Want to financially keep up with the crypto markets? Invest in a Crypto Index.
Crypto Index Funds might be the fastest way to catch up and probably outperform the markets.
So you have heard it. The crypto revolution, the dawn of decentralized finance(Defi). the unbelievable financial gains, people making life changing wealth overnight or within short periods of time. You are thinking of getting in on the action. But where do you start? Or maybe you are already a crypto native?. Well I have news for you.
We have entered a new age of financial primitives. A paradigm shift in the way money/capital are put to work. The advent of bitcoin/cryptocurrencies has ushered in new forms of organizing capital/money to yield returns/interests that make traditional finance look like a joke. The crypto world is driven by breakneck innovations. Underpinning these innovations and ushering us into the era of decentralized finance are defi protocols. Hundreds if not thousands of new defi protocols are released everyday. The amount of money and value accruing to these protocols are mind boggling. Over 100 billion total value locked over the past couple of months, and keeps growing exponentially. In a nutshell, anyone has a chance of being part of them as an investor by buying the underlying protocol token and making fortunes. Unfortunately most of these protocols are failing or doomed to fail. So how do you avoid these pitfalls whilst seeking out successful protocols.
Crypto Index Funds, and why it’s almost impossible to outperform them.
Designed to behave like traditional ETFs and mutual funds, Crypto Index Funds are a bundle of tokens of carefully selected and well researched protocols in the Defi space. CIFs have added functionalities that differentiate them from their traditional counterparts. For instance, Can you vote directly in any of the S&P 500 companies if you own the S&P 500 index? Of course not, but guess what, the PowerIndex from PowerPool gives holders the ability to participate in the governance of 8 Defi protocols directly from owning the index. A concept PowerPool calls “metagovernance”. How cool is that!
It is already an established fact that traditional index funds almost always outperforms actively managed portfolio strategies. This same fact will likely hold true in the crypto space. Even though Crypto Index Funds are an emerging field in the crypto space, the signs are already showing. The number of Defi protocols failing everyday are uncountable. No single individual or even well organized teams are able to fully keep up with what is happening in the space. So imagine actively managing and manually balancing your portfolio in such a space. It is simply impossible. It gets worse as the concept of multichain is becoming a reality. Again, crypto indices solve this hurdle. PowerPool various indices are smart in nature. Meaning they perform certain functions automatically depending on market situations. PowerPool is also in the process of issuing two different indices that will cover the binance Defi ecosystem. This will be the first of its kind, most indices have focused only on the ethereum ecosystem. But this is about to change as more chains gain traction.
Manage risk or have fun staying poor
The crypto space is so risky, anyone who gives you financial advice, tells you it’s not financial advice.! Well there is a good reason. crypto has a darkside too. The space is plagued with scams and theft. Ever heard of rugpull?. It’s the equivalent of bankers running away with all of depositors ‘ money in the bank. For crypto, it’s all the money deposited into a protocol’s smart contract. And rugpull happen almost everyday, as you read this, somewhere, somehow, a protocol is being rugpulled and people are about to lose fortunes. You can go from a million to zero in a blink of an eye. The crypto space is ruthless, unregulated(yet), and incredibly unforgiving. People are losing astonishing amounts of money everyday. So how do you navigate such a space?
Crypto Index Funds help mitigate some of these risks. The PowerPool Crypto Index protocol for instance, constantly develops efficient rebalancing strategies for the various indices. These indices have essentially become automatically managed portfolios. The indices also contain safety features specifically designed to cater for doomsday events such as rugpulls.
The idea of index funds is not new in the world of investment. In Fact, it is one of the surest ways of gradually increasing your investment portfolio whilst mitigating risk intelligently.
The era of money legos, unlimited ETFs & Automated portfolio strategies.
Composability in Defi has given rise to new ways of generating values from protocols which is simply impossible in any other industry, especially traditional finance. The rate at which a protocol can accrue value on top of value for its users/owners is only limited to only the protocols’ imagination. This makes the crypto index space very interesting. There are already a lot of additional functionalities in various crypto indices, especially indices from PowerPool. Check out the following:
- The ASSY index is a concentrated bet on high performing Defi protocols consisting of Aave, Sushi, Synthetic and YFI. Sushi and Aave are staked to receive additional APY for holders of this index. The index itself, ASSY is paired with Eth in the sushi onsen program to receive more APY in sushi tokens.
- The PIPT index is focused on metagovernance in 8 of the most successful protocols in Defi. It is also used in mining CVP, the governance token of the PowerPool Protocol while also staking PIPT-ETH Sushi LP tokens to receive more rewards.
- The YETI index is a collaboration and a bet on one of the most innovative ecosystems within the Defi space,The yearn ecosystem, responsible for creating some of the most valuable and advanced defi protocols that are driving the Defi revolution. The index is also paired with Eth in the Onsen program to generate more APY in sushi tokens.
- The YLA is a cash-flow generating index which accumulates interests over time in stablecoins. It is gas-efficient and leverages ZAP contracts, transaction batching, allowing users to withdraw liquidity in one click for 68x cheaper than before. This is an index created with ethereum gas fees haters in mind, which is almost all of us. In essence, these indices also help in lowering fees.
Almost all of the indices above are generating additional value/cash flow to the owners. And this is just the beginning. The current growth trajectory of Defi is unprecedented and it is showing no signs of slowing down. As a result, composability will be enhanced, numerous ways of accruing values will occur. This is what makes Automated Portfolio management a powerful concept and the vision of PowerPool v2 captivating. The growth of Defi will simply allow for the creation unlimited, highly complex and continues-value accruing indices that will be automatically deployed and flexible enough to capture every sector of the crypto space. In summary, if there’s a protocol that offers value, there will be an index that captures that value for its owners.
The most exciting thing about all of this is, regardless of who you are, and wherever you are, you can have access to all of these ETFs/indices.
As boldly stated by one of the greatest investors of our time, Warren Buffet: “ In my view, for most people the best thing to do is owning the S&P 500 index”.
This holds true especially in the crypto space, you are better off in the long-term holding an automatically traded portfolio. Most people who actively and manually manage their crypto portfolio are likely doomed to fail or underperform.