Auto Diversify
"Auto Diversify" helps an investor automatically earn low-risk and high-return yields.
How does it work? We have developed powerful formulas that efficiently invest across multiple DeFi platforms, auto-compound, and rebalance regularly. All an investor needs to do is pick a token and deposit.
Overview
Structures | Single Asset | Single Asset (No Belt) | Stablecoin |
Deposit | BNB, BTC, ETH | CAKE | USDT, BUSD, DAI, USDC |
Target Vaults | |||
Target Strategy | Borrowing & Lending Auto-compound | Staking Auto-compound | Liquidity Providing & Farming Auto-compound |
Auto Diversify Strategy Details
Auto Diversify spreads deposits across multiple vaults, and directly into PancakeSwap and Dopple Finance as core platforms.
How it works:
Set base allocation of each target vault relative to its TVL and total TVL
Equally redistribute excess allocation above 50% in a single vault to the remaining targets
This makes sure we never allocate more than 50% to any vault
Take 20%* allocation from poor performers and distribute it to better performers; benchmark by APY relative to median
Rebalance if the current allocation is 5% more or less than the target allocation
*Auto Diversify options with 2 targets are will just be a 50/50 split until more targets are added.
How to deposit capital flows from Auto Diversify into the DeFi ecosystem:
Diversification Benefits and Risks
While deposits are diversified, it does not eliminate risks completely. This is because no investment, whether in DeFi or the physical world, is truly risk-free.
Users of Auto Diversify benefit from mitigation of risks by spreading investments into multiple targets (ie.: target vaults and target cores). A single exploit has the possibility of happening to any single target, but unlikely to happen to all at once. Yields generated on DeFi, as is hypothesized by the Efficient Market Hypothesis, has priced in a certain level of price volatility, exploit possibility, and all other factors that drive risk and return structures - not perfectly but generally. That is why yields are as high as they are, relative to other asset classes; think your stock portfolio. Investors face a tremendous risk of complete loss of capital when investments are located in a single location. Spreading investments out across multiple locations, in other words, target vaults or target cores, mitigate this risk.
However, it should be noted that while the product diversifies across multiple target products, it does not necessarily diversify across wide-ranging platforms at the launch stage. Due to the limited availability of target products and development time, various deposit options are platform concentrated -- for instance, the stablecoin structure. Most single asset vaults end up with capital deposited within a few core products, such as Venus, Belt, and PancakeSwap; therefore, this is the nature of the ecosystem at this stage. Exploits typically happen at the smart contract level. Therefore, diversification at the target vault or core product level is a big step toward to reducing risks.
As the ecosystem develops, Auto Diversify's degree of diversification will improve with the addition of new target vaults.
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