About 6 years have passed since the first DeFi projects appeared, and their number has grown tenfold. In January 2021, the total value of blocked funds in the decentralized finance ecosystem reached almost $ 23 billion. Along with the number of projects, the number of directions for the development of the ecosystem has grown. In previous articles from the “Journey through the DeFi Universe” series, we analyzed the components of the decentralized sector of finance, which are divided on average into 12 directions.
Today we propose to consider solutions that offer users various ways to track and hedge assets, as well as ways to decentralized their management..
Features of decentralized asset management
The world of decentralized finance is growing at a fast pace, and therefore it is becoming increasingly difficult to track assets distributed across different projects and platforms. It is for this reason that the question arises about creating dashboards and interfaces for tracking assets..
Decentralized asset management mechanisms allow users to track their assets, open up access to sophisticated trading strategies, provide transparency of investment fund transactions, provide access to financial instruments to any user, regardless of location.
Asset management defi products are non-custodial, and therefore users own the rights to the underlying assets. Most projects in this sector connect to a wide range of DeFi projects, creating end-to-end experiences with such products.
A large number of tools and mechanisms for asset management are automated, and therefore functions such as, for example, liquidation or rebalancing occur without user intervention..
Below we will analyze some projects and platforms offering their services in the field of asset management.
Zapper is a project aggregator offering functions for monitoring and managing assets, as well as investing in pools of third-party projects. Zapper dashboard analyzes addresses and breaks down transactions into categories such as wallets, liquidity pools, debt, harvesting, deposits, etc. By investing their funds on various platforms, users can track their positions on all major DeFi protocols, as well as manage their assets, saving time and effort.
The Zapper interface was born from the merger of two projects: DeFiZap, which allowed users to invest in pools Uniswap liquidity, and DeFiSnap, which was a dashboard for tracking DeFi positions in protocols such as dYdX, Synthetix, Set Protocol and Compound.
The platform became popular after the emergence of the so-called yield farming. As farmers’ profits could change on a daily basis, Zapper was an excellent solution for monitoring and selecting the best positions..
Zapper converts ERC-20 tokens into the tokens required for the selected pool, eliminating the need for users to convert their assets. Creating easy access to liquidity pools is a prerequisite for scaling and popularizing DeFi. So, the developers announced the Pool Pipes feature, which will allow users to move funds between pools. Pools of platforms such as Curve, SushiSwap and Uniswap are currently available on Zapper..
Zerion is the main competitor to the Zapper platform and has an easy-to-use built-in dashboard for tracking DeFi portfolios. The protocol enables users to provide liquidity to Uniswap and Bancor. Lending, lending and asset exchange capabilities are available through integrations with 0x, Maker, Kyber and Compound. Zerion also allows you to track positions in Set Protocol along with each token in the user’s wallet..
Zerion allows you to provide loans in such assets as: 0x, Augur, BAT, DAI, USDT, USDC, WBTC, and integration with TokenSet allows you to automate trading strategies and diversify your investment portfolio using the token system.
Instadapp is a protocol that allows you to perform such financial transactions as lending, staking, leveraged trading, margin trading and others by creating a single integration platform. InstaDapp is integrated with Compound, MakerDAO, Uniswap, dYdX, Aave, Curve, 1inch and allows users to interact with these protocols through their platform.
InstaDapp developers have created their own smart contracts to make it easier to work with DeFi. Thus, InstaDapp allows you to manage all Uniswap pools, earn interest by providing assets with Compound, leverage margin trading on dYdX, transfer positions from Maker to Compound, and much more..
InstaDapp does not charge fees for using the platform, and smart contracts are audited by companies such as Peckshield, Samsunz and OpenZeppelin. In January 2021, InstaDapp announced support for refinancing credit and leveraged positions between Maker, Aave and Compound protocols.
Enzyme Finance (formerly Melon Protocol)
Melon Protocol, being a protocol for decentralized digital asset management based on Ethereum, positions itself as Asset Management 3.0. Enzyme is a secure environment for creating, managing and investing in digital assets, as well as creating management strategies that can exist within a custom set of rules.
The Enzyme protocol allows you to create asset management funds with predefined parameters that are entered into smart contracts. Enzyme allows you to invest in other funds presented on the platform, and participants do not have to trust the managers due to the parameters and rules entered into the smart contract.
Each fund consists of a standardized repository that allows calculations and audits, as well as serving as a basis for connecting various modules; this could be the setting of management fees, the connection of the fund to public exchanges, or a set of rules restricting the behavior of the fund manager. Any investor can familiarize himself with the connected modules and rules of the fund before investing his funds.
Enzyme is currently integrated with decentralized exchange protocols such as Oasis, Kyber Network, 0x and Uniswap.
The Set Protocol is a protocol built on top of Ethereum that provides access to complex trading strategies by purchasing ERC-20 tokens called “Sets”. To combine cryptoassets into fully secured baskets, Set uses existing open finance protocols. The protocol allows the creation of sets – portfolios backed by digital assets, which contain various parameters, assets and rebalancing strategies. Examples of such sets are: a set of market indices that track asset classes, a hedged set, a composite set of stablecoins, and others..
Set Protocol has its own interface – Tokensets, on which all transactions are performed. By purchasing a set, the user buys an ERC-20 token, which is an application for underlying assets inside Set Protocol smart contracts. Liquidity is secured through integration with the Kyber Network; other exchanges will be added in the future, such as 0x, Uniswap, Bancor and others.
The dHedge protocol introduced new ways to use liquidity in the derivatives market that the Synthetix protocol provides. The advantage of synthetic assets is that they are a means of demonstrating the price of the underlying asset in the chain, and this in turn allows investors to create unique portfolios.
The platform works in the same way as Enzyme Finance and Set Protocol. Managers create pools using dHedge smart contracts, and can also use proactive management strategies, algorithmic strategies or invest in other pools on the platform.
Pools attract investment managers to dHedge, while managers and traders can raise funds for management. Managers can also charge performance fees by tracking the pool’s ROI. In turn, investors can enter and exit the pool by interacting with the smart contract, as well as see which assets are currently in the manager’s pool.
Asset management protocols are in the process of integrating with popular DeFi platforms. With the rapid growth of decentralized finance, tools that make it easier for users to interact with different protocols will develop at an accelerated pace. Platforms with a user-friendly and intuitive interface for managing digital assets provide an opportunity for ordinary users to access a wide range of financial instruments and products. At the same time, the creation of decentralized asset management funds allows users to invest in ready-made strategies and not worry about underlying assets or protocols..