Being able to invest in stocks in the past meant you had exclusive access to a portfolio manager or an investment firm. It was all a rather over-formalised way of investing and made it seem like investing in stocks were for the elite of the elites in society. You might even feel like a blob when you go to these outfits and your capital isn’t what they are used to.
All that is changing (and at a drastic pace too) as decentralized finance (DeFi) continues to eat at the traditional finance system. People all over the world, regardless of their societal status or how deep their pockets run, can now invest in stocks, thanks to DeFi. The bureaucratic processes like troublesome account opening, verification and KYC procedures the average investor faced are fast becoming a thing of the past. There are now so many tokenized stocks on so many platforms that offer users a plethora of opportunities they can use to gain proper exposure on their portfolios.
This is what DAOventures is pushing. Bringing opportunities for different investment avenues for our investors.
And what’s more? These investments carry a huge boost to their performance in the form of yield farming bonuses. Sort of like a guarantee when you purchase a property. To add to this, another benefit of using DAOventures and its investment strategy is that the strategy only carries half the volatility risk of the stock market. This strategy is the DAO Tech Stonks strategy.
DAO Tech Stonks
Stonks is a deliberate misspelling of the stocks. It started back in 2017 when it was used in a stock market meme, but gained an increased level of acceptance amongst the crypto community in January 2021. This was when an investment community on Reddit came together to counter a short position opened by a Hedge Fund on the GameStop stock.
Since then, Stonks have been one of the most common terms used when talking about the stock market and it has come to generally represent profitable activities. The DAO Tech Stonks strategy is aimed at taking advantage of the high yield and liquidity incentives on Terra Network to provide exposure to synthetic stocks of US tech giants: Amazon, Apple, Netflix, Google, Tesla, Microsoft, and Twitter
Powered by Terra Network and available on the interchain, Mirror Protocol is used to create fungible and synthetic assets that mirrors and track the price of real-world assets. The synthetics on Mirror are intended to bring and transact real-world assets to the blockchain. These synthetics can be used as key building blocks in smart contracts which are built on Terra.
The DAO Tech Stonks strategy takes advantage of the high incentives attached to being a liquidity provider (offered by Mirror Protocol) to allocate user assets into the synthetic stocks of the tech giants mentioned in this document already.
According to the designed allocations, the tokens are converted into pairs with UST and are deposited into liquidity pools which generates extra rewards. All of the chosen components and pairs are split equally to ensure a balanced diversification of the investor’s portfolio. About half of the portfolio is kept in UST and this is what is paired up with the synthetic stocks to reduce volatility while maintaining the high yield farming incentives APR provided.
With this, the overall strategy not only benefits from the appreciation of the price of the tokens but also benefits from the additional rewards the liquidity pools offer. For compounding, the rewards generated by the liquidity pools are then automatically sold at regular intervals and are then reinvested back into the LP.
- 7.15% MAMZN
- 7.15% MAAPL
- 7.15% MNFLX
- 7.15% MGOOGL
- 7.15% MTSLA
- 7.15% MMSFT
- 7.15% MTWTR
- 49.95% UST
Like have been said in this document, the incentives a user earns from yield farming these pairs would be compounded automatically by DAOventures smart contracts. This would ensure that the portfolio is rebalanced so that the strategy can reset back to its standard allocations as shown above. Ultimately, always maintaining a balanced allocation as a result of this.
A standard risk when it comes to providing liquidity on decentralized exchanges is Impermanent loss.
Besides the standard 0.5%-1% deposit fees and 20% profit sharing fees (see here for more details), there is a 10% fee on the yield farmed which is used to pay the gas fees associated with harvesting rewards and depositing LPs.
DAOventures is a multi-chain DeFi investing platform for fund managers and crypto investors. Its mission is to make DeFi simpler, more accessible, and inclusive. DAOventures is a team of engineers, researchers, crypto-investors, DeFi & NFT adopters, and problem solvers who want to build and accelerate the future of money, together.