From Yearn to Plouto, the decentralized asset management market is rushing
From Yearn to Plouto and many other projects, the scale and charm of the decentralized asset management market are rapidly expanding. Based on smart contracts, they can quickly capture the value of emerging DeFi projects and bring investors the most optimized return on investment. Also, they represent the unlimited possibilities and prospects of the DeFi ecosystem based on cryptocurrency.
With the increasing wave of DeFi, more and more DiFi applications are appearing for investors. Decentralized asset management protocols represented by YFI, YFII, and Plouto are one of the biggest highlights of the DeFi market this year. they are also one of the important manifestations of DeFi becoming mature and structured.
From the perspective of the industry environment, the DeFi market has mainly focused on the expansion of basic financial services such as transactions and lending in the past few years, forming the basic framework and pattern of the DeFi ecosystem. Meanwhile, because the lending business bring investors stable income, it is especially favored by many start-ups, and many high-quality decentralized lending products such as AAVE, Compound, MakerDao, and Fortube have been appeared.
With the launch of liquidity mining plans for projects such as Compound this year, investors’ demand for crypto assets such as USDT and USDC has skyrocketed. As a result, the interest rates of major decentralized lending products have risen sharply, and even formed large spreads among different lending products. Therefore, many investors need to check the actual interest rates of different lending products and compare them before participating in mining, and finally decide which lending product to deposit their funds in. The whole process is cumbersome and time-consuming, and it is not conducive to improving the efficiency of capital allocation in the entire market.
Products based on decentralized asset management agreement, such as Yearn.finance (YFI) has quickly become the target of investors’ pursuit under the stimulation of the aforementioned pain points. Actually, before DeFi became popular this summer, the project had already launched in January this year. The goal of the project is to greatly simplify the process of lending funds for investors, through the interaction of smart contracts to automatically compare the interest rates of different lending products and choose the platform which has the best interest rate to deposit funds and automatically allocate funds according to real-time interest rate changes to help users achieve the most return.
On July 18 this year, Yearn announced the launch of liquidity mining and the the governance token YFI, which directly detonated the entire DeFi market and made most investors realize the value of decentralized asset management protocols. A large number of similar imitating projects were born, but decentralized asset management agreement is one of the highest technical thresholds for many DeFi application. Most imitating projects do not have the corresponding technical development ability and innovation, but YFII and Plouto are two of the few bright projects .
Compared with Yearn, the biggest innovation of the YFII project is the addition of the concept of vault, which is a more concise pledge mining business than stake. Users can one-click deposit and one-click withdrawal, which makes the threshold of DeFi ecology lower for users’ participation.
The biggest innovation of Plouto is to address the problem of a single investment strategy for the Yearn project and set up the characteristic concept of open vault. For most decentralized asset management agreements, they will provide users with investment strategies that have been verified by validators and DAO elections. Investors transfer funds to the treasury to implement the aforementioned investment strategies. Plouto has no large differences with Yearn and other projects in this regard. But the launch of the open vault reflects the Plouto project’s keen capture of market demand.
Since the investment strategy of most asset management agreements is relatively fixed, each change requires a community governance vote, which also requires more time to respond to market changes. Plouto thus launched an open vault mechanism to provide third parties with the ability to create independent investment strategies. Investors transfer funds to the “open vault” to execute their specific strategies independently, without being affected by DAO governance, which can help investors faster respond to market changes and enjoy the early mining dividends of emerging projects.
Through the combination of vault and open vault mechanisms, Plouto are able to provide targeted services for investors with different investment needs and preferences. The market competitiveness and coverage of products have been greatly improved, helping more ordinary investors gain access to the DeFi ecosystem .
Although the outside world refers to projects like Yearn more as “aggregators,” they actually play a role in asset management in DeFi, helping users optimize asset allocation efficiency, and lowering the threshold for investors to participate in DeFi.
Since the investment strategy of most asset management agreements is relatively fixed, each change requires a community governance vote, which also requires more time to respond to market changes. Plouto thus launched an open vault mechanism to provide third parties with the ability to create independent investment strategies. Investors transfer funds to the “open vault” to execute their specific strategies independently, without being affected by DAO governance, which can help investors faster respond to market changes and enjoy the early mining dividends of emerging projects.
Through the combination of vault and open vault mechanisms, Plouto are able to provide targeted services for investors with different investment needs and preferences. The market competitiveness and coverage of products have been greatly improved, helping more ordinary investors gain access to the DeFi ecosystem .
Although the outside world refers to projects like Yearn more as “aggregators,” they actually play a role in asset management in DeFi, helping users optimize asset allocation efficiency, and lowering the threshold for investors to participate in DeFi. “It can not only attract stock funds in the cryptocurrency market, but with the prosperity of DeFi, also attract funds outside the cryptocurrency industry. Decentralized asset management plays a pivotal role for evolving into an asset flow portal and depositing funds in the DeFi space.” one of the persons who are in charged of Plouto said.
In the traditional financial system, asset management has always been one of the pillar businesses. According to a research report released by Ernst & Young Global Limited, as of June 2019, the scale of global financial asset management reached 95.3 trillion US dollars, which set a new record. This data also means that asset management is becoming more and more important in modern society. It has been proven that asset management could be the pillar of the market economy and the lifeline which affects the rise and fall of enterprises.
At the same time, ample capital has further promoted and stimulated the prosperity of the asset management ecosystem, such as fixed income products, equity products, commodities and financial derivative products, mixed products, etc. Their emergence has greatly optimized the economic system and helped outstanding projects to obtain more liquidity and investors obtain optimal rate of return.
As an emerging business supported by cryptocurrency assets, decentralized asset management agreements also contain huge development prospects. Driven by the wealth effect, the entire decentralized asset management market has been rushing in recent months, which means the focusing effects of greater capital and wealth are fermenting and driving the diversification of the underlying assets of the DeFi ecosystem.
Nowadays, almost all the underlying asset management products of decentralized asset management agreements are lending products. As investors’ demand for cryptocurrency asset management continues to rise, it is bound to be similar to the traditional financial market and stimulate more investment models and projects appear.
At present, the decentralized asset management protocol provide high-quality convenience and efficiency for the DeFi market, and has become the most extensive fund allocator in the Ethereum ecosystem, which makes it very important and decisive in the flow of funds in the entire DeFi ecosystem and the formation of the entire DeFi chain.
From Yearn to Plouto, the scale and charm of the decentralized asset management market are rapidly expanding. Based on smart contracts, they can quickly capture the value of emerging DeFi ecological projects and bring investors the most optimized return on investment. It also represents the unlimited possibilities and prospects of the DeFi ecosystem based on cryptocurrency.
Apparently, while all kinds of projects are rushing and attracting money madly, investors should also beware of the accumulation of bubbles and risks, especially their true innovative value and code auditing. Only truly high-quality projects gain long-term value and recognition in the changeable DeFi market.
