The realm of decentralized finance (DeFi) has evolved rapidly since its inception in 2020, offering a wide range of investment opportunities for both newcomers and experienced crypto users. Rivo has emerged as a pioneering platform democratizingaccess to DeFi for everyone.
The platform’s core operational thesis is that financial well-being is a foundational element of global human development. By offering users an accessible entry point, Rivo enables seamless, secure, and self-custodial access to top-tier wealth-building opportunities, including those tied to crypto indexes like the ‘DeFi Core Index’.
Let’s imagine an investor wants to enter the stock market. While there are multiple approaches, most individuals begin by purchasing shares in specific companies. This demands significant research and risk management skills.
Alternatively, a mutual fund is a more accessible option, pooling capital from various investors to create a diversified stock portfolio. This allows investors to gain exposure to a wide range of companies without buying individual shares.
In this context, the DeFi Core Index (also known as xDEFI) stands as a yield-bearing index consisting of major DeFi protocol tokens on the Ethereum blockchain and Liquidity Provider (LP) positions.
The index aims to provide easy access to DeFi assets and yield farming opportunities, essentially functioning as a “DeFi mutual fund” for retail investors. The index operates by converting user assets into FXS (Frax Finance), CVX (Convex Finance), CRV (Curve Finance) and ETH (Ethereum), which are then deposited into LP positions in their respective protocols.
Investing in DeFi can be overwhelming due to the vast array of protocols and tokens. The DeFi Core Index simplifies this process by offering a single investment solution, saving investors time and reducing their learning curve.
The index incorporates multiple yield farming strategies, enabling investors to earn additional returns by participating in various DeFi protocols. These strategies are actively managed to optimize potential returns while minimizing risks.
A thorough vetting process is employed to select assets for the DeFi Core Index. This process involves analyzing factors such as user base, tokenomics design, growth potential, and security.
To this point, the DeFi Core Index possesses an impeccable security track record. Its underlying protocols (Yearn, Frax, Convex, and Curve) have been audited by leading market firms like Certik, MixBytes, PeckShield, and Nomoi, among several others.
Moreover, Yearn, Curve, Convex, and Frax boast impressive TVLs of $222 million, $1.95 billion, $958 million, and $638 million, respectively.
By combining established, blue-chip DeFi tokens with promising emerging projects, the index aims to maximize returns while preserving stability. The index is continuously monitored and adjusted to maintain its relevance and performance.
Like the vast majority of financial instruments available in the crypto market today, the DeFi Core Index comes with its share of pros and cons.
One of the DeFi Core Index’s key features is its dynamic nature. A rebalancing strategy is employed to ensure the index remains optimized for risk and return in the ever-changing DeFi landscape.
Rebalancing is crucial for adapting to market shifts as optimal asset allocation can change with evolving DeFi protocols and market conditions. It also serves as a vital risk management tool, preserving the index’s desired risk profile.
By adjusting allocations, the index can capitalize on the most promising yield opportunities, enhancing overall returns for investors. An advanced alerting system and regular tracking of key metrics for index components support this process
This proactive approach enables timely adjustments to the risk and reward balance, ensuring that the index remains within a given range of profitability and safety.
The DeFi Core Index comprises three main strategies, each focusing on a different DeFi protocol:
User funds are deposited into the cvxFXS-FXS liquidity pool on Convex Finance, earning CRV and CVX emissions. These rewards are regularly harvested and compounded back into the strategy. Frax Finance is a major DeFi protocol on Ethereum, offering products like the FRAX algorithmic stablecoin and frxETH liquid staking derivative.
Funds are deposited into the CVX-ETH pool on Convex, earning CRV and CVX rewards. These earnings are regularly reinvested to compound returns. Convex Finance optimizes Curve yields and has acquired large amounts of CRV tokens for voting on Curve pools.
Funds are converted into st-yCRV tokens on Yearn, earning CRV emissions and other incentives. Accrued tokens are automatically compounded into the strategy. Curve Finance is one of the largest Ethereum DEXes, attracting liquidity providers and helping other protocols bootstrap liquidity.
The CRV token is used to direct Curve emissions through gauge voting. By depositing CRV on Yearn, the index takes advantage of Yearn’s high yields.
Rivo employs a comprehensive risk framework to assess the safety of the DeFi Core Index. The framework considers three main factors:
These factors combine to give the DeFi Core Index an overall safety score of 70/100, indicating a relatively low-risk profile.
Investing in the index via Rivo is simple and straightforward, even for DeFi newcomers.
The DeFi Core Index represents an innovative approach to DeFi investing, offering the right balance between potential high yields and diversification. By providing exposure to a number of major DeFi protocols and automated yield farming strategies, it simplifies the investment process for retail investors.
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