The 20-day moving average rebalance strategy launched by Set Protocol had a 382 percent increase in locked ETH and has successfully increased ETH holdings for investors by 18 percent, September 9, 2019. The automated rebalance based on moving averages shows the ability to automate the process of dollar-cost averaging. The investment angle for DeFi is gaining traction, slowly but surely.
Taking Emotions Out of Investing
One of the fundamental reasons most people are unsuccessful in investing is the inability to isolate emotions during the process. Automating inherently removes this aspect and takes data driven decisions based on concrete strategies.
The method of executing the strategy isn’t concrete, but the parameters that decided a rebalance (moving above or below the stipulated moving average) are taut.
Set Protocol has emerged at the forefront of the investing paradigm of open finance. By offering customers the ability to invest based on technical parameters and remove emotion from the equation, many people can become (somewhat) passive investors in cryptocurrency and keep themselves from making rash decisions.
Recently, the 50-day moving average strategy was launched, which gave investors the ability to gain exposure to an investment scheme that would allow them to outperform the market over a long period of time. As the time period for the moving average is longer, it takes a longer amount of time for the price of ETH to climb either below or above the 50 days moving average.
How Broad Can DeFi Get?
As of now, the blockchain ecosystem has a strong presence of lending/borrowing protocols and reasonably sound growth on the investments front. Many other financial services like insurance, prediction markets, and payments haven’t picked up similar traction.
Infrastructure protocols, as well, like 0x and DutchX have helped create the base to build these products, but the space at large requires a lot more development and reliability before these products can be shipped off to the masses.
DeFi on Ethereum is a prime example of a use case for cryptocurrency and decentralized networks. Those that write it off for being too complex have a point, but they aren’t considering the fact that we are very early in this space. UX is the biggest piece of the puzzle, yet to come, and promises to make the entire process easier, as seen with Argent.