Automated Investing With DEFI Indices - Decentralise #17

Tl;dr: Rebalancing indices outperform hodl and trading strategies

DEFI++ Crowned King of DEFI Indices

Yesterday was huge for PieDAO.

We launched DEFI++, our index of DEFI indices, and to celebrate I published a detailed analysis piece backtesting DEFI++ vs Set’s DPI and Synthetix’s sDEFI.

It was fun to write the piece, working with Gabriele who was the brains behind the data. I hope it can be a valuable resource for anyone interested in investing strategies.

Read the piece here.

The tl;dr is:

Automatically rebalancing indices outperform holding the individual assets, and the more diversified the index, the better the performance.

DEFI++ allocation:

Our research was great news for DEFI++ and the DAO, but the results weren’t surprising for us. That’s because index investing is an established feature of traditional finance with a long track record of performance.

What’s interesting is that the concept seems alien to many DEFI investors, with many either choosing to hodl or attempting to out-trade the market. We’re working on another research piece that shows that in actual fact on average active trading might just be the worst thing you can do.

So DEFI is lagging behind in this vital sector, but personally I don’t think it will take long for the market to catch on.

While DEFI++ outperformed Set’s DPI and Synthetix’s sDEFI, these are two great products with established user bases already. Once the word gets out and more people see the data behind index investing, it seems clear to me that the whole index scene is going to see huge growth.

This will also see massive growth as traditional finance players move into the DEFI space, who will look for index solutions they’re used to using in traditional markets.

So what’s next for the DAO?

There’s a lot of exciting developments underway. A lot of it revolves around the ExperiPie, which follows a version of the diamond standard.

Using this new design we’ll be able to have DEFI+D actively yield farming, as well as meta-governance for our DEFI pies. That means the DAO community will be delegated the underlying tokens locked in pies, able to use them to vote in governance decisions across individual DEFI projects.

We’ve already had success with UNI and COMP, which is incredibly exciting. Learn more about the design here.

Alongside pie development we’re also focusing on updating our incentives model, with a heavy focus on improving DOUGH’s value proposition and rewarding active DAO participants and long-term pie investors.

Read my breakdown of Alex’s proposal here, or go direct to the brains behind the operation.

If you’re interested, why not get involved in the discussion to help shape our future, we’d love to have you in the community.

Baking has never felt so good.