Altcoins Talks - Cryptocurrency Forum
Cryptocurrency Ecosystem => DeFi tokens => Topic started by: RSRS on July 17, 2021, 07:11:26 AM
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Ah, the index fund. Invest in hundreds of stocks at once, like the entire S&P 500, and you can spray and pray your way to conservative financial success within a few decades. So what if Elon Musk crashes Tesla into a wall or climate change snuffs out the oil and gas companies? You’ve invested in the entire market.
Vanguard built an empire by selling low-cost, tax-efficient index funds and ETFs since the mid-70s, and even legendary stock picker Warren Buffett told CNBC that they “make the most sense practically all of the time.”
Now, as an alternative to investing in a niche cryptocurrency yield farm your mother’s son’s father’s dog told you would fly you to the moon, decentralized finance (DeFi) projects are trying to do the same for their own rugged industry.
DeFi for Dummies: Donut Offers Crypto Newbies 4% Yields
There are several DeFi index fund providers but they generally all work like this: a DAO or algorithm or company picks a bunch of tokens from the world of programmable finance, combines them into a pot, then sells shares in said pot through a single index token.
The value of the index token reflects the average prices of the tokens in the pot, so buying the index token is comparable (ish) to investing in the entire DeFi market.
The most popular is DeFi Pulse Index (DPI), which lets you gain exposure to a whole basket of top DeFi tokens through a single token.
More information (https://cryptonews.net/en/news/defi/1081393/)