1/ Let's talk about ETFs🧵
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Conversation
2/ Earlier, I noted that the launches of and completes the MVP launch sequence of stablecoins.
You can now pay, invest, and save using Terra stablecoins.
But we are far from done.
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3/ In traditional finance, ETFs are huge. Passive investing via ETFs dwarf active investing in single stocks - trillions and trillions of dollars.
Single stocks are signals, ETFs are narratives.
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4/ ETFs are far more relevant in crypto than in TradFi.
While single DeFi assets are 99% likely to fail, there is little doubt that DeFi as a movement is going to be transformative.
Investors want to bet on movements.
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5/ But more importantly, TradFi ETFs are broken - they can only:
1) Be issued and managed by permissioned license holders
2) Rebalance on rigid parameters (Market cap) every quarter
DeFi fixes this.
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6/ What if we could have an algorithmically managed ETF, where rebalancing is dictated via permissionless incentives?
That is, when asset composition needs to change, the community has arb incentives to trade agains the ETF?
Wall street becomes obsolete.
Replying to
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8/ Assets up for grabs from day 0 in the Terra ecosystem
- Bridged cryptos
- Stocks / ETFs / Commodities (Mirror)
- Yield products (Anchor)
- FX (Terra stablecoins)
- Soon (tm) Derivatives ()
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9/ Working hard, coming soon 🎄
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Wall Street is not obsolete, because it still influences the underlying prices ... mirror is dependent on Wall Street , and the more popular it becomes the more money that flows away from the underlying ... negatively impacting mAsset prices
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Tell that to 99% of the world who can't participate in those markets.
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I understand how asset composition could be changed permissionless, not sure i understand how to arb it.
Nevertheless, yes this is a good idea
Interesting take, but not sure if obsolete is the word. Agree that the visibility and method of rebalancing can be improved, but to many investors (insti+retail) nothing changes. ETF arb already does exist in tradfi. Ppl buyin ETFs don’t worry much abt allocation mechanisms
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