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.
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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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Index funds are a popular concept in defi but really hard to do because typically it involves the success of the index token for the "index" to be profitable (statera), while also individual assets within the pool (typically balancer) can rug/tank without being replaced.
This is exciting news. I think that Terra is still undervalued despite the recent surge. People are catching on. Keep up the good work!
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I'd be all in for DeFi blended ETF's underpinned by real assets - not synthetics (eg "DeFi Stable: BTC, ETH" & "DeFi High Risk: Compound, AAVE etc", DeFi Stable Yield "Deposited UST"
So much potential
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the market for defi backed securities will be even bigger than the asset backed securities market 2006