Finance, investment, trading, these terms symbolize “professional”, “complex” and “unattainable” in the minds of the older generation. Because in traditional finance, there are not many opportunities for retail investors. The best investment opportunities are reserved for institutional investors and qualified investors, and there are very few financial activities in which retail investors can participate. Combined with the already thin margins that are squeezed by centralized financial intermediaries, there is very little left.
DeFi, decentralized finance, has completely disrupted the traditional financial landscape. Under the environment of no license, equality for all, openness and transparency, users can shuttle between different protocols at will and maximize their earnings through the combination of different protocols. As the best three blockchains in the DeFi ecosystem, Ether, Coinan Smartchain, and the Firecoin Ecosystem, the total locked-in volume has reached $64 billion.
Although the DeFi ecosystem is growing rapidly, it is still in its infancy stage. Because the security of the protocol cannot be guaranteed and the price of assets is too volatile, most users only seek to maximize short-term gains and do not participate deeply in the protocol in the long term. High risk, high reward has become synonymous with DeFi protocols.
However, the best way to invest is to maximize returns while balancing risk. As Bridgewater’s ‘All Weather Fund’ follows the logic of diversifying the underlying assets and reducing correlations to protect against the unknown.
Formation Fi, an all-weather income aggregation platform
Formation Fi is a cross-chain income aggregation platform where risk parity protocols are at the heart of its operations. The risk parity protocol combines the user’s risk appetite with an algorithm to customize a multi-chain liquidity mining strategy and allocate assets to different chains after balancing the risk-reward. The protocol will then mint index tokens for users to keep track of mined assets and returns. To increase the liquidity of the mined assets, the minted index tokens can be traded seamlessly with other ERC-20 tokens and even continue mining with the index tokens.
So what is a risk parity strategy? The main idea of risk parity is to seek a balance of risk rather than return maximizing assets. In a portfolio, the inverse return pairing between assets is performed by correcting the return per unit of risk between different assets, ultimately yielding an overall positive return in different market environments. A more typical inverse return asset pair is stocks and bonds.
In another dimension, asset diversification can likewise withstand uncompensated changes in the market. Generally speaking return = ALPHA + BETA + GAMMA, where ALPHA is the excess return of each asset over the market, while BETA is the overall market volatility and GAMMA is the risk-free cash asset return. In the long term, BETA is the source driver of returns, so optimizing the BETA in the portfolio for passive investment is the best strategy.
Liquidity mining on the Formation Fi platform will be updated periodically, initially Formation Fi will support Ether, Coin Smartchain, and the Firecoin ecosystem chain, and later will include Polkadot, Cardano, Cosmos, and other chains.
Top 4 Strategies in Formation Fi’s Risk Parity Protocol
Formation Fi’s Risk Parity Protocol offers a total of 4 strategies: ALPHA, BETA, GAMMA, and PARITY.
The index token for the ALPHA strategy will provide liquidity mining (leveraged mining) gains for the top DeFi projects within each network, attempting to maximize returns, but also the highest risk.
The BETA strategy’s index token provides investors with price exposure to Web 3.0 infrastructure project tokens, including DeFi (lending, decentralized exchanges, derivatives, treasury…) , Layer1 and Layer2 infrastructures, data markets, prophecy machines, AI, and storage sectors, the strategy has medium risk.
The GAMMA strategy’s index tokens provide investors with stable coin mining revenue from the lending platforms in each network, and investors will receive a stable cash flow, which is low risk.
PARITY strategy is a community of three strategies, tracking the performance of the above three strategies at the same time, the algorithm will adjust each strategy weighting according to the market environment, the risk of this strategy varies according to the market environment.
The chart above provides an overview of the returns of each strategy in different networks.
Formation Fi’s native token $FORM
Formation Fi’s native token, FORM, offers three functions. First, FORM holders can participate in protocol voting and decide where to spend the funds in the protocol vault. Secondly, FORM holders can participate in liquidity mining by pledging ALPHA, BETA, GAMMA, and PARITY Index tokens. Finally, FORM holders have the right to participate in the protocol’s dark pool, which will incubate different DeFi projects that have the potential to succeed in the future.
The total number of FORM tokens is 1,000,000,000, and when the 250,000,000th token is released, the total number of tokens will be incremented at a rate of 2% per year.
Of these, 5% were seed rounds, 5% were private rounds, 5% were strategic rounds, 2% were eco-round investors, 0.83% were public offerings, 33% were incentive pools, 25% were team retention, 3% were eco-development foundations, 1.97% were marketing operations, 10% were network security maintenance, 2% were consulting, 1.2% were liquidity, and 6% were consortia.
Posted by:CoinYuppie，Reprinted with attribution to:https://coinyuppie.com/formation-fi-cross-chain-revenue-aggregator-with-a-24-7-strategy/
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