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DeFi indexes lack diversify — analyst claims

DeFi indexes lack diversify — analyst claims

New research shows indexes based on DeFI tokens are not diversified enough for the advanced investor

The research claims that indexes have overexposure to a few DeFi tokens, which invalidates the whole point of diversification. This makes them ‘poor’ investment options for advanced investors looking to manage their risks.

The DeFi boom seen in the third quarter of the year saw many indexes crop up in the sector. The idea behind indexes is to get broad exposure without doing the tedious work of buying the assets individually.

Popular analytics provider, DeFi Pulse, launched their index in September when the hype around DeFi peaked. However, Roberto Talamas, an analyst at Messari, believes that the DeFi Pulse Index leans more on some assets than others.

“The DeFi Pulse Index (DPI) now has over 35M in assets showing increased demand for crypto indexes. While DPI is a good investment for beginners, it may not provide the diversification that sophisticated investors demand, leaving them overexposed to individual DeFi assets,” he posted on Twitter.

Talamas further pointed out that although these indexes have the benefits of broad exposure and lower fees, they can be less than ideal. He argued that they are often heavily weighted towards some assets, thus reducing the diversification benefits.

The analyst studied the DeFi Pulse Index, and after evaluating the product, he discovered that only four assets represent 77% of the portfolio. These assets are Synthetix’s token that holds 13.29%, Yearn Finance’s token that accounts for 17.87%, Aave’s token, which represents 20.18%, and Uniswap’s token that controls 26.12%.

Talamas highlights that any significant movement from either of these assets impacts the index performance heavily due to their immense contribution.

Interestingly, this analysis is true for many other DeFi indexes. Synthetix’s sDEFI, for instance, is concentrated with only four tokens. These are SNX, Compound, Kyber Network, and Maker that collectively account for about 60% of the portfolio.


Total value locked in DeFi surpasses $14BN

Total value locked in DeFi surpasses $14BN

The total Bitcoin and Ethereum held in DeFi protocols has surpassed the $14 billion mark

The total value locked in DeFi reached new heights thanks to a boost by surging crypto prices. The total value locked (TVL) almost broke $14 billion on 14 November, but a sharp fall saw it drop to $13.47 billion two days later. A week later, on 21 November, TVL reached $14 billion before setting a high of $14.39 billion the following day.

This figure has since slightly decreased to its current $14.3 billion levels. The rise in total value locked has been driven by the rising price of Bitcoin and Ethereum over the past few days.  Ethereum has seen the biggest jump in its price, going up by 54% since the month’s start. In the same period, Bitcoin has recorded a 34% price upswing.

However, there’s a fly in the ointment that shadows the growth in TVL. The number of Ethereum held in DeFi protocols has been dipping and is currently 25% lower than it was last month. DeFi Pulse estimates that over two million ETH have exited the DeFi sector. However, the number of Bitcoin in the DeFi ecosystem has remained about the same, moving from 164,500 on 20 October to the current 168,500.

The ETH outflow is most likely a result of investors moving to support the upcoming launch of the Ethereum 2.0 network. These investors may have taken out their deposits from DeFi to activate Ethereum’s most ambitious upgrade yet, hence the slump.

Ethereum 2.0, scheduled to launch on 1 December, required about 525,000 ETH to be sent to a deposit contract address.  This target was reached yesterday after more than 150,000 ETH were injected in 24 hours.

There is also a possibility that DeFi users feel the need to be more careful with their crypto assets as many hacks are being reported. In November alone, DeFi projects Value DeFi and Akropolis have been exploited by hackers. Pickle Finance was also hacked, losing millions to the incident. Late in October, Harvest Finance suffered a loss of over $34 million in another incident. Fearful of these hacks, DeFi users may have decided to pull out some of their assets.


Dubai Incoming

Dubai Incoming

What is an oasis? A chance to get replenished? Be challenged by illusions? Make dreams come through?

Perhaps all of the above as life has taught me to expect from vortex energy, high net worth, and to-the-core core energized blockchain events. Despite the COVID craziness, it’s time to pack the air camel full of fire artworks, prepare a new keynote about NFT’s, and get ready to ride the dune luxury of Dubai. The Future Blockchain Summit is upon us in less than two weeks, so there is still time to book everything, and get some sand stuck in curious places.

Don’t know about you, but from a Nordic perspective, where the day now sets at around 3 PM – this is looking pretty delicious.

After various missions to the desert oasis of Las Vegas, it’s time to gear up for another kind of “same same but different” experience. With the help of a Finnish home team, the Brittany Kaiser team, and everyone at the Future Blockchain Conference, the support level for this is unprecedented for me. One of the main focus points is to get the Brittany project funded, so we are on the lookout for blockchain companies to come along a hurricane of an NFT, big data, crypto art and blockchain journey. As much as I love all the conferences I’ve been to and the COVID restrictions have made me miss them an awful lot – they were mostly full of already familiar faces by now.

This time I don’t know almost anyone in the speaker roster, but due to some amazing help, will land into a well taken care of premise.

Anita Kalergis aka Krypto Granny

The Team

We’d like to think, due to blockchain solutions, that trust is no longer necessary, but in reality it is a vital component alongside respect, to really get things done. The communities, and the builders of them, are often not praised enough for what they do, so I wanted to bring some VIP individuals to the spotlight from behind the scenes.

The last time I was in Dubai, I was five years old, flying through it with my parents staying at the airport only, so sufficient to say we got catching up and learning to do. The blessing is that Anita Kalergis, who has been working her magic behind the scenes, has a network of 20 years in UAE. Her territory has been from China to Europe. She has built a remarkable global network on the blockchain scene, and to have her build the art & NFT side with me is fantastic. In her ambassador role in the Finland Blockchain Forum, she leads the new Helsinki Blockchain Center globalization planning. Do check out her interviews also on YouTube like Antonio Antonopoulos, John McAfee, and the crypto expert in the Middle East, Dr. Marwan Alzarouni, who is now a key figure in this venture, too.

Dr. Marwan Alzarouni CISSP is a Crypto Pioneer and the CEO of Dubai’s Blockchain Center. This whole travel, exhibit & keynote thing would not have happened, was it not for the kind sponsorship of funds to realize it. His center provides crypto training courses and awareness programs for students, entrepreneurs and government departments. On February 2018, Marwan founded the region’s first crypto over the counted desk with the establishment of his company OTC Supply DMCC. Marwan has extensive experience in the areas of information security management, network security and computer forensics.

He currently holds the position of Director of Information Services at Dubai Electronic Security Center. Alzarouni is an established keynote and expert speaker at many information security and blockchain related conferences world-wide.

The Br8ve

Is Satotshi really eight different individuals?

The Br8ve will make it’s first conference premier at the Future Blockchain Summit.

Pekka Kelkka is another key figure from the home team, a 14 year Dubai resident. He started his first online business in 1994, so this Besos level timing insight was natural to evolve to the blockchain space four years back. As he has several tens of thousands of followers on Social Media – 30000 on LinkedIn, his passion has been to evangelize to companies and people about crypto. Landing to Dubai, knowing he will be there helping out with everything is a big factor in feeling secure that this will be a win for the home team. With his help, we are setting about making an evening around art with another important influencer, Mr. Jorge Sebastiao.

People from all over the world

Jorge Sebastiao is a a seasoned CTO, Advisor and International speaker, with experience in Blockchain, Cyber Security, AI, IoT, 5G, Cloud Computing, Disaster Recovery, Bigdata, & Managed Services. Jorge is professional advisor in several innovative startups using disruptive technologies with focus on generating business value. With his local expertise and knowledge base, I’m excited to explore his ideas around the cross-point of many of these things when we meet up.

Jorge is a regular speaker at international conferences and very pleased to say, helping out to put this evening together with Pekka around my art, creativity and how businesses can better thrive with a creative mindset. It’s an incredible privilidge to be introduced to his network along the journey as well.

”Cyber Security is a continuous skilled process” – Jorge Sebastiao

Compound Defiance” will make an appearance at the conference.

The man behind the conference curtain

This James Bond looking fella right here, Oscar Wendel, is the last feature on this article, but certainly one without which none of us would be going anywhere. As the buck stops here, this is your last chance to seriously consider packing your bags to get some crypto sunlight into your life. Oscar, who is responsible for putting this conference together, is formerly the Senior Content Manager of Global Events at the Financial Times in London and Conference Manager also of:

There is much more to the guy, too, but I’ll save that for the recap article after the conference is done.

The event will be held at the Dubai Conference center.

I’m confident to say we are in good hands, and if you avoid getting spat in the face by a camel, you are likely to have a good & productive time of it. Well, even if you get spat in the face by a camel. You can then write that off your bucket list too.

Once more, also is along the journey helping out with some prints, so the work remains fresh to experience. The studio we are building together, went to print a week ago, so we will soon have more to show that this amazing 3D render of it.

See you in Dubai,

Crypto Artist
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