At SwissBorg, we are committed to helping everyone on their journey to financial freedom. To do that, we place a high priority on continuously enhancing our product offering to align with ever-evolving market opportunities.
Our latest addition is the DeFi (Decentralised Finance) Thematic. We believe the time is right for this new product to thrive and are excited for its launch.
If you are interested in the disruptive potential of decentralised finance, this Thematic is for you.
What is the DeFi Thematic?
The DeFi Thematic can be thought of as a one-click way to gain exposure to the entire DeFi sector through a carefully curated and dynamic basket of tokens that evolves with expert market insights.
When designing this new product, our main objective was simple: create a basket of tokens that is both diverse and resilient, while ensuring it remains continually invested in top DeFi projects.
Thematic diversification
To ensure that the Thematic is well-diversified, we have made sure it has an appropriate allocation to each of the major sub-sectors of DeFi. To do this, we initially followed a weighted market cap approach, where each sub-sector was weighted according to its market capitalisation, and then we strategically adjusted the allocations based on our in-house set of criteria. Lastly, to further improve the Thematic resiliency, we have also ensured an exposition to DeFi on different blockchains.
Project selection
Next, we identified what we believe to be the most promising projects within each sub-sector through our in-house quantitative and qualitative analysis. We also conducted a rigorous due diligence process to ensure that each project meets our standards.
Initial allocation
Based on everything we discussed, the initial allocation for the DeFi Thematic is as follows:
Decentralised exchanges (DEX)
A decentralised exchange (DEX) is a platform that leverages blockchain technology to enable users to trade directly with one another without the need for a centralised authority.
Uniswap
Ticker: UNI
Initial weight: 10%
Quick description: Uniswap is a pioneer decentralised trading protocol, known for its role in facilitating automated trading of decentralised finance tokens. The project aims to keep token trading automated and completely open to anyone who holds tokens, while improving the efficiency of trading versus that on traditional exchanges.
Jupiter
Ticker: JUP
Initial weight: 7.5%
Quick description: Jupiter is a decentralised exchange aggregator on Solana that aims to provide users with the best liquidity, as well as products like limit orders, DCA orders and perpetual futures.
Raydium
Ticker: RAY
Initial weight: 7.5%
Quick description: Raydium is an automated market maker (AMM) decentralised exchange on Solana.
Lending and borrowing
Lending and borrowing in DeFi involve platforms that allow users to lend their assets to earn interest or borrow assets by providing collateral. These decentralised systems facilitate peer-to-peer transactions without intermediaries, offering flexible terms and transparent processes.
Aave
Ticker: AAVE
Initial weight: 12.5%
Quick description: Aave is a decentralised finance protocol that aims to facilitate lending and borrowing of crypto. It is one of the oldest and most established borrowing and lending protocols. Originally known as ETHLend when it launched in November 2017, the rebranding to Aave happened in September 2018.
Compound Finance
Ticker: COMP
Initial weight: 5%
Quick description: Compound is another protocol that aims to incentivise a distributed network of computers to operate a peer-to-peer lending and borrowing market.
Oracles
Oracles are services that provide trusted external data sources to smart contracts, enabling them to fetch market data from on crypto prices as well forex, metals or even commodities.
Chainlink
Ticker: LINK
Initial weight: 10%
Quick description: Chainlink is a decentralised oracle network that provides real-world data to smart contracts on the blockchain. It is an essential component for the operation of many DeFi applications.
Pyth Network
Ticker: PYTH
Initial weight: 5%
Quick description: Pyth Network is a novel oracle solution that aggregates price data directly from exchanges, market makers, and trading firms. It stands out by introducing confidence intervals, offering a more nuanced view of market prices and uncertainties, especially during periods of high volatility or low liquidity.
Staking
Staking involves participating in a blockchain network's proof-of-stake consensus mechanism by locking up a certain amount of crypto to support network operations, such as validating transactions and securing the network. In return, participants can earn rewards in forms of yield.
Lido Finance
Ticker: LDO
Initial weight: 10%
Quick description: Lido Finance is a prominent liquid staking solution in the Ethereum ecosystem, known for its user-friendly approach to staking. As a leading platform, Lido offers a unique blend of accessibility, liquidity, and security for those involved in Ethereum staking.
Jito
Ticker: JTO
Initial weight: 5%
Quick description: Jito is a liquid staking and maximum extractable value (MEV) protocol for the Solana network. The protocol enables Solana users to easily participate in staking and helps decentralise the Solana network by spreading stake across the network.
Yield
Yield platform aims to provide interest to crypto users by leveraging various DeFi strategies on their asset.
Pendle
Ticker: PENDLE
Initial weight: 10%
Quick description: Pendle Finance is a yield tokenization protocol. It allows users to speculate and hedge future yields, offering a novel and unique approach to yield-based investment.
Decentralised money
Decentralised money refers to digital currencies or assets that operate on decentralised networks, typically using blockchain technology, without relying on central authorities like governments or financial institutions.
MakerDAO
Ticker: MKR
Initial weight: 12.5%
Quick description: MakerDAO is a platform that issues the over-collateralised, debt-backed DAI stablecoin. It allows users to deposit approved collateral types and borrow newly minted DAI tokens against this collateral.
SwissBorg native token
SwissBorg
Ticker: BORG
Initial weight: 5%
Quick description: BORG, SwissBorg’s native token, is an essential part of every Thematic to strengthen the SwissBorg ecosystem and act as a link to different crypto narratives and industries.
A dynamic basket of tokens
As mentioned earlier, Thematics are dynamic baskets of tokens, and the DeFi Thematic incorporates multiple strategies to stay aligned with current market conditions.
For now, we will allow the Thematic to drift naturally in response to market fluctuations. However, we will carefully monitor its composition to ensure it doesn't stray too far from the target allocation, especially if it no longer meets the initial diversification or risk management standards. If necessary, discretionary rebalancing will be conducted.
Additionally, periodic reallocations will be made to update the DeFi Thematic based on the SwissBorg investment team’s assessments of market conditions and industry trends. This may involve adding new tokens or removing existing ones as needed.
