Chapter 9: Decentralized Fund Management

Funds management is the process of achieving investment returns through asset supervision and cash flow management. We see that innovative DeFi teams have begun to establish decentralized management methods for users to better accomplish funds management tasks.

In DeFi, funds management does not require investment managers; you can choose the asset management strategy that best suits your financial needs. Decentralized funds management also reduces service fee expenditures.

Dapps have automated trading algorithms that operate without your intervention. To understand how funds management works in a decentralized ledger, we will introduce you to TokenSets.

TokenSets

TokenSets is a trading platform where users can purchase tokens (sets) with strategic functionalities. These tokens have automated asset management strategies that allow you to easily manage your cryptocurrency portfolio without manual trading. By using automated trading strategies, you do not need to monitor the market around the clock, thus reducing the trading risks associated with missed opportunities and emotional factors.

Each set consists of a basket of ERC20 standard digital currency tokens, which automatically controls the position size based on the strategy you choose. In other words, a set (SET) essentially realizes cryptocurrency trading strategies in the form of tokens.

What TokenSets are currently available?

Currently, there are two types of TokenSets: (i) Robo Sets and (ii) Social Trading Sets.

Robo Sets

Robo Sets are an algorithmic trading strategy that buys and sells tokens based on predefined rules in smart contracts. There are currently four main algorithmic strategies:

(i) Buy and Hold: This strategy adjusts the portfolio target to prevent any single token from having excessive exposure risk while spreading the risk across other tokens.

(ii) Trend Trading: This strategy focuses on technical analysis indicators and converts target assets into stablecoins based on the implemented strategy.

(iii) Range Trading: This strategy automatically buys and sells within a defined range, suitable only for bear or neutral markets.

(iv) Inverse Trading: This strategy is suitable for those using a "short" benchmark. Traders can buy when they believe the benchmark needs correction.

Social Trading Sets

Social Trading Sets allow users to follow the top trading strategies of some well-known traders in the TokenSets. By purchasing this social trading set, you can automatically replicate the trades executed by these featured traders. Social Trading Sets are also algorithm-based, but they are not developed by the TokenSets team (like those in Robo Sets); instead, they are authored by renowned traders.

How do Sets help?

Sets are essentially a tokenization of trading strategies. If you want to try any selected trading strategy or follow the footsteps of professional traders, Sets may be the simplest way to do so.

That said, be sure to conduct your due diligence. Just because a set has performed well historically does not mean it will continue to do so. The cryptocurrency market is highly volatile, and the saying "past performance does not guarantee future results" is especially true here. Therefore, do thorough research and compare available strategies to find the one that suits you best, and then you can start using TokenSets.

Taking the best-performing Robo Set as an example—the ETH/BTC RSI Ratio Trading Set. In this case, the Robo Set follows a trend trading strategy using the Relative Strength Index (RSI) technical indicator. The value of this trading strategy has increased by 102.33%, with a gain of 41.29% for holding BTC and a gain of 94.17% for holding ETH. As the TokenSets platform has just launched, there is only historical data for the past three months as of the time of writing.

This is TokenSets—if you want to get started using or testing it, we will provide a step-by-step guide on how to get started with Sets. Or you can go to the next chapter to learn about the next DeFi application!

TokenSets: Step-by-Step Guide

Step 1

• Go to the website: https://www.tokensets.com/
• Click "Get Started"
• Continue clicking "Next," and you will see a wallet request pop-up
• Click "Connect" to connect to your wallet

Step 2

• Accept the terms of service and privacy policy
• You can choose whether to add your email

Step 3

• Scroll down, and you will see two types of sets:

1. Social Trading Sets

2. Robo Sets

• You can choose the set you want to purchase
• Note: You should conduct your own due diligence and research the set you want to buy!

Step 4

• Select a Robo Set
• Click on the name "ETH/BTC RSI Ratio Trading Set"
• Click "Buy"
• Enter the number of sets you want to purchase

Step 5

• For beginners, you must enable Dai before trading
• Once confirmed, you can start purchasing

Step 6

• Done!

Recommended Reading

1. Automated Asset Management with Set Protocol. (DefiZap)

https://defitutorials.substack.com/p/automated-asset-management-with-set

2. DeFi10 Part 1: Lessons in Building a DeFi Portfolio

https://thedefiant.substack.com/p/defi10-part-1-lessons-in-building

3. DeFi10 Part 2: Becoming a Programmable Money Fund Manager

https://thedefiant.substack.com/p/defi10-part2-becoming-a-programmable

4. Returns of Hodling versus DeFi-ing (Evgeny Yurtaev)

https://blog.zerion.io/returns-of-holding-vs-defi-ing-c6f050e89c8e