dHEDGE stands as a decentralized fund management platform, and has recently launched a new tokenized index. This index is responsible for tracking its top-ranked traders on the platform. Alongside this, it’s planned for an ERC-20 token to be issued out that would be an index on automated market maker DEXes
The Mandatory Public Statement
dHEDGE itself allows for fund managers to launch their own actively managed investment pools. These pools are, in turn, powered by synthetic assets that are provided by Synthetix.
Henrik Anderson stands as a co-founder of dHEDGE and the Chief Investment Officer of Apollo Capital. He gave a public statement about the matter, explaining how dHEDGE is aiming to crowdsource the Internet’s best traders. In his eyes, this would be a tremendously powerful index, should you be able to pull it off to develop it, to begin with.
Some Finer Details Of Operation
This new investment pool has been dubbed “dTOP”, and is developed to rebalance the funds across the top ten fund managers by rank on the platform with a monthly interval each time. It should be noted that the bot itself will cover the various gas fees that will occur through this monthly rebalancing process, the fees themselves being paid by the dHEDGE DAO.
As for how the hundreds of pool managers making use of dHEDGE get rated, that’s done through the Sortino Ratio scoring system. This measurement allows for the pool’s performance to be measured in relation to its risk profile and size. Other considerations include the historic volatility on both the downside and upside, all to determine the official ranking.
DeFi Growing Ever More
In relation to this, Anderson highlighted the need to leverage a risk-adjusted measurement when it comes to these rankings. Looking at just the returns doesn’t show how likely the trader is from suffering a spectacular setback.
In order to seed the dTOP pool, dHEDGE DAO provided it with initial funding of $50,00. Anderson himself predicts that the organization will invest more funds into the Index at some point in the future. The fund itself has a 10% performance fee, one that’s distributed among the top asset managers of that month based on their respective weight on the index at large.
Time will tell how effective this new fund will be, but this is very clearly one more step in innovation from the decentralized finance space. It’s only a matter of time before the space as a whole will receive a large number of institutional players taking part within it as well.