TokenSets | The Future of Financial Management

DeFi, Digital Assets, Investing - August 25, 2020

Video Overview

We’ve previously spoken about financial architects and how they’re creating ‘mass customization’ across assets in the decentralized finance world.

In this video we talk about ‘Token Sets’ an application of financial architecture.

What are Token Sets? Well, it’s exactly that, it’s a set of tokens. Any number of tokens, of any type, in any pair, for any purpose. These tokens sets are maintained according to a ‘balance’ decided by the individual who holds it. This balance is fixed irrespective of the changes in the market.

Say you have two cryptocurrencies in your token set, in a 50-50 balance based on their price. If one of them goes up while the other doesn’t, the balance will be altered. In this situation, your token set will automatically re-balance.

So, why is re-balancing important?

  • Correlation: It’s important when the assets you have aren’t correlated. The change in the price of one will not affect the other.
  • Hedging: It’s important to hedge against any risk. The drop in the price of one can be offset by the rise in the price of the other.
  • Risk management: It’s important to manage your risk better. The sale of one at a high price can be used to buy the other at a low price.

What’s even more interesting is that this re-balancing isn’t just related to arbitrary price change.

Token sets can be based on technical indicators. If these indicators are triggered by a particular change in price, the token set is automatically rebalanced, rather than waiting for price rise or fall.

Token sets also allow anyone to become a financial architect. Through ‘social trading’ an individual, with a proven track record, can have their token sets mimicked for fees. Through this protocol, anyone who has insights into cryptocurrency trading can create their own token sets.

But it doesn’t end here.

Since this is a part of the larger decentralized finance world, token sets can potentially do so much more. By incorporating traditional financial assets equities, debt-instruments with Defi concepts of pooled lending, yield farming, and more, token sets can be the portfolio for the new financial architecture.

Enjoy the video!

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