In the world of blockchain, there are plenty of approaches to manage our wealth. Decentralized Finance (DeFi) based on smart contracts is a prime example of this.
Due to the difference in liquidity, the interest rates of various lending platforms are always different: the annual interest rate of Dai in Compound is 7.56%, meanwhile that of dForce could be 7.8%, and dYdX, which enjoys wilder fluctuations, is offering an interest rate of 15%.
For ordinary investors, it’s quite challenging to constantly keep an eye on the market, which leaves investors repeatedly calculating the interest rate gap of those platforms and deliberately assessing yield stability and cost of transferring crypto tokens.
Normally, investors have to be alert to the interest rates and redistribute funds rapidly to catch a better return.
Staked’s Robo-Advisor for Yield (RAY), which launched in Sept. 2019, can automatically move investors’ tokens to the highest yielding opportunity.
How Ray Works
Robo Advisor for Yield (RAY) is a smart contract system that can automatically allocate tokens to find high-yielding opportunities. Investors deposit crypto tokens into Ray, then it will automate the process of monitoring a variety of DeFi products and allocating optimally at any given time.
An example of how RAY works: imagine an investment pool has one million dollars worth of Dai in it and the annual percentage rate a user would earn by depositing Dai on Compound is 5 percent. After a while, the interest rate in dYdX increases to 10 percent because of higher demand for Dai. RAY would automatically move all or part of that pool into dYdX so that the entire pool will get the best return.
Photo by Steve Johnson on Unsplash
It’s not hard to figure out why the interest rate spread exists. In effect, arbitrage opportunities will be quickly smoothed out in a highly efficient market with sufficient liquidity. The rate spread is the result of a small-scale market with insufficient liquidity, which causes the profits of a DeFi contract overtake that of others from time to time.
You may wonder how to make sure that the miner fees generated by high-frequency transfers could be covered by gains. There is a scale advantage-pooling the majority of the funds and returns to scale will make transaction fees negligible.
Notice: RAY will charge roughly 20% as risk reserve and transaction fees for miners while helping users gain higher yields.
How to Use Ray
imToken has already supported RAY. If you are interested in this application, you can search Robo Advisor for Yield on the Browser page in imToken to experience an enhanced DeFi return or click here.
Most of us are merely ordinary investors and we should take an approach to strike a better balance between risks and benefits.
Ogilvie, founder of Staked, said,“We’re not necessarily saying we are going to beat the market. We’re just saying you’ll get the best of what a savvy watcher would get in the market.”
Risk Warning : The content of this article does not constitute any form of investment advice or recommendation. imToken does not make any guarantees and promises for the third-party services and products mentioned in this article, nor assume any responsibility. Digital token investment has risks. You should carefully evaluate these investment risks and consult with relevant professionals to make your own decisions.