DeFi Project Spotlight: Indexed Finance, Index-Based DeFi Investing

Key Takeaways

  • As retail interest in DeFi grows, solutions like indices offer easy passive portfolio management opportunities.
  • The index space is highly competitive, with DeFi Pulse Index taking the large majority of the market capitalization.
  • The project’s upcoming release will turn all underlying tokens in the indices into yield-generating assets.

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Crypto, and DeFi in particular, can be tedious work to follow. By facilitating investment in specific sectors through indices, Indexed Finance creates an enticing financial product that removes much of the hassle of micromanaging a portfolio.  

What Is Indexed?

Not dissimilar to a traditional index fund, Indexed offers passive portfolio management strategies that allow for easy investment in broad sectors of the crypto market.  

In traditional finance, indices are an extremely popular product. There are currently 5,000 U.S. indices available to trade on the stock market. They allow investors to increase their exposure to particular market sectors while softening any sudden downward price movements from a single investment. These indices can represent a country’s largest companies, the key players in a certain sector (the XLV for the health care market, for example), or even a wider selection of consistently well-performing companies like the Dow Jones Industrial Average. Indices play a key role in analyzing the health of a sector and facilitating investments in a broader market.

Indices reduce the amount of research necessary to gain broad exposure to the market too. Following the development of various projects is often a full-time job and many investors enjoy the reduced stress of not having to micromanage their funds. In the world of crypto, this strategy also reduces the cost of gas fees. Instead of manually trading and rebalancing your portfolio, an index maintains its allocations automatically. Over the long run, these savings can be significant given the cost of using…

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