YAM Investment Portfolio Update #1 – Voting for Investment Strategy
This is update #1, for additional information and Investment Thesis / Strategy see original thread here:
This update will be describing the upcoming necessary governance votes that will need to be approved by the community for operating the YAM Token Set that @Krugman is currently building. @Krugman is customizing a Token Set specifically for Yam governance and investment portfolio. Soft target for completion is 12/8/2020.
While the Yam Token Set in construction, there are a few guardrails Yam Governance needs to decide on:
- Investment strategy from Conservative to Aggressive
- Portfolio Set Director and Portfolio Communications Director
Investment strategy from Conservative(1) to Aggressive(5)
Yam Investment Portfolio will be determined by a scale from 1 to 5 from conservative to aggressive. This will allow Yam to give guidance to the Set Manager on how much risk to reward he should target. The individual investments that the Set Manager makes will be up to his discretion but will follow these guidelines. The scale will define the beta and correlation of the portfolio which determines systematic risk. The correlation coefficient allows us to determine how much in sync are the movements of asset vs ETH, but it does not measure the volatility like Beta does. Beta is a statistical measure of the volatility of a stock versus the overall market (ETH in our case):
- A beta above 1 means a stock is more volatile than the Ethereum.
- A beta below 1 means a stock is less volatile than the Ethereum.
Using both of these as guardrails allows the Set Manager to invest based on risk tolerance.
Here’s a sample from @Krugman (#2 AUM currently in Tokenset.com for his own set):
Link to @Krugman’s Excel File:
For Yam’s Purposes, Here is our scale of 1-5:
Here’s an example portfolio would look like:
Currently our portfolio consists of multiple strategies utilizing different decentralized finance strategies:
- Liquidity Pool Farming Yield – This strategy provides income when assets are staked at an Automated Market Maker such as UNISwap.io then staked again at a yield farm to gain additional income.
- AMM staking gains fees from parties swapping assets but it is subject to Impermeant Loss.
- Staking AMM tokens at a yield farm generates additional tokens (usually the farm’s token) but these tokens can be sold for additional income or held.
- Tokenset Index Fund - Defi Pulse Index https://www.tokensets.com/portfolio/dpi
- The DeFi Pulse Index is a capitalization-weighted index that tracks the performance of decentralized financial assets across the market.
- Yielding Stablecoins – Stable coins that can be invested to return income.
- Yielding Stablecoin pools benefit users by socializing gas costs, automating the yield generation and rebalancing process, and automatically shifting capital as opportunities arise.
What we need to vote on is how conservative (1) or aggressive (5) we would like the portfolio. Remember this is not your personal portfolio. Your vote will guide how well the YAM treasury does, and in turn likely how YAM Token does. For more information about portfolio development see my thread:
The poll is from 1 (Conservative) to 5 (Aggressive). Select as many choices as you would like, highest votes will be starter strategy.
- 1 - Conservative 0.25 Beta / 0.2 Corr
- 2 - 0.5 Beta / 0.3 Corr
- 3 - 0.75 Beta / 0.5 Corr
- 4 - 1 Beta / 0.7 Corr
- 5 - Aggressive - 1.5 Beta / 0.9 Corr