TokenSets (Founded in 2017) is a protocol that bundles crypto-assets into tokenized baskets that are programmed to automatically restructure based on any Management or trading logic.
TokenSets provides cryptocurrency basket and portfolio management services. It provides various automated asset management strategies. It offers a crypto token basket for the ERC20 standard for investment.
Set Protocols is a non-custodial Protocol built on Ethereum that allows for the creation, management, and trading of Sets, ERC-20 tokens that represent a portfolio or basket of underlying assets.
Each Set operates and periodically rebalances its portfolio according to a strategy coded into its smart contract.
Set Protocol was announced in November 2017, and its first user-facing application, TokenSets, launched in April 2019.
Users can make use of professional tools for asset managers that help you create, manage, and grow your Set.
Users can create their own set directly using developer documentation and SDKs. Customize it with any ERC20 asset and strategy.
Users can use Set’s portfolio management tools to rebalance and tap into yield-generating opportunities.
Users can grow their own managed assets through Index Coop’s community and liquidity incentives.
TokenSets was born from the idea that structured products in crypto were going to be huge.
In finance, ETFs ten years ago had $700 billion cash invested. Today it’s $5.1 trillion, increasing by more than 7x. Combine this with crypto where anyone in the world with an internet connection can participate in the global financial system, it can become a powerful tool for wealth creation.
With this vision, the team raised funding from Craft Ventures, Vy Capital, DFJ, Social Capital, Kindred Ventures, Haystack Ventures, and move the needle forward on building smart financial products made for the cryptocurrency market
At the end of the day, we wanted to create a product that solved our own problem. We wanted to make a product that was smart enough to enter and exit out of positions at the right times based on market conditions, and do it without the emotional risk or pouring hours of time staring at charts for buy and sell signals. We obviously weren’t the only ones facing this issue, and when we asked our crypto friends, they overwhelmingly agreed that they’ve felt these pains
TokenSets was built to help people easily buy an asset that does all of the smart management for the user holding the Set. The magic for each Set you buy happens in the Set Protocol layer. The protocol monitors crypto market conditions and manages the assets based on if there’s a buy or sell signal depending on which strategy that's chosen. It helps remove the emotional risk from panic selling when prices are too low or fomo buying when prices are too high.
What TokenSets Does
TokenSets brings automated asset management to crypto. It offers two types of sets: social trading sets and robo sets. Each Set has its own criteria for when to rebalance the weight of its portfolio of assets. When a Set's rebalancing criteria are met, a grace period starts that lets holders opt-out prior to rebalancing. After the grace period, transfer of the TokenSets is paused until the rebalance is completed via a modified dutch auction process.
The Robo Sets option is a range of predefined Sets for traders to use, to fit into their desired trading strategies which come built into the set. They are hard-coded strategies including trend trading, range-bound, and buy and hold sets.
Social Trading Sets
The Social Trading Sets are strategies executed by human traders, they work in the same way as the Robo Trading Sets, the difference being is that they are performed by people. This type of set gives control of selecting the best performing traders to put your trust into. This option will become more popular as more tokens are added to TokenSets. Adding more tokens will offer more variety to traders and will differentiate the Social Sets from the Robo Sets.
Rebalancing is the process of realigning the weighting of a portfolio of assets. Sets periodically adjust their allocations when component token prices change enough, and enough time has passed through an on-chain rebalancing mechanism. Set rebalances do not use Kyber as a liquidity source, and instead, use open market participants to supply liquidity. This is to ensure that users don’t incur unnecessary and unpredictable amounts of slippage.
- Index Coop
The is a cooperative focused on building the greatest products and financial building blocks. It is most commonly known for creating, maintaining, and growing the (DPI), powered by Set Protocol.
- TokenSets UI
is an open-sourced UI that enables interactions with the Set Protocol system via Web3. With it, anyone can get started creating Set strategies and interacting with their Sets. There are also consumer flows for your strategy customers to issue your Strategy.
Set Protocol V2
Set Protocol V2 (“Set V2”) is an Ethereum-based protocol that enables the following:
- Multi-Asset: Set V2 enables the creation and implementation of strategies employing single asset, pairs, and 3+ assets
- Margin Trading: Set V2 allows traders to safely implement margin trading through Set’s native lending pool. This enables traders to take leveraged long and short positions and enables Set owners to mint/redeem positions.
- 3rd Party Protocol Support for Tokenized Positions: Set V2 enables Set traders to take advantage of yield opportunities from 3rd party lending protocols (e.g. Compound, Aave) and automated market makers (e.g. Balancer, Uniswap, Curve). In addition, Set V2 allows the retrieval of airdropped tokens if strategies are employing yield farming
- Trader Subscription and Performance Fees: Traders can implement time-based (subscription) and performance-based (profit) fees
- SetToken Compatibility: Set V2’s SetTokens are implemented using the ERC20 standard, are fully collateralized by the underlying, can be issued/redeemed similar to ETFs, are trustless, have specified components, units/natural unit, and are trustless as specified by the Set Protocol whitepaper.
- Protocol Fees: To allow for protocol sustainability, the Protocol will charge fees for protocol-native transactions such as trading via dutch auctions, borrowing using the protocol’s lending pool, and subscription/profit fee sharing.
- Protocol Token Distribution Support: In anticipation of a Protocol Token that requires on-chain distribution mechanisms, protocol design will anticipate the needs of token distribution logic.
- Manager Admin: Set V2 gives managers greater control over how and when Sets can be minted and by whom.
Set V2 employs a modular architecture consisting of a collection of modular smart contracts where additional components (e.g. modules, factories) can be seamlessly integrated or removed. This architecture is extensible, allowing new features and integrations to be easily added.
Set’s system consists of:
- SetToken Factories: SetTokenFactories are smart contracts that contain the template for creating SetTokens. There can be many factories, but we do not expect there to be many Factories given the extensibility of SetTokens.
- SetToken: SetTokens are smart contracts that implement the ERC20 standard and house the state of component composition, user balances, managers, and enabled modules. SetTokens house privileged functionality that is available only to its enabled Modules such as mint, burn, invoke, and reconfigure
- Modules: Modules are smart contracts appendable to SetTokens that enable functions such as trading, margining, and issuance functionality. Modules serve as the entry point for Module-related interactions and can hold a common state across SetTokens. Some modules include BasicIssuanceModule (allows minting/redeeming of Sets with Default Positions), TradeModule (allows DEX trading), WrapModule (allows components to be wrapped on external protocols such as Compound and AAVE), and StreamingFeeModule (allows managers to charge subscription fees).
- Resources: Resources are contracts that provide data, functionality, or permissions that can be drawn upon from Module, SetToken, or SetTokenCreator contracts. Some resources include the MasterPriceOracle (single contract to retrieve token price information) and IntegrationRegistry (a single contract that houses all adapter contracts for external protocol integrations. E.g. Kyber, 1Inch, AAVE, Compound etc).
- Controller: Houses valid SetTokens, Modules, Factories, Resources, user approvals, protocol fee settings, and governance functionality.
TokenSets platform has a very valuable use case in that is seen in the real world of finances in the form of asset-backed baskets and the amount of control the platform offers to traders makes it a nice tool to add to the DeFi tool-bag. The TokenSets team has taken that use case and successfully brought it to the blockchain.
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