Introducing Active Yield Funds
After receiving a final third party audit report and conducting extensive testing over the last week, the Stacker Ventures ETH, WBTC, and USDC Active Yield Funds are live!
Active Yield Funds provide investors with a simple and transparent option to access investment-grade yields in DeFi.
With gas costs barring most DeFi users from turning a profit, a tough learning curve for the average crypto investor, and a dangerous lack of transparency from centralized yield products (which now have over $30 billion in AUM), we see a huge opportunity to build something better.
Active Yield Funds are managed, yield-seeking funds that retain decentralized control of capital while efficiently investing pooled funds in whitelisted strategies. These funds capitalize on the highest investment-grade yield, possibly even before the yield aggregators do.
Stacker Ventures has been focused on designing frameworks for managing pooled capital on Ethereum, starting with the launch of the first blockchain-native, closed-end venture capital fund (Fund 1).
Now that the Fund 1 framework and tech is complete, we are developing a managed DeFi fund that will seek the highest yields while still allowing investors in the fund to retain ownership and control of their funds.
The idea is to pool capital in a decentralized fund, which is invests in strategies by a Managing Farmer. While the Managing Farmer can make decisions as to what strategies these funds are invested in, these strategies must adhere to a whitelist managed by STACK holders. Similar to Fund 1, all assets will remain within the fund contract, meaning the Managing Farmer never takes custody of any assets.
These funds are rolling/open-end, allowing investors to withdraw their capital when they wish. Through the use of a rebalance token, ownership in the fund is tracked, and yield sold for the base currency (i.e. ETH) during a weekly rebalance, increasing investors’ balances. For example, if you owned 5 stackETH after investing 5 ETH in the fund, after this week’s rebalance you might own 5.023 stackETH. You could then exchange them 1:1 with ETH.
This might be thought of as a more decentralized, transparent alternative to BlockFi.
Centralized crypto interest accounts such as those offered by BlockFi, Celsius, Nexo and Crypto.com have seen rapid growth recently. However, they suffer from a massive lack of transparency, are not open to all users, and offer little community input or oversight. Stacker Venture’s Active Yield Funds solve these issues while offering significantly better returns. As we continue to turn the corner on web3 adoption, we expect an increasing number of individuals and institutions to begin seeking safe, decentralized solutions to generate yield.
…or a safer and more efficient alternative to current DeFi yield aggregators
Currently, fully code-based automated yield aggregators are complex to develop and prone to exploits. Management by an expert Farmer greatly reduces attack surface area and enables funds to efficiently be moved into complex strategies.
Because no additional vaults need to be built for each strategy, this fund structure could effectively be used to front-run yield aggregator strategies as their vaults are being developed, tested, and audited, thus generating superior returns over time with limited additional risk.
Lastly, depositing into these Active Yield Funds will be much simpler user experience, opening up the market to users who may be scared off by the complexity of interacting with liquidity pools and other sophisticated protocols.
Stacker Venture’s Active Yield Funds blend human management with code-based capital controls to create an easy-to-use method of generating lasting high returns.