Decentralized Finance to ETF: the New Logic of on-chain Asset Allocation

Introduction: From Geek Toy to Wall Street Darling

In recent years, DeFi( has become a buzzword in the financial sector. A few years ago, the financial tools built by geeks on Ethereum are now attracting the attention of traditional financial giants on Wall Street.

From 2020 to 2021, the locked value in the DeFi market reached a peak of 178 billion USD, soaring from over a billion USD with a TVL of ). Protocols like Uniswap and Aave became popular projects in the global crypto space. However, for ordinary investors, DeFi still resembles a labyrinth. Complicated wallet operations, difficult-to-understand smart contracts, and security risks of assets have resulted in less than 5% of traditional financial institutions truly entering the space.

In 2021, a new tool specifically designed to address "how to easily invest in Decentralized Finance" emerged - the decentralized ETF ( DeETF ). It combines the traditional ETF concept with blockchain transparency, retaining the convenience of traditional funds while also considering the high growth potential of DeFi assets. DeETF has become a bridge connecting DeFi and traditional investors.

Part One: The Development History of DeFi to ETF

( ) one ### early exploration ( 2017-2019 )

In 2017-2018, projects such as MakerDAO and Compound first demonstrated the potential of Decentralized Finance. The automated market maker (AMM) model launched by Uniswap simplified on-chain trading. By the end of 2019, the TVL of DeFi was nearing 600 million USD.

( ) the market explosion and concept formation ### 2020-2021(

The pandemic in 2020 drove massive capital inflows into the cryptocurrency market, with DeFi TVL increasing from $1 billion to $178 billion. New models such as liquidity mining and yield farming became popular, but they also exposed significant user participation barriers.

Some traditional financial companies are starting to position themselves. Canadian listed company DeFi Technologies Inc. has launched financial products that track mainstream Decentralized Finance protocols, allowing users to easily participate in DeFi investment on traditional exchanges. Decentralized platforms like DeETF.org are also beginning to experiment with managing ETF portfolios using smart contracts.

) ( The market reshuffle and model maturity ) 2022-2023###

At the beginning of 2022, events such as the collapse of Terra and the bankruptcy of FTX caused the DeFi market's TVL to drop from $178 billion to $40 billion. Market fluctuations prompted a demand for safer and more transparent investment tools, promoting the development and maturation of ETFs.

Two clear modes are formed:

1. Traditional financial channels: Institutions such as DeFi Technologies expand their product lines by listing ETP products on traditional exchanges.
2. on-chain decentralized model: Platforms like DeETF.org and Sosovalue achieve asset management and portfolio trading through smart contracts.

( ) Four ( Advantages and Challenges

Advantages of DeFi ETF:

• High usability, low participation threshold
• More transparent and flexible investment
• Risk control and diversified investment

Challenge:

• The regulatory environment is uncertain.
• Smart Contract Security Risks

Despite the challenges, DeETF is still seen as an important innovation for the future of financial markets, making asset management more democratic and intelligent.

Part Two: The Rise of Emerging Projects, DeETF Blossoms Everywhere

) ### a diverse exploration

The DeFi ETF evolves along two paths:

1. Traditional finance path: Issuing ETP through formal exchanges
2. Pure on-chain decentralized platforms: such as DeETF.org, Sosovalue, etc.

In terms of institutional pathways, Securitize and others are tokenizing traditional financial assets and introducing them to on-chain markets.

( the new trend of smart asset portfolios

YAMA)Yamaswap( cutting into intelligent DeETF: building an AI-driven asset allocation recommendation system, automatically generating recommended portfolios after user input.

YAMA features:

• Running on Solana and Base, reducing usage costs
• Smart contract supports a combination of full on-chain public
• Emphasize the experience of "self-deployment" + "AI portfolio recommendation"

![From DeFi to DeETF: Who is quietly rewriting the underlying logic of DeFi asset allocation?])https://img-cdn.gateio.im/webp-social/moments-c776eac7159272566b33ef952ce47c19.webp###

( ) three ( DeFi ETF track fork evolution

Different routes:

• DeETF.org: Emphasize user self-configuration
• Sosovalue: Launch of on-chain themed ETF
• Index Coop: Focused on standard index products
• DeFi Technologies, Securitize: Compliance exploration aimed at retail and institutional investors

New trend: a smarter, automated asset allocation experience. Platforms like YAMA are transitioning from "pure tools" to "strategy providers".

![From Decentralized Finance to ETF: Who is quietly rewriting the underlying logic of DeFi asset allocation?])https://img-cdn.gateio.im/webp-social/moments-3a89d6306d8a958ae28f6d1595010167.webp(

Conclusion: DeETF Reshaping the Future of On-Chain Asset Management

DeETF, as an upgraded version of the user experience for Decentralized Finance, is tasked with popularization and lowering the barriers to entry. In the next 5 years, DeETF is expected to become one of the most important application scenarios for on-chain asset management.

Different types of explorers:

• DeFi Technologies: Entering from traditional finance, issuing compliant crypto ETP products
• DeETF.org: Adhere to on-chain autonomy, emphasizing free combination and transparency.
• YAMA: Introduce AI-assisted portfolio construction for intelligent and personalized asset management.

DeETF is redefining on-chain asset management, injecting new imagination into financial freedom, transparency, and inclusiveness. The future of on-chain asset management is expected to become a capability that any ordinary investor can master.

![From Decentralized Finance to ETF: Who is quietly rewriting the underlying logic of DeFi asset allocation?])https://img-cdn.gateio.im/webp-social/moments-c0b4b678c7be2697fc689ff745585688.webp###