DeFi
DeFi for the masses
Valentin Pletnev was frustrated by economies that recklessly print money and intensify the struggle of their citizens. In cryptography, he found ungoverned ground to make changes. He therefore co-founded Quasar financingA decentralized finance (DeFi) project in the Cosmos ecosystem with plans for chain-agnostic investment opportunities.
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Although crypto offers open and transparent monetary policies, investing in it is not for the meek. Investment options range from monkey JPEGs to labyrinthine, multi-tiered yield maximization strategies that match your coins across 18 different global platforms to harvest x% more of something. And in the base case, investing in primates yields better results. A select few can navigate it fluently, but the balance of humanity cannot be expected to analyze the spread of crypto opportunities.
To help average users, crypto entrepreneurs have designed vault strategies. Quasar hopes to spread them across crypto ecosystems. “Increasing capital provision for professional asset managers is not easy. We are leveraging the inherent advantages of DeFi to enable a scalable global exodus of capital,” Pletnev said in an interview with CoinDesk.
An Introduction to DeFi Vaults
Vaults are investment vessels designed by experts for use by novices. They link often complex trading strategies to the capital of individual investors. Passive investors see their balances grow (hopefully) through previously inaccessible investment strategies. And the designers of these strategies take a share of the return on capital investment that they could not have obtained otherwise.
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Vaults often take on extremely complex financial engineering to extract the highest possible return. “The vault allows you to pool money and achieve a common goal,” Pletnev said. “Strategies can be arbitrage and delta neutral strategies, leveraged positions in predictive buys, predictive sells, literally anything.”
Chests are nothing new. They are at the heart of now-legacy protocols like Yearn Finance, which helped spark the DeFi bull run of 2020. Quasar hopes to create a product for the next generation of yield strategies that cross crypto ecosystems.
Towards a multi-blockchain world
Quasar will use the Inter-Blockchain Communication Protocol (IBC) to expand the ecosystem that vault strategies can traverse. Often, decentralized finance applications are limited to their native chain – the separate ecosystems limit the strategies that DeFi yield artisans can develop.
Bringing ecosystems together is desirable because it increases available liquidity and provides opportunities for arbitrage between ecosystems. Quasar could eventually offer vault strategies covering, among others, Ethereum and Cosmos.
Good
When COVID-19 hit, Pletnev’s parents lent him a large sum of money to invest. His investments have performed well enough that his neighbors want to deposit into this local “fund” – but there are laws that prohibit this sort of thing.
Access to financial opportunity and literacy, even in our commercial age, are luxuries that are often overlooked – something Pletnev knows firsthand. Both of his parents were born in former Soviet states. “It’s really crazy how very few people in the West are aware of the kind of loops that people have to go through to get into their system,” he said.
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From there, the appeal of DeFi is obvious. Government barriers and the inconvenience and cost of financial advice and services from the physical world create a market for easily accessible DeFi strategies. Crypto already provides global, permissionless access to funds and transfers – but if only the most savvy users can access the highest-paying opportunities, the social good will be limited. Quasar hopes to expand both the range of vault strategies offered and the number of people with access to them.
If all goes according to plan, Quasar will go live on Cosmos Mainnet towards the end of 2022, connecting complete novices to some of the most complex opportunities in DeFi. “I want my mother to use the app,” Pletnev said.