Demystifying DeFi: DeFi Index Tokens

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Pillar Project Defi

If you’re looking to get exposure to DeFi, but still want to spread your eggs into as many baskets as you can?  There’s a special kind of asset for it. The special kind of asset I’m referring to is Index Tokens.

With the launch of Etherum 2.0, DeFi is set to blow past it’s 14 Billion dollars in this coming year.  So you’ll be right to jump on the DeFi train now. Also to make sure you stay in the know, check back on Blogger.io for more information and to follow us on Facebook as we continue to explore DeFi.  Especially if you’re just beginning your DeFi journey.  We’ll talk more about lending in DeFi in another article.  In particular how AAVE works.

DeFi Index TokensToday we’re taking it a step further by discussing how to get exposure to a lot of DeFi products at once.  Without having to just thru hundreds of DeFi projects at once out there.

Before we continue, it’s always good to remind you that this is not financial advice.  This content is for educational purposes only.  With that said, let’s move on!

Much like indexes in the non-crypto world, crypto index tokens are tokens composed of other tokens and every index tokens have a team of highly intelligent and reputable people or automated systems.  Sometimes both!  Deciding what token will compose the index token.

When you acquire index tokens, you’re getting exposure to a whole bunch of DeFi projects at once, taking most of the hassle out of the equation.  Different DeFi index tokens will have different rules for which tokens are integrated, how long the project has existed, is the code audited, potential growth, etc.

Do not be surprised in case you don’t find the hottest food token that everyone in the depts of Twitter is yapping about.  However instead, you will most definitely find established and reputable names in DeFi composing those index tokens.

DeFi PulseOne example of a DeFi index token is the DeFi Pulse Index, or DPI.  This Index token is a result of a collaboration between token sets and DeFi Pulse and has a strict set of rules for integrating tokens into its list.  DPI is composed of staples of DeFi.  AAVE, Uniswap, Synthetix, Urn, and others.

The minds behind DPI use both an automated and human methodology to adjust the ratio of tokens and which tokens compose it. So it is common to see things shift around.  Such ” rebalancing ” happens so that index tokens can provide token hodlers the best yields possible.

Another Index token example is SDeFi.  An index token by the folks at Synthetix.  Like the DeFi Pulse Index, this one has a solid list of projects that compose it.  Names like Compound, Maker, Kyber, and Synthetix themselves among others.

What sets SDeFi’s list apart, however, it is curated by the Synthetix community, and the list changes again so that the Index token can yield the best possible outcome.

If you’re wondering how to invest in multiple projects these I’d say are a great way to do that the easy way.  If you like going the easy way, you should be made aware that you can find both SDeFi and DPI in the offers engine within the Pillar wallet offers engine.

Don’t have your Pillar wallet yet?  Just click here, or follow us on the links below, and get it.  I hope this article has helped you see how DeFi does not need to be complicated and another awesome and simple way you can get involved.

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