Five Ways to Manage Volatility in DeFi
Volatility in the crypto and DeFi markets is not unheard of. The wild west approach of crypto paints countless stories of cryptocurrencies rising and falling double-digit percentages within hours.
An Entrepreneur article summarizes the recent roller coaster action of the crypto market:
Over the past 12 months alone, the total cryptocurrency market capitalization ballooned from $360 billion to $2 trillion. This aggressive growth culminated with the cryptocurrency market capitalization topping $2.43 trillion a mere three months ago, only to take a steep 33% haircut soon after. This translated into more than $820 million eliminated from the cryptocurrency market over a 12-day span.
Despite the steep volatility, it also creates opportunities to employ new creative ways for earning yield. The article points out 5 keys ways to manage such volatility:
- Smart Contract Automation: DeFi platforms such as 3Key Technologies leverage automation to rebalance investments and manage risk in a timely manner.
- Diversified exposure: 3Key Technologies’ LYRA algorithm constantly explores the myriad of options available for diversifying across yield farming, staking and other forms of DeFi activities.
- New borrowing and lending terms: smarter ways to lend and borrow with several collateralization techniques will continue to improve.
- Protected investments: hedge contracts are useful in times of unpredictable markets to mitigate losses. 3Key’s smart contract audit features are another example of going the extra step to protecting investments, by choosing methods that are safe from rug pulls.
- All-in-one interfaces: “Yield farming would be incredibly difficult without the advent of DeFi aggregators, as the yield farmer would need to toggle multiple lending pools and DEXs to manually compare rates, search available token options and migrate funds.”
One-click solutions to simplify DeFi and diversify exposure to hidden yield generation opportunities are just some of the advantages of 3Key Technologies. As the space continues to evolve, it’s no surprise that more users are seeking user friendly solutions for DeFi.
