17 August 2022
2 min read
Crypto Structured Products
Structured products are not new. They enable retail investors’ access to derivatives and other complex financial instruments. Usually the initial principal invested is guaranteed in these products. They are complex in nature and normally managed by institutional wealth managers. Crypto Structured Products are different in a lot of ways, but the fundamental principle of hedging risks and optimising returns stays the same. With Decentralised Finance increasingly gaining traction, crypto structured products certainly have a future. Several blockchain based projects are working towards making it accessible to more and more retail investors. Composable blockchain networks have made it possible to design combined products of underlying sub-assets
Value driven crypto investments
Easy money making, which might be a goal for a lot of individuals investing in crypto initially, is not the right vision to begin with. Like any other conventional investment, sustained growth in the wealth invested in crypto is an imperative goal. Increasingly there is a shift in the core functionality of crypto protocols to achieve this. Projects in this space are evolving new strategies and functionalities to bind with investors who see value in the longer run. This draws investors’ attention towards the core value of a project. They stick to the investment for a longer period of time. This helps in many ways. One of which is - changing the perception towards investments in crypto. Serious investors participate in the market, create value, take part in the governance and get adequately rewarded. Thus, eliminating pump and dumb schemes, quick money making tactics and other fraudulent intentions. The influencers in the market or large ticket size investors do not get to swing the market as per their will. And due to these value driven crypto investments, perhaps soon no more shall it be referred to gambling.
Risk vs Reward
Composable blockchain networks have enabled interesting combinations of various crypto assets which help create a safer crypto environment. Swaps, options and a few other derivatives have been engineered to mitigate the risk. Crypto structured products can help achieve the alpha, beat the market for best return. Risk adjusted, high yielding crypto structured products with decentralised on chain management certainly is the way forward for a sustained growth in crypto wealth.
Recently, value driven models in crypto have captured the attention of investors. It is a shift towards a more sustainable model. Besides, Web3 offers a plethora of opportunities for not only investment into crypto structured products but also allowing alpha creators to design their own. These DeFi projects have a governance model that selects the best of all structured products through voting. This is a space contributed and shared by web3 minds, alpha creators, and other crypto investors. Certainly it opens up scope for more reliable, less volatile and value driven crypto structured products to enter the market.