We're happy to provide our third monthly Transparency Report, which is designed to bring some peace of mind to our users so that they know where their funds are being deployed. The allocations presented below are subject to change depending on strategy performance, future yield projections, and the evolution of the customer deposit mix.
*The report is subject to market changes and numbers shown are a rough estimation **Target asset allocation is for reference only and subject to change per market conditions and business strategies
As we continue to ramp up our platform feature rollouts, our investment strategies, yields, and allocations are also evolving. This report will cover updates to allocations, August yield changes, and what we’re working on in September.
Our target allocations from July remain unchanged and are as follows:
DeFi protocols: 40-65%
Centralized exchange (CEX): 25-50%
Self custody: 5-15%
CeFi platforms: 0%
As of the beginning of September, our actual allocations are as follows:
DeFi protocols: 43.93%
Centralized exchange (CEX): 50.6%
Self custody: 5.47%
CeFi platforms: 0%
DeFi: With some fine-tuning and process updates, we’ve increased our portfolio’s allocation to DeFi from 34% at the end of July - to 45% by the end of August. Most of this increase comes from a reduction in our self-custody levels as we refined our process for maintaining customer liquidity. This means better maximization of the percentage of assets that produce yield. Here were the yield adjustments in August, which occurred twice:
APE/SAND - These niche altcoins have highly-variable margin lending rates, and don’t have many DeFi use cases. SAND is in the same position.
BNB - Better than expected results from DeFi protocols have let us increase the yields for BNB during both updates.
BUSD - The smallest of the top 3 stablecoins meant it probably wouldn't yield the same as USDC/USDT, but we're pleased with the results.
ETH - The lift in yield here isn't huge, but we’re offering better rates than simple ETH 2.0 staking.
MATIC - MATIC had a significant reduction mid-month due to much lower staking yields, but we’ve regained some of that and hope to continue that direction.
SOL - Modest increase mostly due to lower liquidity needs.
XRP - This is another asset that remains hard to find attractive DeFi yields for. Mostly generated through highly-variable margin lending.
AXS - Ronin network staking yields continue to spiral downwards.
DAI - Reducing the risk exposure in DAI meant we had to lower yields on DAI, but its popularity as the decentralized stablecoin of choice means opportunities remain.
DOT - Polkadot has an unbonding period of 28 days while we provide daily liquidity for DOT tokens is the main cause for the large drop in yield. We’re exploring a lock option for DOT that will offer the option of higher yields while letting users choose their liquidity preferences.
MATIC - Polygon staking yields have also marched downwards.
USDC/USDT - The dreary crypto market conditions still weigh on demand for USDC & USDT. Sustainably increasing stablecoin yields is our focus for September.
We’re pretty happy with how competitive our yields are to market rates, but see the need to concentrate on updating stablecoin strategies for better results. We remain dedicated to generating sustainable yields that comply with our risk policies - and the risks required to generate 7%+ in stablecoins are currently not in line with our risk management policies.
CEX: We’re sitting just outside of our target for exposure to CEX counterparties (0.6% above target), so reducing our exposure remains a challenge under current market conditions.
Self Custody: This category represents all tokens in our operational wallets that provide liquidity to our customers. There has been significant reduction in this allocation, while maintaining the right levels of liquidity.
We believe in providing transparency to our users on the company's activities and aim to increase our users’ view into where their coins and tokens are and how they are performing. As always, we'd love to hear more feedback about the types of info you want.
All the best,
The Finblox Team