We're happy to provide our seventh 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
The echoes of UST/Luna, Celsius, and FTX continue to reverberate across the crypto world, although they are getting softer. However, the closure of Midas Investments' platform is still having an impact. As we close the chapter on 2022, we can look forward to a more stable and stronger 2023 to rebuild from.
Finblox has no customer exposure to Midas Investments.
Nevertheless, risk is both unavoidable but also desirable in the right amounts. Whether your coins are in super cold storage or the newest of degen micro-cap projects, diversification and exposure management are straightforward tools to help limit the impact of any single risk. There is room in the world for far more sophisticated risk management techniques but the likes of LTCM and the GFC show that simplicity and prudence have their place.
Depressed market-making activity continues with sustained wider spreads, less market depth and more price volatility. It appears no other major exchanges have collapsed but the speculation and rumor mill grind onward. We have limited exposure to Cefi exchanges but strongly limit the capital and time exposure.
DeFi Allocation Increase & Risks
All current customer assets remain in DeFi protocols/projects or self-custody wallets. Defi remains at risk of protocol and smart contract exploits, as well as more sinister targeted social engineering attacks as was recently seen with the theft of several BAYC NFTs.
Real Yield has been one of the major talking points in 2022, where sustainable yields are generated. In our first transparency report, we mentioned our strategy of being a sustainable yield platform, which meant we wouldn’t always be able to offer top market rates and rely mainly on token emissions. We still have asset placements with token emissions that form part of the yield but rate that component of the total yield as inferior to yield from trading or LP returns.
December Yield Changes
As we foreshadowed last month, some of our assets generate no yield due to no opportunities that fit within our risk policy. (i.e., no leverage, minimal crypto pair AMM LP tokens). Other tokens were reduced as well. The general market environment means lower trading and lending volumes. This impacts the yields we are able to offer.
We did not make any significant changes to our allocations in December. Our self-custody percentage went down as we deployed some more assets to Defi.
Our target allocations for customer assets that were initially set in July and updated in November 2022 have not changed:
DeFi protocols: 40-90%
Centralized exchange (CEX): 0-5% (used for temporary asset bridging between networks, i.e. USDC_ETH → USDC_POLY)
Self custody: 5-15%
CeFi platforms: 0%
As of the end of December, our allocations are as follows:
DeFi protocols: 56%
Centralized exchange (CEX): 0%
Self custody: 44%
CeFi platforms: 0%
We have more exciting plans for 2023, so stay tuned!
We believe in providing transparency to our users on the company's activities and aim to increase our users’ view of 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