We’re glad you asked. Yield App is committed to providing some of the most competitive annual percentage yields (APYs) in the market. In our pursuit of transparency, we’re dedicated to revealing the inner workings of how Yield App generates returns and disburses its annual interest rates to our valued users.
We believe that understanding the specific investment portfolios we utilize empowers you to make informed financial decisions, while also contributing to our mission of enabling financial freedom. Our emphasis on rigorous due diligence and strategic diversification ensures that you can have peace of mind, knowing that your assets are secure within our platform.
What portfolios does Yield App offer?
Yield App currently offers users access to market-leading interest rates on BTC, ETH, BNB, AVAX, DAI, USDC, TUSD, USDT, MATIC, SOL, DOT, ATOM, XRP and LINK with more in the pipeline. We combine decentralized finance (DeFi) strategies with allocations to external liquid alpha market neutral fund managers to deliver fully diversified, risk-managed portfolios that are able to ensure we meet our obligations and provide secure returns to our users.
This strategy allows us to reduce the overall costs that an individual would incur trading on their own, and reduces the complexities, risk and time involved in building your own portfolio. It particularly allows users to save on network (gas) fees - which can take up a significant chunk in a DeFi portfolio and even be prohibitive for smaller-sized allocations - whilst combining the blended returns generated through market leading digital asset funds that are not typically open or available to individual investors.
Yield App has developed and established a broad network of specialist industry participants and is therefore able to curate bespoke opportunities in partnership with industry-leading quant funds, miners, market makers and other proven DeFi managers.
Our multi-strategy, diversified portfolio allocation model spreads risk and smooths interest volatility, allowing us to offer earnings that often outperform other offerings available in the market, without compromising capital protection. As Yield App grows and our licensing objectives continue to be met, users will be able to access new products and services that meet their objectives and risk profile.
Allocation strategies
Utilizing a proprietary risk analysis model in conjunction with a best of breed, 24/7 data scraping tool, the DeFi portfolio team deploys capital into blue-chip yield generating protocols rapidly and without compromising the security of users’ assets.
We deploy capital to highly liquid systematic trading strategies utilizing different tenors and signaling mechanisms across a range of proven external managers with strong governance procedures in place.
Moreover, fragmented markets provide many opportunities for market-making and liquidity provision. With more derivative products being created, they introduce further arbitrage and relative value opportunities which contribute to our returns.
Who are the portfolio managers?
Yield App has a core team of experts, our Portfolio Managers, who work closely with our technology, risk and software engineering teams.
Our Chief Investment Officer, Lucas Kiely, manages the overall allocation strategy. Lucas has spent 25 years in financial services, initially designing and developing risk management and trading systems for two of the world’s biggest investment banks before moving into trading complex derivatives and managing quantitative investment strategies.
Yield App also works with established, trusted third-party service providers including research houses, smart contract auditors, risk modeling software tools, alongside licensed exchanges to deploy and manage assets. Our partnerships are driven by an emphasis on due diligence and risk management to identify suitable partners and opportunities. Working with advisors such as Kroll and Simmons & Simmons amongst many others, we pride ourselves on the attention to detail undertaken across all elements of our portfolio activities to ensure preservation of capital first and foremost.
Other advisors include:
Top blockchain auditing and accounting firm Armanino, which produces independent audits of our balance sheet reserves.
Decentralized risk modeling platform, Credmark, which helps us assess risk across opportunities in the marketplace.
Analysis and due diligence
The DeFi team uses a proprietary automated social media, sentiment and news capture/analysis tool, which provides what we refer to internally as the “heartbeat” of DeFi. This aggregation of thoughtfully curated information has enabled our DeFi team to enhance operational agility, forecasting market saturation metrics, reward decay, governance proposals and more, well ahead of time.
In addition, we undertake extensive institutional grade due diligence on all of our external managers that provide a complimentary mix of market neutral quantitative trading, spread trading and basis arbitrage strategies.
Risk assessment
We follow a five-pillar risk assessment strategy, which plots and scores dozens of key data risk points, taking account of:
Smart contract risk
Platform risk
Counterparty risk
Financial risk
Credit risk
These are continuously regression tested to ensure that all protocols and pools that are analyzed by our portfolio managers meet our rigorous security and alpha generation thresholds. These are then approved by the investment committee and hard coded into our portfolio management system. We interact directly with whitelisted smart contracts, removing the need to utilize third party wallets.
Diversification
As mentioned above, diversification is a key part of our strategy, allowing us to minimize volatility while protecting overall portfolio returns and our users’ assets. Our diversification strategy encompasses our DeFi allocations and our expanding third party external manager allocations, led by our CIO, Lucas Kiely.
The overall asset allocation weightings are continually reviewed to meet our investment objectives. Typically, our portfolios are spread across 20 to 40 positions and are further diversified within these exposures by the base assets. The benefits of this approach significantly reduces overall portfolio risk exposure into single points of failure.
How are APYs paid?
Each user’s daily APY gains are calculated every 24 hours based on the value of their assets held on the platform. In Version 2 (V2) of our platform, users can choose whether they want these earnings to be paid into their Yield App wallets or auto-compound rewards, so they are automatically redeployed into the specific portfolio.
Our annual interest rates are regularly adjusted to reflect changing market conditions, with the maximum total APY available at Yield App now sitting at 15%. We will continue to adjust rates both up and down depending on market conditions to ensure that our annualized rates are sustainable, which remains our highest priority.
As our strategies evolve and expand, we will ensure we keep our users well-informed by providing timely updates on the performance and management of your assets. Diversification, thorough due diligence and comprehensive risk management will always remain the key pillars of our offering to ensure we bring market-beating interest rates to all our users.
Do you want to earn the market's leading rates on digital assets? Sign up for a Yield App account today!
DISCLAIMER: The content of this article does not constitute financial advice and is for informational purposes only. The price of digital assets can go down as well as up, and you may lose all of your capital. Investors should consult a professional advisor before making any investment decisions.
