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district0x / district-proposals

Proposals for new districts to be built by the district0x Team.
https://vote.district0x.io/
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DP# 148 - Diversify - Cryptocurrency Asset Allocation & Diversification Tool #148

Open MCDForm opened 7 years ago

MCDForm commented 7 years ago

Name

Diversify - Cryptocurrency Asset Allocation & Diversification Tool

Purpose

To provide long term cryptocurrency investors with a simple tool to create and purchase a diversified assortment of cryptocurrency through a single transaction.

Description

Long term (buy & hold) investors are presented with many hurdles in the cryptocurrency market. This district will do the following to address these hurdles.

  1. Provide a way for a passive investor to choose an asset allocation based on perceived risk, sector, and other allocations created by community members.
  2. Provide investors an easy way to purchase their chose allocation with one click by using the 0x platform for decentralized exchange of ERC20 tokens.
  3. Reduce the cost of transaction by pooling buys and by utilizing decentralized exchanges.

Community members will create and curate asset allocations composed of ERC20 tokens. Members would decide on the tokens and percentages in each allocation and the possible combinations are countless. Allocations can be searched by type, perceived risk and by member reputation.

Example allocations could be:

Other Benefits

  1. When compared to similar products like Iconomi, Blackmoon, Bitquence, Prism
    • No management fee
    • No underlying token. All assets go directly to your wallet.
    • No withdrawal or sell fee since all assets move immediately to your wallet at time of purchase

Future Growth

  1. Utilizing the 0x (different than District0x) protocol will allow investors to continue investing as government regulations begin to hurt exchanges in the future.
  2. Allows casual and passive investors to invest easily using a method that is similar to what they are used to.
  3. As additional ERC20 tokens are added to the Ethereum platform a greater number of asset allocations can be generated by members.
  4. If future protocols are created that allow decentralized exchanges to purchase tokens from platforms other than ERC20 (e.g. NEO) they can be added to the district.
  5. The district could also define indexes for use by other sights and investors. For example: Large Cap, Small cap, All ERC20 Index,.

Fee Structure A small fee will be charged for each purchase (~.1%) and will be distributed to the Asset Allocation creator and the District0x voters. A static fee may promote more use.

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ghost commented 7 years ago

A platform that allows users to put together a basket of goods and share it with others to replicate and trade the same basket with minimal fees sounds and low overhead pretty incredible! Not only would this lower the barrier to entry into the cryptocurrency world it would also cut significant overhead off the day to day management required when accounting for different exchanges/wallets/storage/etc.

Charging a small fee would certainly be worth it and having a mechanism that allows the creator of each basket to get rewarded sounds like a good idea. Should this reward be based on performance of the basket or would it be a fixed amount per X tokens? Also, would there need to be a vetting process for those making each basket because once enough people join and start creating baskets I would imagine that duplicate offerings will exist and then it would be a popularity contest. Or would it be better/possible to take the curation market approach for each baskets to ensure fairness among basket proposals?

Great idea!

MCDForm commented 7 years ago

Thanks for the feedback. When I first got into crypto I was overwhelmed by the number of options and the lack of clear information. I would have went for something like this if it was available at a reasonable price.

Your questions are all questions that I have asked myself. Initially I thought that the reputation score could be tied to the performance of each creators baskets. Using that type of system could create a tiered payment system based on reputation level.

There would definitely need to be a vetting system, mostly to keep the quantity manageable for the user. A possibility is that those that approve baskets could also collect a small fee from the fee pool. Their job could be to make sure the basket is not a duplicate, to verify if the category is correct, etc. Other approaches could be used such as a handful of basic baskets set by the District and a limited number of outside creators that pay to participate (curation market possibility). The reputation score could also be used to remove creators although this would create the problem of eliminating some baskets that offer the least positive correlation to the current most successful baskets.

I would love more suggestions.

drreen commented 7 years ago

Great idea...I am looking exactly for such a thing.

The key to success here is to use metrics beyond market cap and give users the possibility to choose their assets based on for example liquidity weighted market cap

For example the CRIX crypto index is following advanced scientific methods used in stock index funds: http://crix.hu-berlin.de/

MCDForm commented 7 years ago

@drreen Great input. A liquidity weighted market cap asset group would be perfect for this. There are really unlimited options, e.g. inverse market cap weighted, new token asset group, etc. I know that liquidity is a major analytic in this space. Thanks for the link. I think there's a huge opening for someone to open the "official" crypto index sight. Pure index listing only no trading.

MCDForm commented 7 years ago

If anyone has suggestions for what to call the allocations (baskets, arrays, etc), investors, Oracles (allocation creators) that would be helpful.