As decentralized finance (DeFi) has matured into an industry with over $200 billion locked in protocols, so has the risk appetite across the spectrum of investors. These varying risk tolerance levels call for a more diversified range of asset management products to meet investors’ demands.
Bella Protocol is a DeFi asset management platform that claims to have found a solution to this issue. The platform aims to be the “BlackRock of crypto wealth management” with a suite of products that seek to simplify the yield farming process and eliminate gas fees.
Bella Virtuoso – the next phase of the Bella Protocol – is a permissionless DeFi asset management platform that will connect investors with the best Liquidity Provider (LP) strategies on Uniswap v3. Bella describes Uniswap v3 as a “game-changer” in efficient capital utilization, but one that comes at the cost of considerably high barriers to entry.
Although Uniswap v3 lets users customize the price range for providing liquidity, there is no real indicator that serves to guide LPs when setting up a price range. In fact, Bella claims that because they are so concerned with managing impermanent loss, most LPs fail to consider that the concentrated liquidity of Uniswap v3 will significantly reduce their exposure. Moreover, there is often a high gas fee involved when it comes to rebalancing a portfolio.
Bella Virtuoso lets DeFi strategists and investors benefit from their ideal strategies using backtesting and implementation on a built-in Uniswap v3 simulator.
Objectives aligned
The idea behind Bella Virtuoso is to provide an inclusive solution for every type of investor while celebrating the wisdom of quant strategy composers. Professional traders and DeFi strategists earn a share of the profit that the average investor generates from using their strategies.
Meanwhile, investors can choose the strategy best suited to their risk tolerance level from the range of investment strategies on offer.
“Everyone will be able to have fair access to premier asset management services. Uniswap v3 offers a phenomenal tool to increase capital efficiency. By building Bella Virtuoso, we are leveraging the wisdom of community quant developers to help investors truly tap in the capital-efficiency and flexibility of Uniswap v3,” said Felix Xu, a core developer at Bella Protocol.
An essential component in achieving this will be the deployment of Tuner – a programmatic Uniswap v3 simulator that allows strategy builders to backtest their strategies with mainnet data.
Tuner independently reproduces the intricate design and implementation of Uniswap v3 on a transaction-by-transaction basis without the Ethereum virtual machine (EVM). The company explains that the tool can fast-forward and rewind transactions and even take or recover from a snapshot. In this way, the platform says that strategists will be able to perform “near-to-perfect” backtesting with on-chain historical data.
Looking ahead
In the near future, Bella Protocol intends to include a number of platform updates that will further benefit users. In Q1 2022, the platform will include a “strategy execution bot” to automatically adjust the price range of concentrated liquidity. After this is deployed, investors will no longer be required to manually adjust the price range to maximize the fund’s utilization rate, saving time and gas fee.
In Q2 and Q3, the platform says its focus will be on the bigger picture of connecting and educating users while also curating quant strategies. Bella says it will include a smart contract-based fund management system to safeguard user funds. It will also feature a simplified user interface with visualizations of past performance, backtesting historicals, and metrics such as Sharpe Ratio and Sortino Ratio.
For now, however, Bella Protocol’s existing product – Bella Flex Savings v2 running on Curve.fi – is nearing $30 million in total value locked (TVL). In this new version, the platform says it can offer an annual percentage yield (APY) as high as 30% because all returns are automatically reinvested into underlying protocols to compound returns.
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