Entrepreneurs in the white-hot arena of decentralized finance have used cryptocurrency technologies to build automatic systems that might someday challenge or even supplant traditional banks and exchanges.
Now, DeFi is taking on the asset-management industry, and already launching a range of new investment products designed to capitalize on its own success.
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One such project is PieDAO, a so-called decentralized autonomous organization conceived and developed by a group of DeFi developers headed by Berlin-based DexLab . Earlier this year PieDAO raised about $5 million through a sale of digital tokens, known as DOUGHs. The network went live in March – just as bitcoin and most traditional financial markets like stocks were crashing due to the spreading global pandemic.
The PieDAO platform, a decentralized application built atop the Ethereum blockchain, produces its own incarnation of digital tokens called “pies.” They work like tokenized investment funds whose value is linked to a basket of other digital tokens, which in turn are sourced from a decentralized liquidity pool known as Balancer.
In April the project rolled out its first pie, called BTC++, which is backed by tokenized versions of bitcoin. And stakeholders in the project have since pushed out a second pie called USD++, backed by U.S. dollar-linked stablecoins.
But PieDAO’s first real push toward full decentralization started last month, when investors were allowed to start buying DOUGHs directly from the project in exchange for ether, the native token of the Ethereum blockchain, with a minimum deposit worth roughly $500. For now, DOUGHs aren’t publicly traded.
Such tokenized vehicles have been described by analysts as the digital-asset version of exchange-traded funds, or ETFs, a type of investment vehicle in traditional financial markets that can be traded like stocks.
“It’s very fascinating to see more experiments to re-invent financial applications we have never seen before,” Soravis Srinawakoon, co-founder and CEO of Band Protocol, a cross-chain data oracle for the DeFi space, wrote in a Telegram message.
PieDAO isn’t the first ETF-like provider for the digital asset space. The Set Protocol, also on Ethereum, allows users to invest or even create their own baskets of assets called “Sets,” which like Pie are fully tokenized. Another option, according to a report Monday from the cryptocurrency analysis firm Delphi Digital, is the sDEFI token from Synthetix.
But PieDAO takes the tokenization concept a step further, since the DOUGHs give…