Plethori

The First Decentralized Cross-Chain Investment Platform for Open Trading and Creation of Trustless ETFs.

Abstract

Exchange-traded funds (ETFs) were established around 30 years ago and have evolved from being a moderately unknown asset class to a type of investment vehicle that has attracted trillions of dollars. By understanding ETFs, investors can quickly gain a valuable tool to increase their exposure to multiple assets.

ETFs benefit holders in multiple forms. Investors can easily obtain diversification, increasing their exposure to a group of stocks like the S&P 500 index with a single transaction.

Not only that, but they can lower transaction expenses and managerial fees by holding these funds, as many of them are passively managed and do not carry the same charges required by actively managed investment funds.

Finally, ETFs can grant access to investment strategies traditionally only available through hedge funds, such as event-driven and arbitrage strategies.

Crypto ETFs have all these advantages, plus some more.

A Broad Overview of Crypto ETFs

Data: Statista,DefiPulse, Indexcoop

Crypto ETFs are tokens that track a set of other tokens. By investing in one ETF, investors get diversified exposure to the performance of the portfolio of tokens contained within. The degree of diversification and the specific exposure depends on the ETF methodology, which will be explored further below.

As shown in the chart above, it is anticipated that crypto ETFs have the potential to surpass the total value locked (TVL) in traditional ETF’s. At the time of writing, the TVL in crypto ETFs has not yet reached $100 million. The total value locked into Traditional ETFs: approximately $7.5T.

As traditional financial markets begin to feel the pressure of a declining global economy, investors all over the world are turning their attention to the rapidly expanding decentralized alternative. This increase in demand has opened the market to the idea of accommodating some of the more complex instruments that have previously only existed within the traditional financial industry.

Why Are Crypto ETFs Beneficial?

The benefits of indices are manifold. Most apparent is the outsourcing of trading strategies to the index manager. Users then don’t have to monitor the market actively and rebalance their portfolio. Investors may choose to participate in a particular ETF, determined to match their risk profile. Once initiated, trading is handled by the ETF.

The second significant advantage is in reduced transaction fee costs. The current levels of gas fees on the Ethereum network effectively exclude low balance participants from Ethereum DeFi. For instance, rebalancing a portfolio of ten different assets monthly can cost thousands of dollars per year. In an ETF, rebalancing happens for all participants at once, effectively spreading each user’s cost.

Crypto ETFs store the underlying assets in a smart contract. By enabling interaction with the smart contract, anyone can provide the underlying tokens’ liquidity to the smart contract, thereby minting a new ETF share. The goal of Plethori is to allow for personalized ETFs to be created and give the community a voice in the ETFs made.

Essentially, crypto ETFs can go further than traditional ETFs by opening liquidity provision to the community. Decentralized Autonomous Organisations, or DAOs, that govern indices are empowered to make all sorts of decisions, from methodology changes like the composition of assets, to determining incentives for liquidity providers. This way, the users of the product also become the decision-makers for development.

Some of the benefits of Crypto ETFs:

• Lower costs of fees charged
• Instant diversification
• Liquidity
• Tax Efficiency
• Sector investing
• The ability to purchase in small amounts
• The availability of a wide variety of alternative investments

Plethori: Crypto ETFs For All

Plethori will be the world’s first crypto ETF generator and tracker, powered by Polkadot.

In sum, Plethori is a crypto ETF investment platform that allows open trading and the creation of trustless ETFs by utilizing blockchain technology and layer 2 solutions.

The platform offers decentralized cross-chain investment for exchange-traded funds built on the Ethereum and Polkadot blockchains. Investors can deposit $PLE (Plethori token) and invest in a wide range of ETFs, enabling investment into entire industries in cryptocurrency such as insurance, oracles, NFTs, Derivatives, and many more.

Plethori is built on an interoperable DeFi protocol that allows cross-chain investments and trades. Its cross-chain functionality opens new opportunities to our users and leverages layer 2 technology to deliver high speed, low-cost trading at the click of a button.

Why Plethori

Plethori’s protocol allows users to trade ETFs and create custom ETFs by staking collateral. The platform helps users to be rewarded for trading and creating various ETFs. Additionally, top-performing managers are ranked on a leaderboard which offers investment credibility and a performance-validated track record.

Plethori provides competitive low transaction costs to users over any other investment platform due to being a cross-chain protocol.

With Plethori, any skilled investor can instantly create an ETF and:

• Yield higher profits.
• Reduce market competition.
• Earn a sizable profit taken as a percentage of the transaction fees of the fund.

Plethori’s Architecture

Cross-chain Interoperability

Due to the recent surge of unaffordable fees charged by networks such as Ethereum, which make trading and investment opportunities seemingly unprofitable to small-scale investors/users, cross-chain interoperability is a critical component.

Plethori’s cross-chain functionality will open up new opportunities to users, enabling them to invest in both the Ethereum and Polkadot ecosystem, thus creating a two-way bridge for investment into both protocols. By using this model, Plethori achieves:

• Cost-effectiveness.
• Low-latency alternative to excessive transactions to save on fees.
• Reduced transaction costs.

Layer 2 Solutions

As blockchain technology usage grows, the importance of new solutions to address the issues of speed, scalability, and cost, whilst maintaining decentralization, grows ever more present.

Being the home of DeFi, Ethereum has been the perfect environment to see the remarkable development and difficulties in bringing traditional financial services to the public. The gas fee crisis coupled with slow transaction times has presented us with an opportunity to revolutionize in the DeFi space.

Plethori will leverage layer 2 technology to enable high speed, low-cost trading and deliver fast contract executions creating a smooth experience for the end-user. One of the potential layer 2 solutions Plethori will adopt is Optimism.

Optimism is a generalized layer 2 solution that utilizes its Optimism Rollups and Optimistic Virtual Machine (OVM) and acts as a ‘child chain’ for the Ethereum blockchain to offload the computational workload of transactions to increase throughput and enable much faster and cheaper transactions.

Therefore, by utilizing both cross-chain functionality and layer 2 solutions, such as Optimism, delivering a high-end crypto ETF platform with low fees will be possible.

Plethori’s Methodology

Plethori’s ecosystem will count with two different methodologies, targeting different segments, subdivided into Public and Private funds. Moreover, to build an ETF, Plethori will follow the following methodology:

1. Construction: The ETF market capitalization is calculated by summing the market caps of the constituents.
2. Weighting: Once the constituents are chosen, each one needs to be assigned a relative weight within the ETF to determine how strongly it will influence the ETF’s performance. This can be based on a range of factors such as the token’s price, market cap, or fundamentals.
3. Calculation: The ETF market capitalization is calculated by summing the market caps of the constituents.
4. Rebalance: A rebalancing period is picked (daily, weekly, monthly, quarterly, etc.).

Let’s discuss how the private and public funds differ from each other.

Public Funds

Plethori’s public investment platform will have various categories (oracles, insurance tokens, small caps, large caps, NFTs, etc.) where users can buy into the available exchange-traded funds’ setup by the team.

Users will be able to deposit capital using the $PLE token discussed in the next section, and the platform acts as an intermediary exchange.

This system allows users to trade ETFs made up of tokens portfolios and will help them diversify and save on ethereum gas fees.

Private Funds

Plethori allows users to stake collateral to mint their own crypto ETFs, composed of tokens they choose.

Additionally, Plethori has a transaction fee mechanism that allows fund creators to earn a percentage of the transaction fees for all fund trades. The better the ETF performance, the higher up the leaderboard the fund manager ranks and the more likely other users will buy into their fund.

NFTs

Plethori will award different Non-Fungible Tokens (NFTs) to users based on their trading performance and to creators based on their created ETFs’ success.

These NFTs essentially act as badges for performance, and holding them gives users fund creators different perks such as access to higher leverage on trades.

Essentially, NFTs on the Plethori platform will have the following mechanics:

• Based on milestones reached.
• Act as badges based on achievements and rankings.
• Rare perks with attributes that give benefits to the Plethori ecosystem.
• Be a tradable asset.

Tokenomics

Plethori’s token, $PLE, is used as an incentive scheme (including staking, farming and fee savings mechanisms) where participants receive a share of the profits.

Plethori has structured robust tokenomics and a balanced token model for the $PLE Token, which is designed not just to reflect the platform’s success but to incentivize healthy participation that brings together token holders, platform participants, the Plethori community and team.

In sum, $PLE serves four primary purposes:

• Access to and deposits/withdrawals for the platform.
• Staking/farming for rewards.
• Voting rights in governance.
• Transaction fees.

Community Governance

Plethori’s governance system is based on a community forum where $PLE token holders will submit proposals and vote on platform changes that will be vetted and executed by the team. The community will coordinate and propose modifications to the Plethori ecosystem, and the team implements the changes.

The way governance works is described below:

• $PLE token holders can vote on the platform to determine fund parameters and new features.
• $PLE token holders can influence decisions concerning the project, such as ETF asset rebalancing or listing/delisting assets.
• The changes proposed will be vetted and then voted on through governance accessed through the $PLE tokens and are applied automatically to the smart contracts.

The governance structure will be a complex but fair tiered system with each holder initially holding a single equal vote and their vote growing in value in response to some factors regarding usage and involvement in Plethori’s ecosystem.

The metrics that will influence the governance tier level and strength of vote are:

1. Length of time holding $PLE.
2. Length of time staking/farming $PLE.
3. Frequency of usage of the Plethori platform.
4. Level of engagement in the Plethori Governance platform.
5. Community contributions.

By implementing an open, transparent and decentralized system based on community control, Plethori holds the cryptocurrency space’s original values and ideals.

Token Distribution

Roadmap

Team

Plethori was founded by Ryan Matovu, a serial entrepreneur with experience in finance, drop shipping, B2B sales and e-commerce. Matovu is an ex-forex trader with experience in algorithmic trading and machine learning applications. He’s also been in leadership positions in various Ethereum-based projects managing developers and building partnerships, and he has a vast network of tech specialists, financial professionals, influencers and investors.

The CMO is Callum Mitchell-Clark, who has 10+ years of managerial experience, including positions within several multinational organisations, and he is by his side work Neil Tiongson, the Brand Manager, and BullTaurus, the CMO.

To conclude, the development team comprises three senior developers: Sanders Poel, a blockchain full-stack developer; Ding Tian, who developed and published over 30 smart contracts and Michael Ayobamidele, who is also a full-stack developer.

Risks

While decentralized crypto ETFs are a fast-growing market, there are some challenges the team will face.

For starters, it is necessary to make transactions cheaper for users, by combining many tokens into one, the team will take responsibility for rebalancing fees and token additions and deletions fees. Depending on the rebalancing periodicity, this may increase the total project’s costs.

However, it must be noted of course, that fees will likely soon decrease once new Ethereum Improvement Proposals (EIPs) that reduce fees, such as EIP-1559, are accepted in the core development branch.

Summary & Conclusion

Plethori is a crypto ETF provider that leverages decentralization benefits to create a community-driven hub for on-chain investment funds. This opens a host of new opportunities such as:

• Community ownership: by using $PLE, holders can govern the project. The DAO may decide to launch a new ETF token, propose changes to an existing methodology, etc.
• Cheaper transactions: by holding a crypto ETF, users benefit from low transaction costs and exposure to many different tokens.
• Transparency: all transactions and addresses are tracked, providing a perfect audit trail both for $PLE and the crypto ETFs. This creates alignment of incentives and accountability between the community and the team and gives full transparency of token movements, rebalancing transactions and more.

In sum, Plethori appears to have the necessary qualities to become an extremely competitive player in the cryptocurrency space since it provides a much-needed service.

Due to the continuous rise of fees, a significant number of cryptocurrency users are struggling to gain exposure to many different tokens. Plethori seems to offer a very viable alternative.

Note: 4SV invested in Plethori. Nothing written in this research article should be considered financial advice of any kind.