Announcing Algoo Strategies Protocol: A Comprehensive Guide to the Largest CeDeFi Ecosystem in the Financial Market for Passive Income

AlgooStrategies
13 min readOct 16, 2023

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Executive Summary

AlgooStrategies.org (“Algoo Strategies” or “the Company”) houses a “CeDeFi” ecosystem for passive income and wealth generation. Algoo Strategies was launched in 2020 and has undergone multiple pivots, ultimately leading to the launch of the most transparent yield platform in the CeFi market, supported by DeFi yields.

Algoo Strategies’ mission is to create the investment platform of the future which combines the best of the CeFi and DeFi ecosystems: the simplicity and accessibility of CeFi with the transparency and innovation of DeFi. Algoo Strategies’ core value is transparency, reflected by our monthly investment reports and the creation of fully transparent, on-chain CeDeFi strategies.

Our platform offers a variety of investment products, including fixed-yield strategies, automated portfolios, and CeDeFi strategies, all of which were purposefully structured, built on-chain, and managed by the team of DeFi experts, all of which provide users with a plethora of opportunities in DeFi.

The Future of Finance

Yield is the key driver of crypto moving forward. The evolution of crypto has led to the emergence of innovative financial networks, which reward its contributors in an efficient way, driving network growth.

Mining, as a yield mechanism, brought computational resources and the first users to the Bitcoin blockchain. Staking is utilized by most blockchains, rewarding holders of the coin for block confirmations. Liquidity pools created by Uniswap created the new “liquidity provider” role while allowing for the launch of trading markets for any token. This ultimately led to the beginning of exponential DeFi trading and hundreds of project launches.

Yield farming bootstrapped DeFi in 2021, rewarding users for providing liquidity. This led to an influx of $160 billion in assets under management (AUM) after just one year following the launch of the incentivization model. Algoo Strategies believes this trend will continue, and the evolution of crypto (and DeFi) will bring more efficient ways to generate yield through building transparent and scalable peer-2-peer financial models. The crypto ecosystem has led to significant financial innovation, which is the heart of DeFi. And DeFi has paved the way for the next generation of passive income opportunities.

DeFi Projects Total Market Cap (Picture 1)

Through blockchain models and the DeFi ecosystem, nearly any asset may provide yield-bearing opportunities; the utilization of peer-2-peer services (staking, liquidity provision, lending) has resulted in a new type of investment strategy available to anyone in the world: the accumulation of scarce assets through yield. Given the complexity and overwhelming variety of DeFi projects and protocols, Algoo Strategies believes the logical solution to democratize passive income through DeFi models among retail users is to combine CeFi accessibility with DeFi transparency and capital efficiency. CeFi and DeFi each have their own opportunities and threats. Building on the strengths of each ecosystem is key to the creation of a company that strives to be the largest wealth-generation company of the current century.

The State of CeFi in 2022 & 2023

Similar to the traditional banking system, centralized finance entities offer yield to retail investors on various crypto assets by providing borrowing opportunities for users through crypto loans (utilizing crypto assets as collateral). Examples of the more well-known CeFi platforms include Nexo, Crypto.com, Celsius, BlockFi, and Vauld.

Centralized finance has served as an important function in the evolution of the crypto ecosystem, opening a gateway for digital assets among millions of users looking for solutions to problems faced by newcomers, such as secure custody of assets, portfolio management, the exchange between core assets, borrowing with crypto as collateral, and yield generation. Thus, CeFi applications gained a lot of traction given its simplicity relative to DeFi and centralized exchanges. The average appreciation of the CeFi industry at the peak of 2021 was over $50 billion AUM and more than 15 million users.

However, 2022 exposed the house of cards, which underlined how many CeFi companies engaged in risky practices not made known to their users. Following the collapses of companies like Celsius, Voyager, and Hodlnaut, millions of users have ultimately been locked out of their funds given the mismanagement of those funds by companies operating within black boxes offering a false simplicity.

As with any business enterprise, the ultimate business model of a CeFi platform is to provide its users with as low a yield as possible while managing its users’ assets in the most efficient manner possible (to generate the largest spread possible). Algoo Strategies recognizes that this does not align with the interests of its users, and this practice ultimately led to violations of basic risk policies.

For example, Celsius’ unhedged investments into liquidity pools (resulting in $50 million of impermanent losses) and Vauld’s loan books (which included loans to Three Arrows Capital companies in 2022) This hidden (and unmitigated) risk led to a major industry collapse in May and June 2022, resulting in what will be tens of billions of dollars worth of crypto losses among retail users.

A lack of transparency and the incompetence of management teams with respect to liquidity management have led to community mistrust of centralized entities. However, this has presented a major opportunity for Algoo Strategies, which seeks to solve these existing problems by bringing unique solutions to the market.

While CeFi is a necessary component of an expanding crypto market, traditional CeFi is an outdated segment as it has ignored innovations in DeFi. This has subsequently limited yield opportunities for retail users. Nonetheless, the bankruptcy of most of CeFi’s major players has ushered in the opportunity for exponential growth of the “next” CeFi platform, which seeks to address the needs of the market by providing:

1. Dynamic yield (adaptive to market conditions)

2. Transparency of the yield generation process

3. Robust risk-management policies

4. A gateway to DeFi innovations

5. An intuitive way to manage a diversified crypto portfolio

A company offering these solutions can and will build the penultimate custodial financial platform of this decade, democratizing wealth generation for millions of users through digital asset innovation and dominating the $100 billion market.

DeFi: A Lab for the Financial Future

Decentralized finance is building a landscape of open-source protocols for a new, emerging decentralized financial future. DeFi is scalable, transparent, efficient, and anti-fragile.

DeFi emerged in 2020 and reached a total value locked (TVL) of $160 billion at the peak of the bull market in late 2021 (while now sitting at $36 billion). DeFi is innovated layer after layer. It began with lending services (AAVE, Compound) and automated market maker (AMM) technologies (Uniswap, Curve), which opened up innovative ways to manage liquidity. Multiple protocols sprouted, solving the problems of attracting liquidity while introducing new trading methods, which then led to locking mechanisms and bribing as new sources of yield.

DeFi Projects TVL (Picture 2)

The year 2022-2023 has led to a boom in major developments toward new market-making models for derivatives and options. Additionally, protocols have begun experimenting with “real yield” profit distribution to token holders.

This innovation is occurring on the heels of dozens of competing blockchains and among hundreds of protocols led by the best engineering teams in the world. This innovation has resulted in DeFi being the most competitive industry in modern markets, with the ambition to disrupt traditional finance.

In today’s market, it’s incredibly difficult and resource-intensive to engineer a DeFi protocol with a product-market fit. The core issue facing every DeFi project is how to find the initial liquidity to bootstrap the usage of the protocol, as this utilization serves as the revenue driver. The current market has limited liquidity that is being transferred from one protocol to another.

The lack of liquidity stems not only from the primary limitations of the crypto market dynamic but also from the complexity of onboarding and portfolio management at DeFi. It requires a great deal of effort to understand and perform due diligence on DeFi protocols, and it requires even more time to constantly monitor positions across dozens of projects.

Further, DeFi users must continually track the latest on what’s occurring on every blockchain and all protocols in order to remain consistent in yield generation without exposing themselves to the systematic risk of DeFi. The DeFi user experience is one of the most important problems that needs to be solved. Algoo Strategies has solved this problem by creating a transparent CeFi layer built on top of DeFi protocols.

Enter “CeDeFi”

Algoo Strategies believes the most effective way to build a successful wealth management ecosystem in crypto is to fuse the simplicity, accessibility, and regulation of a CeFi platform with the transparency, efficiency, and scalability of DeFi.

The bridge between the CeFi and DeFi ecosystems, which takes advantage of the best characteristics of these systems, is called “CeDeFi.” CeDeFi connects retail demand from users looking to invest in DeFi protocols, which benefit from liquidity and an increasing user base, thereby laying the foundation for new partnerships.

As envisioned by Algoo Strategies, a CeDeFi strategy is a structured yield or directional product built on top of DeFi protocols. The strategy should be hosted on a specific address accessible to all and easily monitored via an explorer, all of which will provide full transparency on the sources of yield and performance of the strategy. Each strategy is presented on Algoo Strategies’ platform as an automated algorithm with assets under management and gauged based on the performance of the underlying assets within the strategy’s address. At Algoo Strategies, users may swap in and out of these CeDeFi strategies at any time.

CeDeFi strategies give retail users “one-click” exposure to the most sophisticated, structured products in crypto, opening the gates for future DeFi innovations to come.

CeDeFi framework

1️⃣ Investment team with a deep knowledge of DeFi; responsible for. monitoring the DeFi landscape, bringing a constant awareness of all possibilities of strategy-building

2️⃣ The hypothesis for a CeDeFi strategy emerges from community needs and/or when the investment team sees specific market opportunities

3️⃣ CeDeFi position on-chain prototype; risk policies are constructed among DeFi protocols concurrent with an algorithmic infrastructure and backtesting to validate the investment team’s hypothesis

4️⃣ After successful validation of this hypothesis, the strategy is packaged together. Algoo Strategies adds educational information on the strategy and liquidity limitations

5️⃣ Strategy release; limited liquidity is allowed, and the strategy may be located and monitored by users on a visible address; the strategy may be adjusted daily according to user dynamics

6️⃣ The strategy is monitored by Algoo Strategies’ investment team 24/7 via in-house monitoring tools, ensuring the strategy adheres to risk policies

The benefits of CeDeFi not only lie in the transparency of the product and attractive yield possibilities but also in the flexibility of the terms in selecting blockchains and protocols. This flexibility allows Algoo Strategies to quickly adapt its strategies to the volatile movements of the crypto market, (rather than spend months integrating a specific protocol, only for it to be quickly obsolete/ outdated by the market during its development). CeDeFi allows Algoo Strategies to stay on top of the crypto market while presenting the best opportunities available to Algoo Strategies’ users.

Algoo Strategies’ aspirations are not limited to constructing DeFi strategies, but they also lie with our quantitative algorithmic research, which allows for our investment team to better manage the efficiency of our positions (e.g., entering and exiting directional positions on trend reversals) and present simplified options trading for users to hedge against specific market events that may be the most detrimental to a portfolio.

With respect to Algoo Strategies’ CeDeFi strategies, performance fees are collected based on the strategies’ performances. As previously noted, performance fees are used to compensate the team members behind the creation of the strategies.

The long-term market for CeDeFi strategies may be compared with the traditional, structured investment products in the asset management industry. This industry represents the connection between ordinary individuals, pension funds, and the traditional investment market.

Algoo Strategies’ vision is that the frameworks of our CeDeFi strategies are the most important components in reaching accessibility

A Comparison: CeFi vs DeFi vs CeDeFi

Algoo Strategies. A Next-Generation CeDeFi Platform for Passive Income

Algoostrategies.org is a custodial “CeDeFi” investment platform offering market-leading yields on an array of cryptocurrencies, including BTC, ETH, and USDC. Algoo Strategies’ mission is to bridge the ease of CeFi with the transparency of DeFi strategies, fueled by algorithmic infrastructures and 24/7 portfolio monitoring. These strategies allow Algoo Strategies to offer premium yields while hedging against downside risk, thereby allowing investors to build sustainable passive income. In the four years since our launch, we’ve attracted more than 5,000 active investors and over $200 million in assets under management.

Algoo Strategies’ yields are made possible through our diversified investment approach across a wide variety of DeFi yield strategies. Each strategy is extensively vetted and hedged against impermanent loss volatility and token depreciation, as Algoo Strategies adheres to a strict risk management policy.

Supported by Fireblocksnon-custodial wallet infrastructure and a multi-signature policy, investors’ funds are well-safeguarded, making Algoo Strategies the premier crypto investment platform.

Beyond our yield offerings, investors can swap between crypto-assets and DeFi strategies directly on our platform, making it a seamless experience for investors to enter and exit positions.

The transparency of the yield process on the strategies is presented via regular investment reports shared with the community.

The History of Algoo Strategies’ Platform

Algoostrategies.org launched in the second half of 2020 as a platform that provided users with passive income via masternoding and coin staking.

The platform was self-funded and began as a Discord server before evolving into a full-fledged crypto platform. Algoo Strategies pioneered instant deposits, withdrawals, and reinvestments for masternodes and staking coins, which quickly led to Algoo Strategies becoming a key player in these respective markets.

Through the bear market, Algoo Strategies continued to innovate, offering a variety of investment tools and features to its users, including trading algorithms, yield-bearing indexes, and fixed-yield products. Algoo Strategies began experimenting with the first DeFi protocols in the summer of 2021, observing unprecedented opportunities for yield generation beyond what was already offered. DeFi protocols unveiled the opportunity to build fixed-yield services on top of DeFi yield.

Algoo Strategies' exponential growth’ began in September 2021, following a revamp of the platform. This renovation skyrocketed the platform’s user base and would increase Algoo Strategies’ total AUM by more than 15x over the following 12 months.

By the end of 2021, Algoo Strategies had begun strengthening its risk infrastructure for DeFi investment processes to protect them from hacks, depegs, and investing in illiquid assets.

This infrastructure and risk policy framework has allowed Algoo Strategies to minimize the impact of 2022’s bearish market while also allowing Algoo Strategies to avoid the UST crash and stETH depeg.

In August 2022, Algoo Strategies successfully launched its first set of CeDeFi strategies, giving users exposure to long and short ETH positions and DeFi “blue chips.”

For the same month (August 2022), Algoo Strategies released its first monthly “Investment Summary” report, revealing our investment strategies and the yields generated from each of those strategies. These reports are made available to our community (and the public) within the first week of each month, detailing our yields for the prior month. These reports support Algoo Strategies’ decision to raise or lower yields monthly for our Fixed Yield strategies based on the yields generated.

Algoo Strategies’ Suite of Investment Products

Fixed Yield Strategies

$200 million AUM

Liquid DeFi + Algo yield-generating system for BTC, ETH, and stablecoins Algoo Startegies’ Fixed Yield offering is overwhelmingly the most popular option amongst our users and the core strategy for the highest yield on the platform. These strategies involve 24/7 risk monitoring for all positions involved. Rates are adjusted based on the actual two-month performance of the pool; the sources of yield and actual yield generated are disclosed within our monthly investment reports.

Fixed Yield Strategies, AUM (Picture 3)

CeDeFi Strategies

$10 million AUM

Launched in July 2022, our CeDeFi strategies attracted 1,300 users in the first month. Our CeDeFi strategies include structured yield products based on secure DeFi protocols with on-chain transparency. These strategies are tailored to specific market conditions, are easy to use, and may be swapped in and out of at any time.

CeDeFi Strategies (Pictuure 4)

Yield Automated Portfolios

$4 million AUM

Indexed yield products consisting of a basket of select cryptocurrencies; these indexes are rebalanced monthly for yield optimization (at no cost to the user)

Yield Automated Portfolio AUM (Picture 5)

Algoo Strategies as a Governed Retail DeFi Ecosystem

As part of our scaling strategy, Algoostrategies.org anticipates building, acquiring, and partnering with DeFi protocols. Each protocol creates a new way to generate sustainable income for investors on the platform.

The long-term vision for our CeDeFi strategies is the tokenization (ERC-20) of our CeDeFi strategies, which will generate fees as extra income for the platform. It opens up the interoperability of every CeDeFi strategy, which provides further opportunities to integrate those strategies into dozens of protocols as basic financial blocks (while giving access to a wide DeFi audience and keeping control of funds in their hands).

Algoo Strategies’ tokenized CeDeFi vaults may be used by any internet entity, such as companies, protocols, DAO treasuries, and retail users, giving those vaults unlimited scaling possibilities.

The primary competitive advantage in building Algoo Strategies’ DeFi ecosystem is the network of partnerships to be built through DeFi protocols, along with the accessibility to the Algoo Strategies community while understanding both the user’s needs and DeFi complexity.

Algoo Strategies plans to launch a decentralized autonomous organization (DAO) that will regulate the CeDeFi activities in DeFi protocols, which will introduce the governance process to everything related to managing Algoo Strategies’ decentralized autonomous organizations.

Algoo Strategies’ governance aims to bring a breath of fresh air toward building a community-centric ecosystem of wealth management. The launch phase of the governance process is targeted for the first half of 2024 and will be conducted through the platform and then expanded toward the DeFi space.

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AlgooStrategies

On-chain asset management protocol. Empowering the open financial system through simplicity, profitability and accessibility.