Ethel Point ADA Yield Fund (“WAY”) is a DeFi liquidity fund designed to support the new decentralized exchanges, lending protocols, and stablecoin issuers building on Cardano*. Each of these decentralized applications adds to the strong foundation of the ADA blockchain as it realizes a fully functional and diverse ecosystem.
Ethel Point
Lending
Liquidity Mining
Stablecoins
Potential Future of Cardano DeFi
Prominent and flourishing dApps ecosystem across various DeFi sub sectors and verticals
Increased institutional exposure and investment within DeFi protocol liquidity and lending pools
Increased retail participation across the Cardno DeFi ecosystem
Notable increase in TVL with high DeFi functionality and efficiency
Sources of Yield Overview
Source of Yield- Liquidity Mining
Decentralized Exchanges (DEX) are set up without market makers, and instead with two pools of assets that represent each side of a trading pair.
This creates a liquid pool of assets to trade against. DEXs rely on Automated market makers (AMMs) to facilitate the transactions between assets within a smart contract pool.
Source of Yield- DeFi Lending
Decentralized lending protocols are fully transparent, permissionless applications built on the blockchain using smart contracts.
Risk Factors
Market Risks
Market Risk
Blockchain-native assets make up the vast majority of collateral across decentralized finance. Therefore every actor is exposed to movements in the market prices of those assets.
Additionally, since yield is paid out in wrapped or native tokens, the value of your yield may decrease if the underlying token prices drop.
Impermanent loss
Occurs when one side of the pair decreases in value compared to the other side, leaving the liquidity provider holding more of the lower-value asset and thereby losing out on gains in the higher-value asset.
This imbalance can correct if the assets in the pool revert to their previous price parity, which is why it’s known as Impermanent loss. The higher the volatility of an asset, the higher the potential impermanent loss risk. This is one reason that the fund will only deploy with stablecoin as they’re a lower volatility asset.
Liquidation
Risk of failure of an asset that is being used as collateral on the protocol; risk of liquidators not capturing liquidation opportunities in a timely manner, or low market liquidity of the principal asset to be repaid.
Systems & Technology Risks
Smart Contract
The daily operation of decentralized capital markets are autonomously and deterministically dictated by the codebases of each platform and the integrations between platforms.
Coding flaws can be exploited by bad actors at will, with little to no recourse available to victims.
Design & Incentive
The underlying digital ledger technology, and added features such as scaling technologies, rely on complex game-theoretic incentive designs. Flaws in the incentive design can skew operational outcomes.
Liquidation
Risk of the Oracle system not properly updating prices in case of extreme market downturn and network congestion; risk of the Oracle system not properly submitting prices, causing improper liquidations.
Credit Risks
Counterparty Risk
When a DeFi platform lends out assets to other DeFi protocols, there is a risk that borrowers may not be able to payback their loans.
Lenders can lose a significant portion of their assets if DeFi protocols do not properly protect against a mass default on loans.
Governance Risk
Most decentralized applications operate according to the wishes of token holders (think direct democracy corporate governance by shareholders). Anyone can propose any course of action, which is then voted upon.
Proposals can address nearly anything, including core operational tenets of the application, changes to risk metrics, or extending/ending promotional rewards.
Stablecoin Specific Risks
When trading stablecoin pairs, if one of the stablecoins in a pool goes significantly down below the peg of 1.0 and never returns to the peg, it will effectively mean that pool liquidity providers hold almost all their liquidity in that currency. Please check out our Stablecoin Research Paper for more information on these risks, stablecoin-research
Regulatory Risks
The regulatory environment surrounding these assets continues to develop and there are risks new legislation may impact these assets.
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How to Invest in the Ethel Point SAYF Fund
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Our team has deep institutional experience managing third-party capital across traditional and decentralized finance, in particular venture capital, derivative, lending, and staking expertise.
In addition, we have built strong relationships with institutional service providers leveraging our blockchain and digital assets network across the world.
Treasury Management
Ethel Point’s Corporate Treasury Management services include digital asset lending programs and derivative strategies designed to capture additional yield and fine-tune risk, with a range of qualified custodians and counter-parties. Ethel Point also operates across multiple DeFi protocols for lending, borrowing, trading, yield farming, staking, and mining. Ethel Point applies our deep experience in digital asset strategies to bespoke risk managed portfolios. Ethel Point is UK COMPANY HOUSE regulated focused exclusively on digital assets, and have a fiduciary duty to protect our clients.
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Wealth Management
Your ultimate solution for digital asset portfolio management, combining custody, execution, and tailored investment strategies.
Ethel Point is a leader and pioneer in digital asset investment management. We are focused exclusively on digital assets, our offering is designed to provide the ultimate all-in-one portfolio solution for corporate and individual investors, and we have taken steps to ensure that assets are secure, growing, and generating income.
Protocol Inventory Management
Tokenized staking fund for your protocol. Programmable liquidity through fully-compliant global exchanges. We deal with all the administrative hurdles providing you the ease of use
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Ethel Point’s investment team draws on decades of asset management expertise to offer actively-managed strategies.
