Decentralized fund management platform dHEDGE has launched a tokenized index that tracks its top-ranked traders.
An ERC-20 token will also be issued for the index on automated market maker DEXes in futur.
dHEDGE allows fund managers to launch actively managed investment pools powered by synthetic assets provided by Synthetix.
“What dHEDGE is trying to do is crowdsource the best traders on the internet, and if you can create an index out of that, […] I think that’s tremendously powerful,” Apollo Capital chief investment officer and dHEDGE co-founder, Henrik Anderson, told Cointelegraph.
The new pool, dubbed “dTOP,” will rebalance funds across the platform’s top 10-ranked fund managers on a monthly basis. The bot will also cover gas fees incurred through rebalancing, with the dHEDGE DAO paying for gas.
The performance of dHEDGE’s hundreds of pool managers is scored using the Sortino Ratio. The risk-adjusted measure considers a pool’s performance relative to its size and risk profile, considering historic volatility both to the upside and the downside.
“What we’re looking for is a risk-adjusted measure — we think it is really important you not just look at the returns,” Anderson said.
The dHEDGE DAO provided $50,000 to seed the dTOP pool, with Anderson predicting the organization will invest more funds into the index in future. The pool has a 10% performance fee that is distributed among the month’s top asset managers relative to their weight in the index.
Since exiting stealth mode in July 2020, dHEDGE has attracted a TVL of $30 million and facilitated more than $400 million worth of trades.
Anderson indicated that more indices will be launched on dHEDGE in future, and noted that the project is currently exploring Optimism for layer-two scaling.
“The team is excited to continue to deliver value and expand the capabilities of the protocol,” he said.