by Patrick Mayr and Brett Sun
Decentralised finance (DeFi) has ignited a Cambrian explosion of new financial applications built on public networks that are accessible to anyone with a computing device and an Internet connection. Its native composability also allows developers to permissonlessly build new applications on existing software, which compounds the rate at which the technology evolves.
DeFi today continues to develop at a staggering pace with a flood of products across a multitude of categories coming to market. Whilst the quantity of products has increased user choice, it has also greatly heightened complexity. A rising level of sophistication is required for users to navigate through DeFi and find products that suit their intended investment goals.
Brahma is a yield protocol that gives users access to sophisticated DeFi strategies through easy-to-use investment vaults running automated strategies across different DeFi protocols. Users one-click deposit their tokens into vaults instead of having to cobble together and execute strategies manually.
A major source of yield in today’s DeFi environment has been inflationary rewards, which are created when a protocol rewards usage by inflating its token supply and distributing these newly minted tokens to users. Despite there being questions around the long term viability of this technique as a method of keeping users engaged, they are nonetheless the mechanism through which the majority of investment vaults generate yield today as pioneered by Yearn.
Brahma’s investment strategies will differ in that their returns are not intended to exclusively leverage inflationary rewards but instead capture sustainable yields from market inefficiencies, with a focus on risk management and hedging. Often being multi-stage, multi-protocol, or even multi-layer, these strategies are more difficult for end-users to execute and importantly, offer diversified exposure.
While the first vaults will be built by Brahma’s own team, the team envisions opening their platform to external strategists in the future. At this stage, anyone in the world with the know-how to construct investment-grade strategies in DeFi will be able to offer their strategies on Brahma and compete for the platform’s deposited capital. In that sense, Brahma’s long term ambition is to become the premier destination for the brightest talent to build strategies and for users to find the most attractive returns.