What is Toros Finance?
DeFi has been nothing short of a revolution in the world of blockchain-based finance. By providing new ways for people to invest, borrow, and lend using cryptocurrencies, DeFi has opened up a world of possibilities for both seasoned investors and newcomers alike.
One of the most exciting developments in the DeFi space has been the explosion of automated investment strategies. Using sophisticated algorithms and smart contracts, these strategies allow investors to automatically manage their crypto portfolios, maximizing their returns while minimizing risk.
And now, a new player has entered the field: Toros Finance. With its advanced investment strategies, Toros Finance is poised to squeeze out every opportunity in DeFi. Whether you're a seasoned investor or just starting out, Toros Finance has something to offer, with a wide range of investment options and unparalleled transparency and security.
Toros Finance is a relatively new project, launched in 2021. The protocol derives its value from offering complex derivative strategies, safely, through a single token.
Toros Finance integrates dHEDGE, Aave and 1inch under the hood to offer a suite of on-chain tokenized derivatives products. This makes Toros Finance a fairly safe protocol, as its codebase is borrowed from battle-tested protocols. If dHEDGE smart contracts haven't been hacked, this means Toros Finance won't be hacked anytime soon.
One of the biggest advantages with Toros Finance is that users can access DeFi yield strategies without needing to monitor their positions, understanding advanced trading, or going though KYC.
Unlike your average DeFi app, Toros doesn't have a native token (yet). As of 2023, Toros Vaults are managed by the core team. By using Toros Finance, users place a degree of trust into the vault rebalancing and strategies done by the core team. On the other hand, code is publicly viewable and the performance of the vaults can be monitored in real-time.
With a TVL of $15M, and growing, Toros will eventually attract more users by launching its own token. The team has made no mention of a roadmap to decentralize the protocol.
How does Toros Finance work?
Toros Finance is an automated yield strategy protocol that scans the DeFi markets for the best yield opportunities. Whether you are a power DeFi user or a dabbler, Toros offers exposure to 18 investment strategies, ranging from indexes to long and short positions. All you need is the underlying asset, and Toros takes care of the rest.
The core of Toros' offering are the automated Vaults, which represent smart contracts programmed for a specific strategy.
Starting from the idea of a customizable vault, Toros goes a step further by changing its strategy depending on its profitability. Thanks to the underlying financial engineering, Toros Vaults are capable of producing constant yields without going degen.
Toros Finance integrates dHEDGE, Aave and 1inch under the hood to offer a suite of on-chain tokenized derivatives products.
Stablecoin Yield
The Toros Stablecoin Yield vault actively seeks secure USD yields as a hedge against inflation. By leveraging Optimism-based stablecoin yield farms, the vault automatically captures farming incentives. Acting as a true aggregator, it dynamically switches to better stable strategies to maximize yield.
As the pool adds more tokens, it seamlessly collects the rewards and readjusts the newly acquired stablecoins to maintain equal weighting. Once the equal weighting is restored, the pool proceeds to offer these assets as liquidity and restakes them to continue generating returns.
USDy is designed in a way so that investors have an auto-compounding stablecoin instrument that optimizes for the best yield without having to continuously manage the position themselves.
Toros Leveraged Tokens
Toros leveraged tokens offer users a way to hold long or short positions on different crypto assets. With this strategy, users don't need to worry about actively managing leveraged loans themselves because it's taken care of automatically.
The system uses a special algorithm to maintain a balanced Target Leverage Ratio (TLR), which helps reduce the risks involved in holding a collateralized debt position. In simpler terms, Toros leveraged tokens allow users to multiply their potential gains (or losses) on assets without needing to handle complex loan management, thanks to an algorithm that keeps things safe and balanced.
Toros leveraged vaults currently have long/short positions for BTC, ETH, and MATIC. While allocations and assets vary, the mechanic of leveraged tokens is essentially the same. Let's take ETHBEAR2X as an example!
ETHBEAR2X is a token designed to offer investors the opportunity to profit from the inverse movement of Ethereum's price with double the impact. Unlike traditional assets that increase in value when the underlying asset rises, ETHBEAR2X moves in the opposite direction of Ethereum's price movements.
If the price of Ethereum decreases by 5%, the value of ETHBEAR2X increases by 10%. This means that for every percentage point Ethereum's price drops, ETHBEAR2X experiences a two-fold increase in value. This intensified response allows investors to potentially capitalize on market downturns and profit from a bearish market sentiment.
Toros leverage tokens incorporate a mechanism that automatically rebalances the leverage range in response to price movements. This means that as the price of Ethereum went up, the ETHBEAR2X token would have adjusted to maintain the intended leverage ratio, mitigating the risk of liquidation.
The built-in protection against liquidation offered by Toros leverage tokens can be attributed to their active rebalancing mechanism. This mechanism helps to preserve the desired leverage range and prevent the position from being forcefully closed due to significant price fluctuations.
By maintaining the leverage range, Toros leverage tokens provide investors with greater stability and protection, even in volatile market conditions. This feature allows investors to confidently hold their positions without the constant worry of being liquidated during price movements that are unfavorable to their chosen leverage strategy.
Now that we understood how Toros leverage tokens work short positions, let's shift the narrative. It's time to go bullish! 🐂📈
The BTCBULL3X token aims to magnify the impact of Bitcoin price movements by three times. When the price of Bitcoin increases, BTCBULL3X undergoes a proportional increase that is three times larger. For instance, if Bitcoin's price climbs by 5%, the value of BTCBULL3X rises by 15%.
What sets BTCBULL3X apart is its ability to maintain a constant leverage ratio without the risk of liquidation. This means that the token does not face forced closure or loss of value due to significant price fluctuations. By maintaining constant leverage, BTCBULL3X aims to achieve higher growth potential compared to a regular 3x long position.
To illustrate this, let's consider an example. If Bitcoin's price increases by 5%, the value of BTCBULL3X would rise by 15%. Suppose Bitcoin initially traded at $10,000. After a 5% increase, the price would reach $10,500. In this case, BTCBULL3X would see its value surge from its initial level to $11,500.
This amplified response to Bitcoin price movements makes BTCBULL3X an appealing choice for investors seeking increased exposure and potential profits. Due to the compounding effect and daily rebalancing process, this token is more suitable for short-term trading or hedging strategies rather than long-term investments.
Market Neutral Yield
In a volatile market, delta neutral strategies seek to minimize a portfolio’s exposure to price volatility, mitigating its response to market movements. When it comes to applying a delta neutral strategy for the DeFi markets, Toros leverages yield farming opportunities with borrowing.
The premise of market neutral is simple: hold equivalent assets both long and short to net out exposure to that asset.
Toros Finance offers an automated way to gain exposure to delta neutral yield. Let's take for example the USD Delta Neutral Yield (USDmny):
This vault has exposure to USDC, WETH, and wstETH. Furthermore, the vault uses Aave V3, Arrakis Finance, and Velodrome Finance to produce yields.
The vault initially deposits USDC collateral into Aave, then borrows ETH against the USDC collateral. This ETH is then deposited into an incentivized WETH/sETH pair on Velodrome.
The long exposure to the ETH in Velodrome is therefore hedged against the borrowed ETH from Aave, causing a delta neutral exposure.
The key concept here is creating a delta-neutral exposure. Delta refers to the change in the value of an asset relative to changes in another asset. In this case, the vault has long exposure to ETH in Velodrome due to the deposited ETH in the incentivized pool.
To hedge this exposure, the vault borrowed an equivalent amount of ETH from Aave. By borrowing ETH against the USDC collateral, the vault creates a short position on ETH. This means that if the value of ETH were to decrease, the short position would offset the loss in value of the ETH deposited in Velodrome.
By combining the long exposure to ETH in Velodrome with the short position on ETH from Aave, the vault achieves a delta-neutral exposure. This means that regardless of whether the price of ETH goes up or down, the impact on the vault's overall position is minimized.
The purpose of this strategy is to capture the potential yield and rewards from the incentivized pool in Velodrome while mitigating the risks associated with the volatility of the underlying asset (ETH) by creating a delta-neutral position.
How to make money on Toros Finance?
The only way to make money on Toros Finance is to deposit crypto assets with their vaults and watch the gains accumulate as the vaults hunt for the highest APY. With all of the work being done by the Toros vault, all you need is some spare crypto, and a token strategy you would like to gain exposure to.
Here's how you deposit with Toros:
Open the Toros app
Select the vault of your choice
Input the amount you wish to deposit
Click "Stake"
Approve the transaction
Before you buy your first Toros tokens, it is important to take into account the fee structure and the risks associated. Toros vaults rely on DeFi protocols in order to execute on their strategy, which means you automatically gain exposure to the respective protocols.
An Entry Fee is charged whenever you buy a Toros token. This fee can be reduced to 0% if you accept a 24 hour lockup. The lockup is a measure to protect against flashloan and arbitrage attacks. After the lockup period has passed, you can choose to withdraw your tokens at any time and the accrued interest will be transferred to your wallet.
Leveraged Tokens
Toros leveraged tokens are best used for short-term market movement. This is because the market volatility
Here's an example of how ETHBEAR2x works in practice:
Imagine that the price of Ethereum is currently $2,000. You decide to invest in ETHBEAR2X because you anticipate a decline in Ethereum's value.
A few days later, Ethereum experiences a significant drop of 10%. In this scenario, the value of ETHBEAR2X would increase by double the percentage, which means it would surge by 20%. So, if you had invested $1,000 in ETHBEAR2X, your investment would have grown to $1,200.
This inverse relationship with double the impact allows you to profit even when Ethereum's price is declining. ETHBEAR2X amplifies your returns by magnifying the negative movements of Ethereum, enabling you to potentially generate greater profits during bearish market conditions.
Here's an example of how BTCBULL3X works in practice:
Suppose the price of Bitcoin is initially $50,000, and you decide to invest $1,000 in BTCBULL3X. BTCBULL3X aims to provide three times the amplification of Bitcoin's price movement.
Scenario 1: Bitcoin's price increases by 5% In this scenario, if Bitcoin's price rises by 5% to $52,500, BTCBULL3X would experience a threefold amplification. Therefore, the value of your investment in BTCBULL3X would increase by 15%, resulting in a value of $1,150.
Scenario 2: Bitcoin's price decreases by 3% In this case, if Bitcoin's price declines by 3% to $48,500, BTCBULL3X would also respond with a threefold inverse amplification. Consequently, the value of your investment in BTCBULL3X would decrease by 9%, resulting in a value of $910.
It's important to note that BTCBULL3X's performance is typically evaluated on a daily basis due to its daily rebalancing mechanism. The compounding effect of daily rebalancing can lead to deviations in long-term performance compared to the expected three times leverage.
Market Neutral Yield
With USD Delta Neutral Yield (USDmny), you can put your money to work, earn interest, protect yourself from downside risks.
As a holder of USDmny, you don't have to do anything except holding the token. Toros vaults do the work described in this example:
Let's say you deposit $1,000 worth of USDC for USDmy. The USDmy tokens represent your position in the vault, and will later be used to redeem the underlying USDC and accrued yield.
The vault utilizes Aave V3 to lend out your USDC and earn interest. With an annualized yield of 2% on Aave V3, you can expect to earn $20 over the course of a year. To make it delta neutral, the vault borrows an equivalent value of WETH using Arrakis Finance. Let's assume you borrow $1,000 worth of WETH.
Now, you have two positions: a long position on USDC and a short position on WETH. If the US dollar weakens, the value of your USDC increases, offsetting any potential losses on your borrowed WETH.
The Toros vault then deposits the borrowed WETH into a WETH/wstETH liquidity pool on Velodrome Finance. By providing liquidity, you earn trading fees and incentives. Let's assume you earn an additional 5% APY from the liquidity pool, which amounts to $50 over a year.
Combining the interest earned from Aave V3 ($20) and the liquidity pool rewards from Velodrome Finance ($50), your total earnings for the year would amount to $70.
It is important to mention that the market neutral yield is focused more on stability rather than outsized gains. The yield may not be mindblowing, but it is consistent and compounds over time. Ultimately, the performance USDmny is dependent on the adjustments made by Toros Finance.
