The global decentralized finance (DeFi) economy has continued to experience immense growth in recent years, with recent studies even projecting a market valuation of $446.43 billion by 2031. However, platform and liquidity fragmentation within the blockchain realm has continued to be a pressing issue, resulting in the general user experience of most DeFi entrants being dissatisfactory.

This is because novices tend to be unfamiliar with the technicalities associated with different chains, especially how they work, how gas fees are paid, and how crypto wallets work, among other problems.

Therefore, in an effort to alleviate these bottlenecks, Rivo has devised a digital infrastructure that connects retail investors to a myriad of financial opportunities, primarily by demystifying many of today’s complex DeFi processes and creating a user-friendly platform.

Furthermore, an approach rooted in the belief that financial freedom should be accessible to all, not just the technically savvy, has been implemented. Therefore, by offering an intuitive interface and educational resources, the platform brings together various DeFi protocols and strategies under one roof.

Yield Indexes - What they are and what they do!

In their most basic sense, yield Indexes can be thought of as curated baskets of DeFi strategies that optimize investors' returns while reducing their financial risks. By diversifying one’s portfolio with various yield-generating offerings and strategies, they help deliver consistent and attractive returns.

Yield Indexes operate on the principles of diversification and automation. When an investor buys into a Yield Index, their funds are automatically distributed across various DeFi protocols and strategies according to predetermined allocations.

Pros

• Passive management: Yield indexes offer a "set-and-forget" approach that is ideal for hands-off investors.

• Expert curation: They allow investors to benefit from professional strategy selection and management.

• Gas optimization: They offer the advantage of reduced transaction costs through bulk operations.

• Accessibility: These indexes are the perfect entry point for DeFi newcomers, especially those with limited knowledge of crypto investments.

• Economic diversity: They allow for the distribution of risk across multiple protocols and strategies.

Cons

• Less individual control: Investors are unable to customize their allocations, reducing their financial flexibility.

• Dependence on an index manager: Index performance relies primarily on the expertise of its creators.

The annual percentage yield (APY) of different indexes can vary widely depending on the pervading market conditions and the specific strategies employed. As can be seen below, the returns associated with the xUSD (Locus Yield USD) index are significantly lower than those offered by xDeFi (DeFi Core Index) — i.e. 5.6% vs. 22.2%.

However, as a result, the risk levels between the two also vary, as do the asset types used by them (for example, one uses stablecoins, whereas the other employs altcoins).

Another crucial aspect of managing yield indexes is the idea of ‘rebalancing.’ To this end, the composition of each index is regularly reviewed and adjusted to maintain the desired risk-reward profile.

How assets are selected for indexes

Assets are chosen for the indexes through a rigorous selection process. This begins with a thorough evaluation of the underlying protocol, including a deep dive into its smart contract security.

Moreover, priority is given to those protocols that have a proven track record of security, demonstrated by successful audits and ongoing bug bounty programs. For example, the xETH (Locus Yield ETH ) index consists of five protocols that have been audited, hence its low-risk score. Similarly, xDeFi’s (DeFi Core Index) all four underlying protocols have undergone thorough audits to date. All of these reports are accessible online.

Only those protocols (such as Aura, Convex, Yearn, Frax, Curce, etc) with a proven history of stable performance and user adoption are utilized. Lastly, a thorough analysis of each protocol's tokenomics and overall economic structure is done to ensure long-term viability.

In terms of assessing the individual tokens contained within these indexes, the following aspects are taken into consideration:

• Tokenomics: To assess potential risks associated with a growing token supply, the asset’s supply and inflation rate are carefully considered.

• Liquidity: Experts analyze the liquidity of every asset in each index to ensure a smooth trading experience as well as robust market health

• Utility assessment: Priority is given to tokens with demonstrably useful applications that play a critical role within their respective ecosystems.

Specific criteria are also tailored according to each index's focus. For instance, ecosystem-specific indexes (like Arbitrum) prioritize the coverage of key assets such as $JOE, $GNS, and $GMX, while indexes like xETH and xUSD focus on including only the most trustworthy stablecoins, such as USDC, USDT and others.

Yield indexes available on Rivo Yield Marketplace

Locus Yield ETH

The Locus Yield ETH index provides investors with exposure to a diverse range of ETH-based yield strategies. It aims to deliver optimal risk-adjusted returns, typically ranging between 5% and 10% annually. The index incorporates various DeFi yield sources, including liquidity provision to decentralized exchanges (DEXes) and utilization of ETH liquid staking derivatives.

Locus Yield USD

Designed primarily for stablecoin diversification, Locus Yield USD index provides exposure to various stablecoin strategies across multiple networks. It combines established tokens (such as USDC) with more experimental ones, carefully weighted based on factors such as protocol design, counterparty risk, and decentralization. Built using LayerZero technology, this index can aggregate strategies from numerous networks, offering unparalleled flexibility.

Locus Pendle Index

The index is centered around ETH liquidity provision on Pendle. It leverages the power of liquid staking and liquid restaking ETH derivatives to earn incentives in the form of PENDLE tokens as well as airdrops (due to the accrual of points).

Points farming is a novel way for teams to distribute their tokens to the most active users, with t notable examples being platforms like Eigenlayer, Ether.fi, and Renzo. Lastly, the index aims to streamline liquidity provision on Pendle by managing underlying pools and rotating them as soon as one of them is matured.

Arbitrum Yield Index

Arbitrum Yield Index is a yield-bearing basket of bluechip assets on Arbitrum, one of the most prominent Layer-2 (L2) blockchains in the market today, offering multiple innovative products. The index builds on Arbitrum’s growing popularity through the growth of its ecosystem leaders. Assets utilized in the index are deployed in different contracts, allowing investors to earn staking rewards and protocol fees.

Defi Core Index

DeFi Core Index is a yield-bearing basket of blue-chip assets on the Ethereum mainnet, namely FXS, CRV, and CVX. The index revolves around the thesis of established DeFi protocols growing in popularity as the crypto market matures. As a result, the tokens utilized are battle-tested with proven use cases.