The very nature of DeFi instruments is that the majority are backed by stablecoins, which means they are linked to the rise and fall of the dollar, i.e. YIELD App fund positions are structured as dollar neutral, for non stablecoin pools, positions are asset neutral. For non DeFi strategies, YIELD App undertakes extensive due diligence of investment opportunities, hedges against rises or falls in the value of base assets where possible and utilizes diversification to minimize concentration risk to protect principal and maintain minimum APY obligations to users.
YIELD App’s Portfolio strategies have proven resilient though volatile declining markets and flash crashes as experienced during May 2021, whilst Portfolio diversification has enabled YIELD App to maintain its APY rates for all assets through the same period.
The risk of systemic failure or contagion within crypto and DeFi does exist but is low; these “Black Swan” events will at the same time impact all passive income, crypto wealth management service providers.
As with any alternative asset investment class there is inherent risk, whether it be macro, regulatory or technology driven. YIELD App, through its teams, partners, knowhow, and proprietary portfolio management technology, seeks to minimize the typical risks associated with the crypto asset class.