Diversify like a Pro

Diversification is a key concept in investing. Allocating investments across multiple assets is called diversification and helps minimize idiosyncratic risk. For example, a portfolio consisting of one asset is more likely to face a volatile return over time than a diversified portfolio. You can imagine purchasing a single stock that may move up and down based on the company’s specific performance. However, if you buy another stock in your portfolio (or 500) you will see less volatility related to any specific asset (company in this case) and instead observe a performance that is more reflective of the market overall.

Diversification helps stable returns

Unlike the traditional financial markets, diversifying ones crypto investments in the current ecosystem is too complex for most. Managing multiple wallets, different chains, bridging assets, yield strategies, etc., require a steep learning curve and is simply a non-starter for most users.

Affine aims to remove these barriers through its innovation - Affine Baskets. They enable users to invest and get price exposure to multiple crypto tokens (ETH, BTC, etc.) and cash-yield strategies (AAVE, Compound, Market Making, etc.). With this, users can diversify their portfolio without doing the legwork of managing that complexity, all while paying lower gas fees. Affine enables them to focus on building a sustainable investment strategy instead of managing a highly complex strategy.

However, the scope of crypto investment diversification today is currently more narrow than in traditional finance. While DeFi is blossoming to include financial primitives that match and in some cases expand beyond our current financial system’s capabilities, the crypto market overall is still much smaller and more immature. In short, this means that crypto-specific portfolio’s are still exposed to the overall crypto industry’s market volatility.