The ASRT, or aarnâ staking rewards program, is a refreshing fair-launch initiative designed to incentivize and reward early contributors to the aarnâ protocol. ASRT’s primary function is to secure liquidity on âtv vaults, rewarding early TVL deployers with preferential access to the protocol token at its 2024 seed-round valuation. This transparent and community-first design ensures that those who support the protocol in its earliest stages are aligned with investors, entering at the same fair valuation rather than inflated public prices.

## The Next Frontier in DeFi: Structured, Scalable, Transparent Strategies

![image7.png](https://aarna-blogs-media-content.s3.ap-southeast-1.amazonaws.com/image7_9457c6f7a0.png)

To set the context for the ASRT, it's important to understand the role of asset management and aarna’s mission. Over **36% of global financial assets** in traditional markets are managed through structured strategies (or asset management) - ETFs, mutual funds, quant and hedge funds, and engineered investment products designed to optimize for specific outcomes.

In crypto, however, structured strategies represent **less than 3% of total assets**. While DeFi has built powerful primitives like lending, trading, and staking, the **infrastructure to compose them into scalable, automated, and transparent strategies has been missing**.

That’s the gap aarnâ is solving at both the **infrastructure** and **application** layers. The mission is simple: **structure DeFi** by turning fragmented opportunities into simplified, risk-managed products that are accessible at scale.

This is essential because most DeFi activity today is fragmented and manual. Users must navigate multiple protocols, assess risks independently, and execute transactions on their own. This complexity not only limits adoption but also keeps institutional capital on the sidelines.

And aarnâ addresses this by combining tokenized vault infrastructure with a proprietary deep learning model, and a mobile-first UX - delivering structured strategies across yield markets, and AI-managed token portfolios, and intelligent on-chain indices.

## What is ASRT

![image3.png](https://aarna-blogs-media-content.s3.ap-southeast-1.amazonaws.com/image3_ae34cdd7c6.png)

ASRT (aarnâ staking reward token) is a highly rewarding token designed to incentivize early adopters of aarnâ. It is the early ticket to $AARNA, the protocol token, which is slated for a TGE soon this year. The fair launch design of ASRT provides access to $AARNA at the 2024 seed round valuation of $ 40 M. 

### How to earn it
There are three routes to accessing ASRT at the moment, with the primary focus and allocation being towards the âtv Timelock and Staking program. 

#### Timelock and Staking Program
aarnâ’s Timelock and Staking programs reward users who commit liquidity early. By staking vault tokens, users strengthen the protocol and unlock extra ASRT rewards on top of native yields.

As a full-stack asset management protocol, aarnâ has multiple âtv (aarnâ tokenized vaults) strategy vaults - USDC yield aggregation, AI quant token portfolios, autonomously rebalanced on-chain indexes. The timelock program enables depositors of âtv vaults to stake their vault tokens and softlock for flexible periods to earn ASRT. 

For example, âtvUSDC a composable yield token that already aggregates base USDC yield, and stakes the underlying âtv asset to boost payouts up to 3x the native USDC yield via ASRT. At current rates, that’s around 18% APY, including USDC plus ASRT rewards, making it one of the most attractive entry points for new users.

From a tokenomics perspective, 10% of the $AARNA supply is allocated towards the timelock program, so ASRT worth $4Mn will be earned by early TVL deployers. This still converts to $AARNA at seed round valuation, so its real value could be a significant multiple. 

#### Partner Protocol Incentives
The second route to ASRT is via protocol partnership initiatives. Deep, early liquidity is the foundation of vault adoption, so we’ve built structured incentive programs tailored to how professional LPs deploy capital.

Instead of ad-hoc arrangements, aarnâ provides transparent, programmable rewards that integrate naturally with partner protocols and liquidity venues, whether through yield marketplaces, structured LP syndicates, or DEX pools.

This means access to customized reward curves, boosted yield multipliers, and favorable emission profiles, ensuring that capital deployed into aarnâ works harder from day one while maintaining long-term sustainability.

For example, LPs could provide liquidity through **Pendle**, where âtvUSDC tokens can be split into yield-bearing and fixed-income positions, with **boosted ASRT incentives** available for early liquidity providers.

#### Community Contributors

Finally, aarnâ values its community contributors seriously & genuinely and rewards them generously via the ASRT program too. Approx 35% is allocated towards this. The aarnâ Vanguard Program, verified ambassadors receive ASRT for measurable social contributions. We have onboarded over 250 micro-KOLs from across the globe to act as aarnâ’s first line of buzz, creating a flywheel for token distribution as well as social validation

## The Fair Launch Design of ASRT

![image5.png](https://aarna-blogs-media-content.s3.ap-southeast-1.amazonaws.com/image5_33504e9b28.png)

ASRT is designed as a fair launch mechanism. Most token launches favour insiders- VCs and private investors, while early users who bootstrapped early TVL end up entering at inflated valuations. 

ASRT’s fair launch design flips this by rewarding early users of the protocol, the same way as the seed investors. ASRT fixes entry for early adopters and deployers  at the 2024 seed valuation of ~$40M FDV

This model ensures early contributors are rewarded on equal terms. By capping supply, setting transparent mechanics, and giving liquidity providers preferential access at seed valuation, the design ensures early adopters benefit most from supporting the protocol’s foundation.

## Why This Matters in the Context of ASRT & $AARNA

On-chain structured finance has already proven its market potential. Protocols like **Maple, Reserve, Ondo, and EtherFi** each addressed a slice of the asset management stack in various ways, serving institutions and retail. They managed to reach **hundreds of millions to multi-billion-dollar in token valuations at the Token Generation Event ( TGE) and beyond**.

- Maple brought institutional credit on-chain.
- Reserve designed asset-backed index currencies
- Ether fi made crypto truly consumerized 
- Yearn, the original aggregator, optimized yield across protocols

Each solved an important piece of the puzzle, but none natively packaged AI-driven portfolios, indices, and hybrid exposure vaults into tokenized products with user lifecycle automation.

![image6.png](https://aarna-blogs-media-content.s3.ap-southeast-1.amazonaws.com/image6_a3e22da9be.png)

The rationale behind comparing competitor FDV’s

![image2.png](https://aarna-blogs-media-content.s3.ap-southeast-1.amazonaws.com/image2_684ec79226.png)

That’s the category aarnâ is building towards, the next evolution of on-chain asset management. aarnâ’s thesis is to enable investors around the world to invest in popular and complex DeFi primitives in one place with one click.

By earning ASRT today, you’re getting access to $AARNA at TGE; you’re not just collecting rewards; you’re getting an early-stage entry into a protocol aiming to define a new category, at a price point that won’t be available once the market catches on.

### $AARNA has three key functions: 

1. $AARNA secures liquidity through the âtv Timelock & Staking programs. Users stake âtv tokens and accrue ASRT ( aarna staking rewards). A predetermined cap has been set to ensure fairness and minimize reliance on protocol incentives solely. 
2. âTARS is aarnâ’s interactive, user-facing AI agent. Think of it as a personal intelligent DeFi guide. $ AARNA holders can chat with âTARS directly to explore strategies, ask questions, and get clarity on complex vault mechanics. It helps with:
   1. DeFi portfolio recommendations tailored to user vault positions.
   2. Automated execution of complex multi-step strategies.
   3. Early access to new strategy modules as they roll out.
   Only available to $AARNA token holders
   
3. $AARNA holders can stake into **$veAARNA** to participate in governance. Shape vault design, strategy parameters, and protocol direction aligning aarna’s growth with its community.

![image4.png](https://aarna-blogs-media-content.s3.ap-southeast-1.amazonaws.com/image4_c8eacb5d19.png)

#### Preferential Vesting for Early Deployers

Being early should mean more than just bragging rights; it should give a real advantage. That’s why early vault deployers who earn and convert ASRT into $AARNA receive preferential vesting terms:

- 50% of earned ASRT and converted and unlocked immediately at TGE
- The remaining 50% vests linearly over 5 months

This means early adopters not only lock in seed valuation pricing, but also enjoy faster liquidity on their $AARNA than later participants. This route will also be the primary option for the protocol to release $AARNA liquidity in markets, in line with the fair launch design.


The ASRT, or aarnâ staking rewards program, is a refreshing fair-launch initiative designed to incentivize and reward early contributors to the aarnâ protocol.

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ASRT - why is it a high-value meta in DeFi

[aarnâ protocol](https://www.aarna.ai/) has activated âtv111, a structured yield vault for stablecoins, along with âtvUSDC, a composable vault token representing staked positions in âtv111.

The [âtv111](https://www.aarna.ai/vaults?productId=atv_111) pre-deposit phase starts June 8 and runs through July 15. Whitelisted users will gain access to ASRT multipliers, offering boosted $AARNA rewards at 2024 seed round valuation -on top of vault yield. Early participants can earn up to 4x additional yield, with rewards tapering as vault TVL grows.

Access is code-gated. Eligible users will need a valid code to unlock deposits during this phase. Codes will be distributed via aarnâ’s contributors, selected ecosystem partners, KOL drops and [aarnâ socials](https://linktr.ee/aarnasays).

Users can participate through either the web app or mobile dApp -available on iOS and Android. Once verified, whitelisted wallets can deposit USDC into âtv111 and begin earning stacked rewards from day one.

This pre-launch phase is designed to align early capital with vault mechanics and establish the first layer of long-term users participating in structured, onchain yield.Reward Structure

During the pre-deposit window, users who hold âtvUSDC will automatically earn ASRT — non-transferable staking reward tokens that can be redeemed for $AARNA during the token generation event. The earlier you participate, the higher your multiplier.

![table.png](https://aarna-blogs-media-content.s3.ap-southeast-1.amazonaws.com/table_9226444c6c.png)

Weekly snapshots track âtvUSDC holdings and distribute rewards via Merkl. There are no minimum durations or lock-ins — users can deposit or withdraw at any time while still earning proportional rewards.

Total ASRT rewards are capped at 10 million, equivalent to 10% of the $AARNA supply, making this a limited-time opportunity to compound yield and earn early protocol ownership.

## What is âtv111?

With a single deposit, users get exposure to structured, low-volatility yield without needing to manage individual protocols. Deposited assets can be staked to mint âtvUSDC - a composable vault token that reflects participation in the âtv111 yield strategy and accrues protocol rewards, $AARNA incentives, and additional ecosystem-level boosts. The vaults are going live on Ethereum now and in 2 weeks on Sonic.

![a27ff53d9c5b4724b3ac281179eec245.jpg](https://aarna-blogs-media-content.s3.ap-southeast-1.amazonaws.com/a27ff53d9c5b4724b3ac281179eec245_44a85b56ba.jpg)

### Roadmap: scaling, stacking, and composability
With âtv111 now live on Ethereum, aarnâ is entering a phased expansion focused on deepening liquidity and enhancing cross-protocol interoperability. The vault will go live on Sonic in two weeks, is live on the Monad testnet and will be followed by deployments on Base, Arbitrum and Solana. These deployments are aimed at routing stablecoin liquidity across ecosystems while maintaining the vault’s core principles of risk-aware optimization and transparency.

Beyond multi-chain access, composability will play a key role in shaping utility. Upcoming integrations with Pendle will allow users to tokenize future âtvUSDC yield, trade it, and access fixed-income strategies layered with additional incentives. In parallel, PT-âtvUSDC will be enabled as collateral on lending protocols such as Euler and Morpho, unlocking lending opportunities and leverage loops for users seeking higher capital efficiency. aarnâ’s own native loan module is also in the works to further streamline this experience.

The protocol is targeting its token generation event (TGE) in Q4 2025. This launch is timed to coincide with vault adoption and ecosystem expansion, aligning the introduction of the $AARNA token with utility-driven milestones — and cementing long-term alignment between contributors, depositors, and the broader community.

![unnamed.png](https://aarna-blogs-media-content.s3.ap-southeast-1.amazonaws.com/unnamed_6b389adaeb.png)

### Join aarnâ on This Journey
Stay tuned for more updates, and here’s to continued success, growth, and a journey forward that’s both prosperous and meaningful.

Follow us on socials and join the community to stay connected

aarnâ protocol has activated âtv111, a structured yield vault for stablecoins, along with âtvUSDC, a composable vault token representing staked positions in âtv111.

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âtv111 + âtvUSDC: preDeposits are now live!

Singapore, 5 June 2025 – [aarnâ protocol](https://www.aarna.ai/) has activated âtv111, a structured yield vault for stablecoins, along with âtvUSDC, a composable vault token representing staked positions in âtv111. The pre-launch was unveiled during un#6, aarnâ’s invite-only DeFi forum in Singapore, bringing together allocators, funds, and builders focused on the next evolution of onchain asset management.

# DeFi yield: where TradFi curiosity meets onchain conviction

![press release (1).png](https://aarna-blogs-media-content.s3.ap-southeast-1.amazonaws.com/press_release_1_47b4d0e7fe.png)

The [un#6](https://medium.com/@aarna_finance/alpha-un-the-bridge-between-product-and-people-7cebc409cc8d) event opened with a high-signal panel featuring perspectives from both ends of the capital stack - Pendle’s stablecoin & RWA specialist and Citi’s former head of tokenisation - moderated by Sri Misra, founder of aarnâ protocol and a former consumer tech entrepreneur turned DeFi builder. The discussion explored how onchain yield is evolving from degen-fueled APYs to structured products that institutions can actually model and increasingly allocate into.

As stablecoin yield strategies gain traction across both TradFi and crypto-native capital, one challenge remains clear: navigating the yield stack. Switching protocols, tracking rewards, managing risk exposures -it’s fragmented, inefficient, and hard to scale.

aarnâ protocol is building to solve that with âtv111 and âtvUSDC, a new class of tokenized vaults designed to make yield programmable, composable, and efficient across ecosystems.

## [âtv111 + âtvUSDC](https://www.aarna.ai/vaults?productId=atv_111): pre-launch

âtv111 is an onchain yield aggregator built to route USDC into top-performing stablecoin strategies across DeFi. It’s designed to simplify access while maximizing underlying returns through dynamic allocation and risk-aware optimization.

With a single deposit, users get exposure to structured, low-volatility yield without needing to manage individual protocols. Deposited assets can be staked to mint âtvUSDC - a composable vault token that reflects participation in the âtv111 yield strategy and accrues protocol rewards, $AARNA incentives, and additional ecosystem-level boosts. The vaults are going live on Ethereum and Sonic.

![a27ff53d9c5b4724b3ac281179eec245.jpg](https://aarna-blogs-media-content.s3.ap-southeast-1.amazonaws.com/a27ff53d9c5b4724b3ac281179eec245_44a85b56ba.jpg)

## Roadmap: scaling, stacking, and composability

The rollout of âtv111 follows a phased approach, starting with the pre-deposit window from June 8 to July 15. This gated phase offers early users access to boosted $AARNA rewards through ASRT tokens, which gradually taper as the vault scales -rewarding those who move first.

In the following weeks, aarnâ will expand liquidity through strategic LP partnerships and deploy across multiple chains, including Base, Arbitrum, and the Monad testnet. The Pendle integration is next in line, enabling users to tokenize future âtvUSDC yield, trade it, and stack Pendle incentives -unlocking a new layer of fixed-income strategies in DeFi.

Next, PT-âtvUSDC will be enabled as collateral on lending protocols like Euler and Morpho, while aarnâ’s own loan module will allow native leverage loops. These are designed to increase capital efficiency while keeping yield composable and transparent.

aarnâ protocol is targeting its TGE in Q4 2025, with strong interest from tier 1 exchanges and market makers. The release of the protocol’s $AARNA token dovetails directly with the rollout of âtv vaults and aligns rewards for early depositors and contributors participating in the pre-deposit phase.

## Pre-deposit campaign: early access, real rewards

The [âtv111](https://www.aarna.ai/vaults?productId=atv_111) pre-deposit phase starts June 8 and runs through July 15. Whitelisted users will gain access to ASRT multipliers, offering boosted $AARNA rewards at 2024 seed round valuation -on top of vault yield. Early participants can earn up to 4x additional yield, with rewards tapering as vault TVL grows.

Access is code-gated. Eligible users will need a valid code to unlock deposits during this phase. Codes will be distributed via aarnâ’s contributors, selected ecosystem partners, KOL drops and [aarnâ socials](https://linktr.ee/aarnasays).

Users can participate through either the web app or mobile dApp -available on iOS and Android. Once verified, whitelisted wallets can deposit USDC into âtv111 and begin earning stacked rewards from day one.

This pre-launch phase is designed to align early capital with vault mechanics and establish the first layer of long-term users participating in structured, onchain yield.

### Development structure

The core protocol architecture and smart contract development for âtv111 and âtvUSDC is led by aarna lab, a dedicated engineering team based in India. The team comprises experienced smart contract developers and full-stack engineers with deep domain expertise across DeFi protocols, AI infrastructure, and tokenized systems.

Aarna AI Pte Ltd, based in Singapore, oversees ecosystem strategy and coordinates global contributors to the aarna protocol, which is a decentralized and permissionless infrastructure layer for onchain asset management.

#### Join aarnâ on This Journey

Stay tuned for more updates, and here’s to continued success, growth, and a journey forward that’s both prosperous and meaningful.

Follow us on socials and join the community to stay connected


aarnâ protocol has activated âtv111, a structured yield vault for stablecoins, along with âtvUSDC, a composable vault token representing staked positions in âtv111. The pre-launch was unveiled during un#6, aarnâ’s invite-only DeFi forum in Singapore, bringing together allocators, funds, and builders focused on the next evolution of onchain asset management.

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aarnâ’s pre-launch of âtv111 & âtvUSDC: unlocking modular DeFi yield for stablecoin capital

# âtv 808: Deep-Value Contrarian Vault Joins aarnâ’s AI Quant Ecosystem

_In crypto, **volatility** is inevitable. The âtv 800 quant series by aarnâ transforms volatility from risk into structured opportunity. Introducing âtv 808: a contrarian, deep-value vault complementing the AI quant driven alpha of âtv 802 - designed to work together as a strategy._

The âtv 800 quant series comprises autonomous, AI powered tokenized vaults engineered to systematically capture alpha across diverse market conditions. Each vault acts as a structured product, allowing sophisticated investors to curate portfolios tailored to distinct risk-return dynamics.
While âtv 802 is an AI quant strategy vault that identifies high-potential opportunities and dynamically manages allocations to deliver consistent alpha, thriving in environments of directional clarity, âtv 808 emerges to navigate periods of uncertainty and dislocation, capitalizing on market inefficiencies where traditional momentum strategies fall short.

## âtv 808: A Contrarian Pathway to Asymmetric Returns

âtv 808 is a contrarian strategy vault designed to complement âtv 802, âtv 808 empowers users to diversify and generate alpha across varying market volatility, explicitly designed for investors targeting asymmetric upside by strategically leveraging undervalued market conditions. As a tokenized structured product, âtv 808 specifically pinpoints crypto tokens that have recently undergone significant short-term to mid-term price declines yet demonstrate strong rebound potential.

The strategy underpinning âtv 808 is distinctively patient and methodical. The vault allocates capital into these assets at moments of market undervaluation guided by the AI model and maintains longer holding periods. This approach allows sufficient time for asset values to recover and consolidate, thereby maximizing returns from market corrections.

![808_flow.png](https://aarna-blogs-media-content.s3.ap-southeast-1.amazonaws.com/808_flow_61b05ed1eb.png)

### Features:

- **Signal Architecture**: AI-driven models integrate token-specific fundamentals and macroeconomic signals to identify sustained undervaluation and potential structural rebounds.

- **Capital Deployment**: Asset accumulation is executed when valuation and sentiment thresholds signal optimal entry points.

- **Holding Horizon**: Designed explicitly for long-duration positioning, allowing ample time for value realization and recovery, complementing âtv 802.

- **Transparent Execution**: Portfolio rebalancing and trade execution within the âtv 808 vault occur on-chain through smart contracts. This ensures transparency, precise execution, and the security of complete self-custody throughout the investment lifecycle.

### Portfolio Synergy within the âtv 800 Series
âtv 808 expands investor choices, allowing nuanced portfolio construction through strategic blends. Investors might consider:

- 50% allocation in âtv 802 for dynamic, AI quant driven alpha.
- 50% allocation in âtv 808 for asymmetric yield, contrarian alpha with high convexity potential.

With âtv 808 and 802 combined, investors gain a sophisticated, structured pathway to capitalize effectively during turbulent market conditions. Embrace the volatility and discover strategic alpha opportunities with the precision of âtv 808.

Crypto markets do not reward hesitation, they reward structure and conviction. The âtv 800 series reframes volatility from an unavoidable risk into a calculated advantage.

âtv 808 is now live, with âtv 802. Embrace volatility with structured sophistication, enter confidently when others exit, and unlock the potential of asymmetric alpha.

## Current âtv808 portfolio >

| tokens | 52 weeks drawdown | 45 days return | ATH | âtv808 init. price | featured by alpha 30/7 |
|--------|--------------------|----------------|-----------|--------------------|-------------------------|
| UNI | -72.2% | -35.0% | $44.92 | $5.27 | 42 |
| AAVE | -65.5% | -38.5% | $661.69 | $139.16 | 40 |
| ENA | -77.6% | -37.8% | $1.52 | $0.27 | 19 |
| ONDO | -59.0% | -26.2% | $2.14 | $0.84 | 36 |
| LINK | -58.9% | -27.2% | $52.70 | $12.62 | 37 |
| TON | -65.2% | -18.2% | $8.25 | $2.95 | 18 |
| WETH | -60.4% | -35.6% | $4,799.80 | $1606.20 | 44 |
| WBTC | -22.1% | -10.2% | $108,368 | $8466.10 | 35 |
| MKR | -57.2% | -10.9% | $6,292.30 | $1369.20 | 41 |
| COMP | -70.8% | -25.4% | $910.54 | $39.53 | 32 |


### âtv timelock and staking

âtv timelock & staking program is a protocol tvl and liquidity building program. it’s designed to reward early deployers of capital in âtv vaults, and in the process secure sustainable tvl build up, and create a positive reinforcement cycle for the protocol and token engineering.

aarnâ's also offers an institutional TVL plan designed to add a compelling opportunity to optimize institution's crypto asset allocation through tokenized structured products, while benefiting from enhanced rewards for higher commitments. 

![standard_timelock.svg](https://aarna-blogs-media-content.s3.ap-southeast-1.amazonaws.com/standard_timelock_486a158da8.svg)

In crypto, volatility is inevitable. The âtv 800 quant series by aarnâ transforms volatility from risk into structured opportunity. Introducing âtv 808: a contrarian, deep-value vault complementing the  AI quant driven alpha of âtv 802 - designed to work together as a strategy.

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âtv 808: Deep-Value Contrarian Vault Joins aarnâ’s AI Quant Ecosystem

# âtv Booster Staking Program

The âtv Booster Staking Program is designed to drive protocol TVL and liquidity growth by rewarding early adopters of âtv vaults. Through this secure and flexible staking plan, users who deploy capital into âtv vault strategies earn both a yield multiplier and early access to the $AARNA token sale.

The âtv Booster Staking Program enables users to stake their âtv111 tokens in exchange for âtvUSDC tokens. This yield-bearing token offers boosted rewards based on the total yield generated. Through this flexible and composable staking mechanism, users mint âtvUSDC tokens at the current NAV of âtv111. While âtvUSDC is always valued at $1, the underlying NAV of âtv111 grows over time — meaning user holdings grow in value as yield accrues. The system enables non-custodial, real-time compounding of returns and forms a cornerstone of the protocol’s flywheel to drive TVL and liquidity growth.

Participants can deposit or withdraw at any time, with no hard lockups or restrictions. The yield is tracked weekly via snapshots, and rewarded through Merkl based on wallet holdings and activity, making it highly interoperable and efficient for both users and the broader token economy.

By incentivizing users to stake and hold âtvUSDC, the Booster Staking Program aligns long-term user participation with protocol growth — nurturing a robust ecosystem around âtv vault strategies and reinforcing sustained liquidity.

## What is ASRT ?

ASRT (âtv Staking Reward Tokens) is a non-transferable shadow token issued to users as a reward for holding âtvUSDC. ASRT represents a claim on future $AARNA tokens, and acts as a mechanism for pre-sale access to $AARNA at the seed round valuation.

Each ASRT is assigned a notional value of $1 and is distributed in proportion to the weekly accrued yield of âtvUSDC stakers. When the $AARNA token sale begins, ASRT holders can exchange them for $AARNA tokens at $0.40, giving early stakers exclusive access to the protocol’s native token.

## how does âtv Booster staking work >

When users deposit âtv111 into the WTL staking contract, they receive âtvUSDC tokens in return, calculated at the current Net Asset Value (NAV) of âtv111. The âtvUSDC tokens are always valued at $1, and as the underlying vault yield increases, so does the user's effective value.

The system allows deposit and withdrawal at any time, with no minimum lock durations. Rewards are accrued automatically, and user activity is tracked via weekly snapshots. The yield generated over time is then used to calculate ASRT distributions using Merkl — providing users with a seamless, on-chain, and composable experience.

For example, if a user stakes âtv111 and holds âtvUSDC then in the weekly snapshots for 1 week from June 8th to June 15th, the yield generated by the user over that period will be recorded, and the accrued yield will be multiplied by the current multiplier i.e. 4 to determine ASRT rewards, the rewards will be Distributed through the Merkl reward distributor and will be available to claim at the end of the weekly cycle. 


| Duration                              | Multiplier | ASRT rewards Yield (considering ~4% base yield) |
|---------------------------------------|------------|-------------------------------------------------|
| June 8, 25 to July 15, 25             | 4x         | 16%                                            |
| July 16, 25 to July 31, 25            | 3x         | 12%                                            |
| Aug 1, 25 to Nov 13, 25               | 2x (3x for ETH)    | 8%                                           |
| Nov 14, 25 to Feb 15, 26               | 1x (2x for ETH)     | 4%                                             |
| Feb 16, 26 to Nov 1, 26                | 0.5x       | 2%                                             |


## âtv staking is a limited program

To incentivize early adopters, the ASRT program has a hard cap of 10 million $AARNA equivalent to 10% of total supply.With a seed round valuation of $0.40 USD per $AARNA, the value of ASRT is tied to tangible protocol ownership, reinforcing the long-term value of participation.




The âtv Booster Staking Program is designed to drive protocol TVL and liquidity growth by rewarding early adopters of âtv vaults.

âtv Booster Staking Program

# Multi-Chain Future: How Crypto Bridges Enable Cross-Chain DeFi

DeFi isn’t just multi-chain—it’s chain-agnostic. But right now, liquidity is siloed across ecosystems like Ethereum, Solana, and Polkadot, fragmenting capital and limiting cross-chain yield strategies. That’s where crypto bridges come in. By enabling seamless asset transfers across chains, bridges unify liquidity, supercharge composability, and let users chase yield wherever the best opportunities arise.

With monthly bridging volumes hitting [$1.5–3.2B](https://www.chainalysis.com/blog/introduction-to-cross-chain-bridges/), demand for cross-chain interoperability is undeniable. In this post, we’ll break down how bridges work under the hood, explore major players within the space, and dive into their role in building a truly scalable, permissionless financial system.

## understanding the multi-chain ecosystem and the role of bridges

The multi-chain ecosystem emerged because no single blockchain can fulfill every need for scalability, security, and specialized features. Ethereum remains DeFi’s core hub, but high gas fees and congestion push users to alternative Layer 1’s like Solana, Tron, and BNB Chain, each with unique consensus mechanisms and performance characteristics. However, these networks remain siloed, trapping liquidity and limiting cross-chain yield strategies.

 \> **enter crypto bridges**:

Bridges solve this fragmentation by allowing assets to move seamlessly between chains. They typically use a lock-and-mint model—tokens on the source chain are locked in a smart contract, while equivalent “wrapped” tokens are minted on the destination chain. For instance, Bitcoin can be locked on its native chain, converted into Wrapped Bitcoin (WBTC) on Ethereum, and deployed in DeFi protocols for lending or trading. By breaking down barriers, bridges unify liquidity, expand composability, and open the door to fully interconnected DeFi.

## types of cross-chain bridges

Cross-chain bridges connect blockchains so they can transfer assets and data, addressing fragmentation in DeFi. Various bridge types solve different needs for trust, security, and scalability.

\> **centralized vs. decentralized bridges**
The most basic distinction lies in trust models:
- Centralized Bridges like Binance Bridge rely on a single entity, which locks assets on one chain and mints pegged tokens on another. Although they’re fast and user-friendly, they introduce a single point of failure.
- Decentralized Bridges (e.g., ChainBridge) remove intermediaries by using smart contracts for cross-chain transfers. While they’re more trustless, they can be slower and more complex due to reliance on consensus mechanisms.

\> **federated or multi-signature bridges**: Federated or Multi-Signature Bridges strike a balance, requiring multiple validators to approve transactions, reducing single points of failure. The Ripple Network, for instance, uses a consortium of trusted validators to confirm cross-chain transfers.

\> **interoperability-focused chains**: Chains like Cosmos and Polkadot have embedded cross-chain functionality into their protocols. Cosmos uses the Inter-Blockchain Communication (IBC) protocol, allowing zones to exchange assets securely. Polkadot employs parachains linked to a central Relay Chain, ensuring secure, efficient data sharing and a common security layer.

Ultimately, all these bridges aim for the same goal: seamless interaction across isolated networks. By choosing the right approach—centralized simplicity, decentralized trustlessness, or federated balance—blockchains can break out of their silos, unlocking more connected and composable DeFi. In practice, each bridging solution involves trade-offs in trust, speed, cost, and complexity, so users must weigh their priorities carefully. As DeFi continues expanding across chains, robust bridge infrastructure is pivotal for unlocking the next wave of growth and innovation. Bridges are the key.

## how crypto bridges enable cross-chain DeFi

\> **unrestricted asset flow**: Bridges eliminate the isolation of blockchains, allowing assets to flow across networks without relying on centralized exchanges (CEXs). 

\> **liquidity optimization**: Fragmented liquidity hampers efficiency. Bridges solve this by connecting liquidity pools across chains, enabling tighter spreads, deeper pools, and reduced slippage. For traders and LPs, this means higher efficiency and better capital deployment.

\> **access to multi-chain yield**: Bridges provide users with the ability to optimize strategies across chains—staking on Ethereum, farming on Polygon, or borrowing on Solana. Protocols like Cosmos IBC and Avalanche Bridge make cross-chain yield farming and asset mobility seamless, all while maintaining decentralized security.

To make cross-chain asset transfers seamless and secure, crypto bridges rely on powerful tools. Let’s see how they work under the hood. 

## technical underpinnings of bridges

Here’s how crypto bridges deliver cross-chain DeFi, enabling frictionless asset movement, optimized liquidity, and multi-chain yields.

\> **smart contracts & oracles**: Smart contracts handle the heavy lifting by locking tokens on the source chain and minting wrapped versions on the destination chain. Oracles act as the “watchdogs,” verifying transactions and relaying data between blockchains to ensure trust and accuracy.

\> **lock-and-mint model**: This common bridging process involves locking tokens on one blockchain and minting a 1:1 wrapped token on the target blockchain. For instance, tokens locked on the source chain serve as collateral, guaranteeing that their wrapped counterpart is fully backed until redeemed.

\> **cross-chain communication protocols**: Interoperability protocols like Chainlink CCIP and Cosmos IBC enable secure messaging and data verification across networks, ensuring smooth asset transfers and interaction between dApps.

While these mechanisms enable the functionality of bridges, they also introduce vulnerabilities that bad actors can exploit. This makes understanding the security risks tied to bridges critical for both developers and users.

## security, risks, and key limitations of bridges

Bridges unlock cross-chain liquidity and composability but face a range of security threats and practical hurdles:

\> **smart contract vulnerabilities**: Faulty code or logic gaps can make bridges prime targets. High-profile hacks like [Wormhole](https://www.chainalysis.com/blog/wormhole-hack-february-2022/) and [Ronin](https://www.halborn.com/blog/post/explained-the-ronin-network-hack-august-2024) underscore how attackers leverage bugs to siphon off millions.

\> **validator takeover**: Some bridges rely on a small set of validators or a centralized entity. If hackers gain majority control, they can authorize fraudulent transactions—one factor in the Ronin hack.

\> **locked asset risks**: Tokens locked on the source chain serve as collateral for wrapped assets. A breach on the original chain renders the wrapped tokens worthless, leaving users empty-handed.

\> **network layer attacks**:  Beyond smart contracts, bridges can be exposed to routing-level threats like [BGP hijacking](https://www.certik.com/resources/blog/1%4E%48v%50nv%5A8%45%55j%56%56s4%4B%5A4%4C8h-bgp-hijacking-how-hackers-circumvent-internet-routing-security-to-tear-the
), which allows malicious actors to intercept cross-chain traffic.

\> **scalability issues**: Connecting numerous blockchains is complex, and fees or congestion can slow down cross-chain transfers during peak activity.

\> **liquidity fragmentation**: Limited liquidity—especially for smaller tokens—can lead to high slippage and unfavorable rates when moving assets across chains.

\> **user experience challenges**: Juggling multiple protocols and wallets is confusing, discouraging newcomers and hindering mass adoption.

\> **regulatory uncertainty**: Operating across multiple jurisdictions opens bridges to legal scrutiny, which can disrupt or even halt their services.
To mitigate these, robust audits, decentralized architectures, and secure key management are essential.

Despite these challenges, there are several success stories that reveal how bridges unlock interoperability, enhance liquidity, and simplify DeFi, highlighting their transformative potential of cross-chain technology in action.

## case studies: successful cross-chain DeFi implementations

\> **Thorchain**: As a decentralized liquidity network, Thorchain enables direct swaps between native assets like Bitcoin and Ethereum without requiring wrapped tokens or custodial exchanges. This design enhances liquidity across networks while simplifying the user experience for cross-chain trading.

\> **Polygon Bridge**: This bridge connects Ethereum to the Polygon network, offering fast and low-cost asset transfers. Users leverage Polygon’s scalability and low fees while maintaining access to Ethereum’s extensive DeFi ecosystem, making it a cornerstone for projects needing efficient cross-chain functionality.

\> **Avalanche Bridge**: Known for its high speed and low fees, the Avalanche Bridge facilitates transfers between Ethereum and Avalanche. It enables users to seamlessly move assets across chains while benefiting from Avalanche’s high throughput and cost efficiency.

There are also additional examples like Cosmos IBC connects blockchains within the Cosmos ecosystem, enabling seamless transfers for apps like Osmosis, while RenBridge supports decentralized, secure asset transfers across Bitcoin, Ethereum, and more, making both key tools for multi-chain DeFi.

## the way forward

The future of multi-chain DeFi is set for transformative growth, driven by advancements in technology, institutional adoption, and seamless interoperability. Protocols like Cosmos IBC and Chainlink CCIP are laying the groundwork for a connected ecosystem, enabling frictionless asset transfers and composability across blockchains. This evolution will unlock deeper liquidity, allowing dApps to operate as part of a unified financial system rather than fragmented silos.

Institutional participation is expected to accelerate as TradFi integrates with DeFi through hybrid financial models, introducing on-chain products like decentralized derivatives. This influx of liquidity will strengthen decentralized markets and legitimize DeFi as a key player in the global financial landscape. Additionally, Layer 2 scaling solutions, such as Ethereum rollups and Bitcoin’s Lightning Network, will reduce costs and improve accessibility, making DeFi more user-friendly and efficient.

At the same time, AI integration will optimize risk management, enhance smart contract security, and automate financial processes, while regulatory clarity will create a stable environment for broader adoption.

Cross-chain bridges are the backbone of this multi-chain evolution, solving fragmentation and unlocking opportunities across networks. Developers and investors must stay ahead of innovations in bridging technology, as the promise of a scalable, inclusive, and borderless decentralized future has never been closer.



DeFi isn’t just multi-chain—it’s chain-agnostic. But right now, liquidity is siloed across ecosystems like Ethereum, Solana, and Polkadot, fragmenting capital and limiting cross-chain yield strategies. That’s where crypto bridges come in. By enabling seamless asset transfers across chains, bridges unify liquidity, supercharge composability, and let users chase yield wherever the best opportunities arise. 

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Multi-Chain Future: How Crypto Bridges Enable Cross-Chain DeFi

# How Layer 2 Scaling Solutions Are Solving Ethereum’s Congestion Crisis

Ethereum is the settlement layer of the decentralized economy, securing billions in DeFi, NFTs, and on-chain applications. But its dominance comes at a cost—network congestion, gas wars, and unpredictable fees, pricing out users and throttling scalability. As Ethereum continues to onboard the next wave of adoption, its Layer 1 (L1) throughput is proving insufficient to meet the demands of high-frequency trading, yield farming, and NFT minting.

Layer 2 (L2) scaling solutions have emerged as the answer—offloading computation and execution from Ethereum’s mainnet while retaining its security. With Optimistic and ZK-Rollups at the forefront, these solutions are dramatically reducing gas fees and enabling near-instant transactions.

This article breaks down Ethereum’s congestion crisis, the mechanics of L2 scaling, and how these solutions are fueling DeFi, NFTs, and beyond. 

## understanding the Ethereum congestion crisis

Ethereum’s congestion crisis is an unavoidable consequence of its success. As the primary settlement layer for DeFi, NFTs, and on-chain applications, Ethereum processes thousands of transactions daily, all competing for limited block space. Every interaction—whether swapping tokens on a DEX, minting an NFT, or executing a smart contract—requires gas, and when demand spikes, so do transaction fees. Ethereum’s block size and production rate are fixed, meaning that when network activity surges, transactions pile up in the mempool, forcing users to either pay exorbitant fees for priority or endure long delays.

For DeFi users, congestion can be brutal. Gas fees during peak periods have rendered simple token swaps uneconomical, sometimes exceeding the trade value itself. Liquidations on lending platforms like Aave and Compound become inefficient, creating risk for both borrowers and lenders. NFT markets also suffer—during hyped mints, gas wars push transaction costs to unsustainable levels, pricing out smaller participants. Even basic on-chain activities, such as DAO governance voting or bridging assets, become frustratingly slow and expensive.

Ethereum’s Layer 1 alone cannot scale to meet global demand without sacrificing security or decentralization. Increasing block size or reducing block time would centralize the network, violating the blockchain trilemma. Instead, scalability must be achieved through Layer 2 solutions like rollups, which offload computation while leveraging Ethereum’s security. By bundling transactions and settling them efficiently on L1, these solutions drastically cut fees and improve throughput, ensuring Ethereum remains the dominant hub for decentralized innovation.

## introducing Layer 2 solutions

Layer 2 (L2) solutions are built on top of Ethereum’s mainnet (Layer 1) to enhance scalability and reduce transaction costs while preserving the security and decentralization of the underlying blockchain. Unlike sidechains, which operate independently with their own security models, L2 solutions inherit Ethereum’s security by settling transaction data on-chain. These scaling frameworks enable users to execute transactions off-chain with finality guaranteed by Ethereum, drastically improving throughput without compromising trustlessness.

The benefits of L2 solutions are game-changing. Rollups, whether Optimistic or Zero-Knowledge (ZK), significantly lower gas fees by bundling transactions before submitting them to L1, effectively multiplying Ethereum’s transaction capacity. Faster processing speeds enable real-time trading and DeFi interactions, while reduced costs make microtransactions viable again. However, L2s come with trade-offs—Optimistic Rollups introduce a delay for fraud proof verification, while ZK-Rollups require complex cryptographic computation. Liquidity fragmentation and UX challenges also pose barriers to seamless adoption.

Despite these hurdles, L2 adoption is accelerating across DeFi. Leading protocols like Uniswap, Aave, and Curve are migrating to L2 environments to minimize gas costs and enhance efficiency. Arbitrum and Optimism have emerged as dominant Optimistic Rollup solutions, while zkSync and StarkNet push the boundaries of ZK technology. The growth of L2 transactions signals a prominent shift—Ethereum’s future is modular, and L2s are the key to scaling DeFi without sacrificing security or decentralization.

## Layer 2 approaches: a closer look

Ethereum’s Layer 2 ecosystem consists of multiple scaling solutions, each designed to optimize transaction efficiency while maintaining security. These solutions differ in their execution models, trade-offs, and suitability for various use cases. Here’s a breakdown of the most prominent L2 methodologies driving Ethereum’s scalability.

### State Channels
- **What are they**
     - State channels allow two or more participants to transact off-chain, only settling the final transaction state on Ethereum.
     - Transactions occur instantly between participants without requiring block confirmations.
- **How they work**
    - Participants lock a portion of their funds in a multisig smart contract on Ethereum.
    - They exchange signed messages representing transactions off-chain.
    - When the channel is closed, the final state is recorded on-chain, updating the Ethereum ledger.
- **Use cases**
   - Micropayments (e.g., streaming services, pay-per-use models)
   - Gaming (instant in-game transactions)
   - High-frequency transactions between fixed participants
- **Limitations**
   - Only works for a predefined group of participants.
   - Requires all participants to remain online.
   - Not suitable for open DeFi environments or complex smart contracts.
 
### Plasma
- **What are they**
  - Plasma chains are child chains that operate independently but periodically submit cryptographic proofs (Merkle trees) to Ethereum for validation.
  - Transactions occur off-chain on the Plasma chain, reducing Ethereum’s workload.
- **How they work** 
  - Users deposit funds into a Plasma smart contract on Ethereum.
  - Transactions occur off-chain on the Plasma chain.
  - The Plasma chain submits periodic state commitments to Ethereum for finality.
- **Use cases**
  - High-throughput applications (e.g., gaming, enterprise solutions)
  - Scenarios where delayed withdrawals are acceptable
- **Limitations**
  - Withdrawal delays (can take days due to fraud-proof mechanisms).
  - Limited support for complex smart contract interactions, making it less suited for DeFi.
  - User experience challenges when moving assets between Plasma and Ethereum.

### Rollups (The Leading Layer 2 Solution)

Rollups bundle multiple transactions and submit them as a single batch to Ethereum, dramatically reducing costs while retaining Ethereum’s security. There are two main types: Optimistic Rollups and ZK-Rollups.

#### Optimistic Rollups
- **What are they**
  - Assume transactions are valid by default and only execute fraud-proof mechanisms if challenged.
  - Introduce a “challenge period” where incorrect transactions can be disputed.
- **How they work** 
  - Transactions are batched off-chain and posted to Ethereum as calldata.
  - Validators can submit fraud proofs if they detect invalid transactions.
  - If a transaction is disputed, it is re-executed on Ethereum to verify legitimacy.
- **Real-World Examples**
  - Arbitrum – Adopted by Uniswap, GMX, and Aave.
  - Optimism – Powering DeFi projects like Synthetix and Velodrome.
- **Benefits**
  - Lower transaction fees compared to Ethereum L1.
  - Increased scalability while retaining Ethereum’s security.
  - Compatible with Ethereum smart contracts.
- **Limitations**
  - Withdrawal delays (usually ~7 days due to the dispute period).
  - Relies on honest actors to challenge fraudulent transactions.

#### ZK-Rollups
- **What are they**
  - Use cryptographic zero-knowledge proofs (ZK-SNARKs or ZK-STARKs) to verify transactions off-chain before submitting a validity proof to Ethereum.
  - Unlike Optimistic Rollups, transactions are mathematically verified, eliminating the need for a challenge period.
- **How they work**
  - Transactions are bundled off-chain.
  - A cryptographic proof (ZK-proof) is generated to verify their validity.
  - This proof is submitted to Ethereum, confirming all transactions in the batch. 
- **Real-World Examples**
  - zkSync – Low-fee transactions with instant finality.
  - Loopring – DeFi-focused rollup with ultra-low-cost trading.
  - StarkNet – High-performance scaling with support for advanced smart contracts. 
- **Benefits**
  - Instant finality (no challenge period).
  - Higher security due to cryptographic validity proofs.
  - More efficient than Optimistic Rollups in the long term.
- **Limitations**
  - Requires advanced cryptography, making implementation complex.
  - Higher computational costs for proof generation.

### Sidechains vs. Layer 2: understanding the difference

Many people confuse sidechains with L2 solutions, but they serve different purposes.

![layer2_vs_sidechains.png](https://aarna-blogs-media-content.s3.ap-southeast-1.amazonaws.com/layer2_vs_sidechains_cb38a030ea.png)

- **When Sidechains Make Sense:**
  - Projects that prioritize speed and flexibility over Ethereum-level security.
  - Games, enterprise applications, or projects requiring their own governance rules.
- **When Layer 2 is Better:**
  - DeFi protocols, where trust and security are critical.
  - Any application requiring Ethereum’s trustless architecture and composability.

Ethereum’s Layer 2 scaling landscape is rapidly evolving, with rollups emerging as the dominant solution for secure, low-cost transactions. While state channels and Plasma offer niche benefits, rollups provide the best balance of scalability, security, and decentralization. Optimistic Rollups are gaining adoption due to their Ethereum compatibility, while ZK-Rollups push the boundaries of cryptographic efficiency. As L2 adoption accelerates, Ethereum’s future is becoming modular, with Layer 2 solutions serving as the execution layer while Ethereum remains the ultimate settlement layer.

## real-world examples and case studies

Ethereum’s Layer 2 ecosystem is transforming scalability, with several projects leading adoption. Arbitrum, an Optimistic Rollup, has onboarded major DeFi platforms like Uniswap and SushiSwap, reducing gas fees and easing congestion. Polygon, though a sidechain, has driven DeFi growth with Aave and QuickSwap, while expanding into Layer 2 with zkEVM for enhanced security. Loopring leverages ZK-Rollups to power its DEX, offering near-instant, low-cost trading that rivals CEXs. zkSync, built on zero-knowledge proofs, ensures secure scalability with growing DeFi integrations. These solutions have cut fees by over 90% and boosted transactions per second (TPS), proving Layer 2’s critical role in Ethereum’s future.

## challenges and considerations

While Layer 2 solutions enhance Ethereum’s scalability, they come with trade-offs: 
\> Some rely on centralized operators, raising concerns about trust and security.
\> Implementation is technically complex, requiring expertise to avoid inefficiencies and smart contract vulnerabilities. 
\> Interoperability remains a challenge, as different L2 networks often lack seamless communication. 
\> Users face onboarding difficulties, navigating asset bridging and multiple wallets, which can hinder adoption. 
\> Regulatory uncertainty poses risks as authorities scrutinize L2 frameworks. 
\> Economic sustainability is another concern—ensuring long-term incentives for validators and developers is critical. 

Overcoming these challenges is essential for the widespread adoption of Layer 2 scaling solutions.

## the road ahead for Ethereum and Layer 2

Ethereum’s future is anchored in Layer 2 scaling, with Optimistic and ZK-Rollups leading the charge in offloading execution while inheriting Ethereum’s security guarantees. As adoption intensifies, these rollups will continue optimizing finality and slashing gas fees, making transactions seamless and cost-efficient. With proto-danksharding and full EIP-4844 implementation on the roadmap, Ethereum’s throughput is set to skyrocket beyond 100,000 TPS, reinforcing Layer 2 as the de facto execution layer.

Interoperability upgrades will enable cross-rollup liquidity, eliminating fragmented ecosystems, while native account abstraction will streamline UX, making self-custody and gasless transactions mainstream. With Ethereum’s transition to Proof of Stake (PoS) complete, sustainability remains a core focus, reducing the network’s energy footprint while maintaining cryptographic integrity.

As Layer 2 ecosystems mature, Ethereum is evolving into a modular blockchain powerhouse, where settlement, execution, and scalability work in perfect synergy. The future of DeFi, NFTs, and Web3 isn’t just multi-chain—it’s Ethereum-first, with L2s leading the way. 




This article breaks down Ethereum’s congestion crisis, the mechanics of L2 scaling, and how these solutions are fueling DeFi, NFTs, and beyond.  

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How Layer 2 Scaling Solutions Are Solving Ethereum’s Congestion Crisis

# The Math Behind AMMs: Understanding Liquidity Pools and Impermanent Loss

Imagine earning fees on every crypto trade without needing sophisticated software or a large bankroll. This is possible with Automated Market Makers (AMMs), which are a key part of Decentralized Exchanges (DEXs). AMMs allow anyone to become a Liquidity Provider (LP), earning fees as traders swap tokens. However, there’s a catch — impermanent loss (IL).
This blog dives into the math behind AMMs, liquidity pools, and IL, helping you understand the risks, strategies, and smart moves every LP should know.

## What Are Automated Market Makers?

AMMs power token swaps on DEXs without traditional order books. Instead of matching buyers and sellers, AMMs use liquidity pools — reserves of two tokens controlled by smart contracts. LPs contribute tokens to these pools, and prices are set by the **x * y = k** formula, where x and y are token quantities, and k is a constant.

As traders buy tokens, the pool rebalances — if someone buys ETH in an ETH/USDC pool, ETH supply shrinks while USDC increases, driving up ETH’s price. This system ensures continuous liquidity and allows anyone to earn fees as an LP, transforming market-making from an exclusive role into an open, decentralized opportunity.

However, to fully grasp the role of AMMs, it’s crucial to understand how DEXs differ from CEXs as it explains why decentralized liquidity and pricing are essential for permissionless trading. 

## DEXs vs CEXs: Key Differences

The table below highlights the key differences that are most relevant to the role of AMMs:

![cex-vs-dex.png](https://aarna-blogs-media-content.s3.ap-southeast-1.amazonaws.com/cex_vs_dex_298b13edb6.png)

Now that we’ve understood the key differences between DEXs and CEXs, let’s explore liquidity pools — the engine that drives AMMs and enables seamless, decentralized trading.

## Understanding Liquidity Pools

In its simplest definition, liquidity pools enable token swaps on DEXs without relying on order books. These pools consist of two tokens locked in a smart contract, typically at a specific ratio (e.g., 50:50 for an ETH/USDC pool).

Here’s how it works:
- Role of LPs: LPs deposit tokens into the pool, enabling token swaps and earning a share of the trading fees.
- Role of Traders: Traders swap tokens directly with the pool, with prices adjusting automatically according to the **x * y = k** formula.
While liquidity pools offer LPs a way to earn passive income, they also expose them to impermanent loss — a potential reduction in the value of their deposits. 

## What Is Impermanent Loss? 

Impermanent loss is a risk faced by LPs in AMMs when the value of the tokens they’ve deposited in a liquidity pool changes relative to simply holding them. This loss is considered “impermanent” because it can reverse if token prices return to their original values.
The loss occurs because the x * y = k formula forces the pool to rebalance token quantities when prices shift. As the price of one token rises, LPs hold less of it and more of the other, resulting in a difference in value compared to holding the tokens outright.
Think of it like running a fruit stand: you start with 10 apples and 10 oranges, both priced at $1. If apple prices double, you’re forced to trade some apples for oranges to maintain balance. By the end of the day, you have fewer apples than you started with — that’s impermanent loss.

## The Maths of Impermanent Loss

The formula to calculate impermanent loss is:
**IL (k) = (2√k) / (1 + k) - 1**

Where k is the price ratio of the new price to the original price (P_new / P_old).  This formula shows that IL increases disproportionately as price differences grow.
For example, if an LP deposits 1 ETH ($1000) and 1000 USDC ($2000) into a pool, and the price of ETH rises from $1000 to $1500, the pool rebalances. The price ratio k would be 1500 / 1000 = 1.5.  Applying the formula:

**IL = (2√1.5) / (1 + 1.5) - 1 = -0.0202 (or 2.02%)**

This means the LP experiences a 2.02% loss relative to the price change. However, this loss is impermanent because it only becomes permanent if the LP withdraws the funds while prices are still diverged. If the price returns to the original value, the loss disappears.

## How AMMs Mitigate Impermanent Loss 

While impermanent loss is a key risk for liquidity providers, AMMs employ various strategies to mitigate its impact such as:
- **LP Fees**: LPs earn a percentage fee (typically 0.3%) on every trade, and in high-volume pools, these fees can outpace IL.
- **Stablecoin Pairs**: Providing liquidity in stablecoin pairs (like USDC/DAI) reduces IL as stablecoins experience minimal price fluctuations.
- **Diversification**: Spreading liquidity across multiple pools reduces risk from price volatility in any single pair.
- **Concentrated Liquidity**: Models like Uniswap v3 let LPs target specific price ranges, maximizing fees and reducing IL.

## Common Misconceptions About Impermanent Loss

Impermanent loss is one of the most misunderstood concepts in DeFi. Here are four key misconceptions that often confuse liquidity providers:
- **“Impermanent loss is only temporary.”** IL becomes permanent if prices stay diverged when LPs withdraw funds.
- **“LPs always lose money.”** LPs earn fees that often outweigh IL, especially in high-volume pools.
- **“All liquidity pools have the same risk.”** Stablecoin pairs (e.g., USDC/DAI) have low IL, while volatile pairs (e.g., ETH/USDC) carry higher risk.
- **“LPs have no control.”** With protocols like Uniswap v3, LPs can target specific price ranges, reducing risk and boosting returns.

## Should You Be a Liquidity Provider?

Becoming an LP in DeFi offers passive income through transaction fees, especially in high-volume pools. However, LPs face the risk of impermanent loss, which can reduce the value of their holdings when token prices fluctuate. The key question is whether fees outweigh the potential IL.
- **Who Should Consider It?** LPing is ideal for those who can actively monitor market conditions and use tools like APY calculators and IL simulators. Focusing on stablecoin pairs (like USDC/USDT) minimizes IL risk, while diversification across pools helps spread risk.
- **When Is It Worth It?** Liquidity provision is most profitable in high-volume pools and stablecoin pairs, which offer low IL. For volatile pairs like ETH/USDC, tracking IL with simulators is essential. 

In essence, the decision to become an LP depends on your risk tolerance, market knowledge, and ability to leverage the right tools.
aarnâ’s DeFi Matrix makes this easier by scanning high-yield LP opportunities across platforms like Uniswap, Curve, and others. Our proprietary algorithm identifies the best LP positions for maximized yield, leveraging AI-driven strategies to boost profits while managing impermanent loss and market volatility. 
With aarnâ, navigating DeFi liquidity provision becomes more seamless and profitable.

## The Bottom Line

As an LP in DeFi, earning fees is an attractive opportunity, but understanding and managing the risks, particularly impermanent loss, is crucial. By strategically choosing liquidity pools and leveraging tools like IL calculators and diversification, LPs can minimize risks and enhance returns.
To succeed, it’s important to stay informed about the dynamics of different pools and apply strategies such as stablecoin pairs or concentrated liquidity. Actively managing your liquidity provision can turn potential risks into rewarding opportunities in DeFi.








This blog dives into the math behind AMMs, liquidity pools, and IL, helping you understand the risks, strategies, and smart moves every LP should know.


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The Math Behind AMMs: Understanding Liquidity Pools and Impermanent Loss

## aarnâ protocol
aarnâ is an advanced DeFi asset management platform that converges AI and tokenization technology to help high value users manage their digital assets lifecycle. The aarnâ protocol infrastructure is utilized to create crypto structured products that provide informed, transparent and risk managed access to underlying crypto & digital assets. As the crypto market grows from USDT onwards and becomes widely adopted in mainstream, structured products in crypto would become the pathway for accessing this new asset class, not just for new users, but also for experienced crypto investors who currently invest in individual tokens. 


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![afi802_flow.png](https://aarna-blogs-media-content.s3.ap-southeast-1.amazonaws.com/afi802_flow_23ed26d2b7.png)

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![key_features.png](https://aarna-blogs-media-content.s3.ap-southeast-1.amazonaws.com/key_features_1077d4bd4f.png)

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 <img src="https://aarna-blogs-media-content.s3.ap-southeast-1.amazonaws.com/appstore_ecb81e44e0.png" alt="appstore" style="width: 230px;" />
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 <a href="https://play.google.com/store/apps/details?id=app.aarna.finance" target="_blank">
 <img src="https://aarna-blogs-media-content.s3.ap-southeast-1.amazonaws.com/playstore_download_e1ed25a752.png" alt="playstore" style="width: 200px;" />
 </a>
 
</div>


## âtv timelock and staking 
âtv timelock & staking program is a protocol tvl and liquidity building program. it’s designed to reward early deployers of capital in âtv vaults, and in the process secure sustainable tvl build up, and create a positive reinforcement cycle for the protocol and token engineering.

aarnâ's also offers an Institutional TVL Plan designed to add a compelling opportunity to optimize institution's crypto asset allocation through tokenized structured products, while benefiting from enhanced rewards for higher commitments. Learn more [here](https://www.aarna.ai/institutional-tvl-plan)

![standard_timelock.svg](https://aarna-blogs-media-content.s3.ap-southeast-1.amazonaws.com/standard_timelock_486a158da8.svg)

aarnâ is an advanced DeFi asset management platform that converges AI and tokenization technology to help high value users manage their digital assets lifecycle. The aarnâ protocol infrastructure is utilized to create crypto structured products that provide informed, transparent and risk managed access to underlying crypto & digital assets.

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âtv 802: Crypto’s First AI-Quant Tokenized Structured Product

# Blockchain’s Disruptive Impact on Traditional Finance

Imagine a world where your financial transactions don’t rely on banks or brokers—where trust isn’t placed in institutions but in technology that’s transparent, secure, and immune to human error or manipulation. That’s the promise of blockchain, the transformative technology serving as the backbone of decentralized finance (DeFi). 
At its simplest, blockchain is like a digital ledger that records every transaction across a network of computers, making it nearly impossible to alter or cheat. This innovation is already making waves in the financial world, but what happens when it meets the long-standing systems of traditional finance (TradFi)? 
DeFi’s ability to improve traditional finance is gradually changing the way we think about and handle money.  Let’s explore how blockchain is transforming TradFi and what that could mean for the future of finance.

## redefining finance: blockchain’s influence
Going beyond the hype, blockchain technology has already actively transformed several crucial aspects of TradFi by bringing unprecedented levels of efficiency, security, and transparency. Some of the most prominent ones include:

**\> payments and transactions:** Traditional cross-border transactions often involve multiple intermediaries, leading to delays and high fees. On the other hand, blockchain enables direct, peer-to-peer cross-border payments with near-instant settlements and lower costs. For example, [Ripple’s](https://x.com/Ripple) blockchain-based system allows real-time payments without intermediaries, reducing delays and fees, and minimizing reliance on traditional banks.

**\> lending and borrowing:** Traditional lending involves lengthy processes with credit checks and intermediaries. In contrast, blockchain uses smart contracts to enable decentralized lending and borrowing. Platforms like [Aave](https://x.com/aave) allow users to lend and borrow cryptocurrencies directly, with transparent, automated agreements, eliminating the need for banks and speeding up the process.

**\> asset management:** Traditional asset management often requires brokers and advisors, adding fees and complexity. Blockchain introduces tokenization, enabling direct ownership and trading of assets like real estate. For instance, [RealT](https://x.com/RealTPlatform) allows fractional ownership of properties, increasing liquidity and accessibility, while reducing the need for intermediaries.

**\> identity verification:** Traditional identity verification involves extensive paperwork and multiple steps, increasing the risk of fraud. Blockchain, however, allows decentralized identity management. [Civic](https://x.com/civickey/?referrer=home-twitter), for example, lets users control their data, streamlining KYC processes and reducing fraud risks, making identity verification faster and more secure.

**\> capital markets:** Traditional capital markets involve complex processes and delays in trading securities. Blockchain simplifies this by enabling the issuance of digital securities, or security tokens. Platforms like [tZERO](https://x.com/tZERO) offer more transparent, efficient trading with faster settlement times and lower costs, transforming the traditional market structure.

### tokenization of assets
One of the most transformative uses of blockchain is asset tokenization, which has revolutionized our approach to ownership and investment. In TradFi, investing in assets like real estate, fine art, or even stocks often requires significant capital and involves intermediaries such as brokers or banks. This process can be cumbersome, expensive, and inaccessible to many potential investors.

Blockchain changes the game by enabling the tokenization of assets, which means converting physical or financial assets into digital tokens on a blockchain. Each token represents a share of ownership in the underlying asset. For instance, a piece of real estate can be divided into multiple tokens, allowing investors to purchase a fraction of the property. This not only democratizes access to high-value assets but also increases liquidity, as these tokens can be traded on blockchain platforms much more easily than traditional assets.

Platforms like RealT and tZERO are leading the way in this space. RealT allows investors to buy fractional ownership in rental properties, earning rental income proportional to their holdings. tZERO offers a marketplace for trading tokenized securities, providing a more efficient, transparent alternative to traditional stock exchanges.

Tokenization also opens up opportunities for new asset classes, such as digital collectibles and intellectual property, further broadening the scope of investment options. As this trend grows, it has the potential to transform global finance by making investments more accessible, transparent, and liquid for everyone.

### DeFi vs. TradFi: beyond the basics
While the differences between DeFi and TradFi in areas like payments, lending, and asset management are well-known, there are deeper contrasts that highlight the fundamental shifts blockchain technology brings to the financial landscape.

![tradfi-vs-defi.png](https://aarna-blogs-media-content.s3.ap-southeast-1.amazonaws.com/tradfi_vs_defi_424756744b.png)

### challenges and barriers to adoption
Despite its transformative potential, DeFi faces significant challenges and barriers to widespread adoption. One major obstacle is regulatory uncertainty. Governments and financial regulators worldwide are grappling with how to classify and control DeFi activities, leading to inconsistent regulations that can hinder innovation and growth.

Another challenge is security and risk. While DeFi platforms offer transparency through smart contracts, they are also vulnerable to coding errors and hacks. High-profile exploits have resulted in significant financial losses, raising concerns about the safety of assets on these platforms.

Scalability is also a critical issue. Current blockchain networks, like Ethereum, can struggle with transaction throughput during peak times, leading to high fees and slower processing times, which can deter users.

Additionally, the user experience in DeFi remains complex. Navigating decentralized platforms often requires technical knowledge, creating a steep learning curve for newcomers. This limits adoption among non-technical users who are accustomed to the simplicity of TradFi  services.
Finally, liquidity constraints on some DeFi platforms can limit the availability of funds for lending and borrowing, impacting the overall effectiveness of the ecosystem. Addressing these challenges is crucial for DeFi to achieve mainstream acceptance.


### the future of finance
The future of finance is set to be a dynamic blend of tradition and innovation, driven by the convergence of blockchain technology and DeFi with TradFi. Rather than replacing established systems, DeFi is likely to complement and enhance them, creating a financial landscape that is more adaptable, transparent, and inclusive.

Imagine a world where financial services are not only more accessible but also more secure and efficient, thanks to blockchain’s inherent transparency and decentralized nature. Tokenization and smart contracts will continue to push boundaries, opening up new avenues for investment and financial interaction that were once unimaginable.

As these technologies mature, we can expect a shift from experimental adoption to mainstream integration, where DeFi principles are woven into the fabric of global finance. This evolution promises a future where financial power is more evenly distributed, offering greater opportunities for everyone, regardless of where they stand today.



Imagine a world where your financial transactions don’t rely on banks or brokers—where trust isn’t placed in institutions but in technology that’s transparent, secure, and immune to human error or manipulation.

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Blockchain’s Disruptive Impact on Traditional Finance

# aarnâ at TOKEN2049: Elevate your digital assets play with AI quant & tokenization > âtv 802 

Join aarnâ at TOKEN2049, Singapore, from September 17 to 19, 2024. We are introducing our flagship AI quant tokenized structured product, âtv802. And we’re looking forward to meeting high value investors & asset managers, and potential ecosystem partners.

## TLDR;
1. Visit us at the aarnâ booth at **Level 4, booth P122**
2. Demo Day on 18th September 2024
3. **Capital X** - our side event for HNIs / FOs / Liquid Crypto on Sep 17th with **[DigiFT](https://www.digift.sg/capitalx/index)**
4. We have an exciting pack of cards (literally) for you in the welcome bag
5. And yes, we’re Gold Sponsors at T2049

## What to Expect at the aarnâ booth >

**For Investors:** Discover the âtv 802 vault, a sophisticated product for digital asset management. Leveraging aarnâ’s deep learning model alpha 30/7 to optimize asset allocation, manage risk, and deliver long term alpha. Visit our booth to meet the team for a tailored demonstration. Pre-book a meeting with the founder here >

**For Enthusiasts:** Engage with live demonstrations and explore how AI is transforming DeFi. Our displays and team will offer insights into real-time AI x DeFi and our launch product âtv802. Explore how aarnâ helps you manage your entire digital assets lifecycle. 
For Partners: We’re exploring strategic alliances that extend beyond networking. Ecosystem partnerships, TVL collaborations, DAO treasury management, and crypto asset managers. You will discover the most advanced DeFi asset management platform with us. 

**Live Demo Day:** On Wednesday, September 18, from 4:00 PM to 5:00 PM GMT+8, we invite you to Aarnâ’s Live Demo Day. Experience the capabilities of âtv 802 firsthand, meet our founders, and witness how we are advancing AI-driven DeFi.

## CapitalX Side Event

We’re also co-sponsoring a specialist side event, CapitalX, along with DigitFt. CapitalX is an exclusive event tailored for HNIs and UHNIs, Family Offices, Liquid Crypto Investors / Funds. This intimate gathering provides a platform for deeper exploration of not just our AI quant tokenization strategy, but also explore other opportunities with our partner DigiFT. aarnâ’s founder Sri Misra will be speaking at a panel discussion on DeFi Trading: Strategies and Liquidity Uncovered at [https://www.digift.sg/capitalx/index](https://www.digift.sg/capitalx/index), join us, register >

## Join Us at TOKEN2049

TOKEN2049 is where the future of crypto and DeFi unfolds. At aarnâ, we are active participants and contributors to advancement of DeFI at the frontier. And we’re looking forward to meeting the best minds in the space, please drop by sometime, or look us up on the T2049 app. We promise to make your time (& crypto assets) worthwhile.

Join aarnâ at TOKEN2049, Singapore, from September 17 to 19, 2024. We are introducing our flagship AI quant tokenized structured product, âtv802. And we’re looking forward to meeting high value investors & asset managers, and potential ecosystem partners. 

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aarnâ at TOKEN2049: Elevate Your DeFi Strategy with âfi802

aarnâ at TOKEN2049: Elevate Your DeFi Strategy with âtv802

# How to Choose the Best DeFi Wallet?

In decentralized finance (DeFi), choosing the right wallet is essential because it not only secures and controls your assets but also optimizes your access to DeFi opportunities. A DeFi wallet is a non-custodial tool that puts you in full control of your cryptocurrency, secured by private keys or seed phrases. This means only you can access your assets, protecting them from external control like government interference.

Some wallets stand out for their strong security, ease of use, and integration with various DeFi platforms. Additionally, many offer features like direct staking, allowing you to earn interest on your crypto holdings. Selecting the best DeFi wallet is crucial for managing your assets effectively and securely in the DeFi space.

## types of DeFi wallets
Each type of DeFi wallet has its own advantages and trade-offs. The best choice for you depends on your specific needs, whether you prioritize security, ease of access, or the ability to make frequent transactions. 

**\> hardware wallets:** These are physical devices that store your private keys offline, offering the highest level of security. Hardware wallets are ideal for long-term storage of large amounts of cryptocurrency since they are immune to online hacks. However, they can be less convenient for frequent transactions due to the need to connect the device each time you want to access your funds.

**\> software wallets:** Software wallets, available as desktop and mobile applications, offer a balance between security and convenience. Desktop wallets provide high control but depend on the computer’s security. On the other hand, mobile wallets offer the flexibility to manage assets on the go, though they come with risks like device loss or theft. Both types include essential security features like password protection and two-factor authentication (2FA) for added protection.

**\> web wallets:** Web wallets are accessible through your web browser without needing to install any software. They are convenient and easy to use, often integrated directly into DeFi platforms for seamless transactions. However, since they are always online, they are more vulnerable to phishing attacks and other security risks.

**\> multisignature wallets (multisig wallets):** These wallets require multiple private keys to authorize a transaction. This adds an extra layer of security, as no single person can move funds without the agreement of others. Multisig wallets are particularly useful for organizations or groups that manage shared funds.

## key features to consider
**\> security:** Ensure the wallet provides robust security features, including full control over your private keys, strong encryption, and reliable backup and recovery features. This is crucial for protecting your assets from unauthorized access and ensuring recovery in case of device loss.

**\> user interface and experience:** A user-friendly interface and easy navigation are essential, especially for those new to DeFi. The wallet should be accessible across different devices and offer a smooth, intuitive experience.

**\> compatibility with DeFi platforms:** The wallet should support a wide range of tokens and seamlessly integrate with the decentralized applications (dApps) and platforms you plan to use. This includes offering built-in DApp browsers and cross-platform compatibility.

**\> privacy and anonymity:** If privacy is a priority, choose a wallet that doesn’t require KYC verification and offers additional privacy features, such as transaction mixing services, to protect your anonymity in the DeFi space.

**\> transaction fees and speed:** Both transaction fees and speed can vary greatly between wallets, and both these factors are essential in the fast-paced DeFi environment. Some wallets allow you to set your own transaction fees, helping you manage costs effectively. Additionally, choosing a wallet known for fast transaction processing can be crucial during times when quick action is needed.

## popular DeFi wallets in 2024
**\> MetaMask:** [MetaMask](https://x.com/MetaMask?ref_src=twsrc%5Egoogle%7Ctwcamp%5Eserp%7Ctwgr%5Eauthor) remains a top DeFi wallet in 2024, known for its ease of use and broad compatibility with dApps. Available as a browser extension and a mobile app, it supports most Ethereum-based tokens and offers features like built-in token swapping and hardware wallet integration. However, its browser integration makes it vulnerable to phishing attacks, and it has limited support for non-Ethereum blockchains.

**\> Trust Wallet:** Owned by Binance, [Trust Wallet](https://x.com/trustwallet) is a versatile mobile wallet that supports over 65 blockchains, including Ethereum, Binance Smart Chain, and Bitcoin. It offers staking, an integrated DEX, and support for NFTs, all within a user-friendly interface. Trust Wallet’s main drawbacks are its availability only on mobile devices and slow customer service response times.

**\> Ledger:** [Ledger](https://x.com/Ledger) is a leading hardware wallet, offering cold storage for over 5,500 cryptocurrencies. Its advanced security features, like SE chips and offline private key storage, make it highly secure. The Ledger Live dashboard allows easy management of assets, but the wallet’s higher cost and limited dApp integration are potential downsides.

**\> Coinbase Wallet:** [Coinbase Wallet](https://x.com/CoinbaseWallet), a standalone app from Coinbase, is ideal for managing cryptocurrencies and dApps on mobile devices. It integrates directly with the Coinbase exchange and offers strong security features, including end-to-end encryption. While it’s user-friendly, especially for beginners, its customer support is limited compared to the main Coinbase platform, and it has restricted support for other exchanges.

**\> MyEtherWallet (MEW):** [MyEtherWallet (MEW](https://x.com/myetherwallet/)) is a free, open-source interface for managing Ethereum-based assets. It supports ERC-20 tokens and integrates with hardware wallets like Ledger and Trezor. While MEW offers full control over private keys and built-in exchange services, it’s limited to the Ethereum blockchain and has a steeper learning curve, especially for new users.

## choosing the right wallet for your needs
When choosing a DeFi wallet, it’s crucial to match the wallet’s features with your specific needs and how you plan to use it. Here are key factors to consider based on your goals and preferences.

**\> asset management:** Choose a wallet with strong multi-chain support if you manage a diverse portfolio across multiple blockchains.

**\> security focus:** If security is your top priority, opt for a hardware wallet with offline storage and advanced protection features.

**\> DeFi engagement:** For frequent interaction with dApps, select a wallet with seamless dApp integration and an intuitive interface.

**\> earning potential:** If you’re interested in staking or yield farming, pick a wallet that directly supports these activities for ease of use.

**\> convenience vs. security:** Consider your preference for accessibility versus security—mobile wallets offer convenience, while hardware wallets provide superior protection.

## wrapping up
As the DeFi landscape continues to evolve, the choice of wallet will increasingly shape how you interact with this dynamic ecosystem. Your wallet is not just a tool for storage; it’s your gateway to participating in staking, trading, and other DeFi activities. As more features and innovations emerge, staying informed and adaptable will be key to maximizing your opportunities and safeguarding your investments in this rapidly growing space. Making the right choice now sets the foundation for your future success in DeFi.

In decentralized finance (DeFi), choosing the right wallet is essential because it not only secures and controls your assets but also optimizes your access to DeFi opportunities. A DeFi wallet is a non-custodial tool that puts you in full control of your cryptocurrency, secured by private keys or seed phrases. This means only you can access your assets, protecting them from external control like government interference.

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How to Choose the Best DeFi Wallet?

# Reimagining DeFi: 2024 and Beyond

In 2024, decentralized finance (DeFi), stands at the forefront of financial innovation, shaping a future that seemed unimaginable a decade ago. Imagine a world where anyone, anywhere, can access financial services without needing a bank account or a credit score. This was the vision that began with Bitcoin’s introduction in 2009, which offered a glimpse of a financial system free from centralized control. When Ethereum emerged in 2015, it opened the door to programmable money and gave rise to smart contracts—self-executing agreements that can run without middlemen. Fast forward to today, and DeFi is no longer just a niche interest; but a force that has broken barriers, making finance more accessible and efficient. In 2024, we’re seeing a flourishing ecosystem of innovations, like platforms where you can lend or borrow money without a bank and systems that let you trade assets globally, all thanks to blockchain technology. This growth is fueled by a community committed to democratizing finance and creating opportunities for everyone. 

## DeFi in 2024: growth and trends
As we enter 2024, the DeFi market is experiencing significant growth, with the total value locked (TVL) in DeFi applications reaching [$192 billion in May](https://cointelegraph.com/news/defi-tvl-192-billion-first-time-15-months-dappradar) (the highest level since February 2022). This surge highlights DeFi’s emergence as a major force in the global financial system. Investors are attracted to DeFi for its transparency, reduced costs, and yields that often surpass traditional bank savings rates. 

Regulatory frameworks are becoming more defined, enhancing trust and encouraging broader DeFi adoption. In the United States, the Securities and Exchange Commission (SEC) is developing clearer regulations for digital assets to protect consumers and promote innovation. The European Union’s Markets in Crypto-Assets Regulation (MiCA) aims to establish comprehensive rules for crypto assets, including DeFi, to ensure market integrity. Singapore’s Monetary Authority has introduced a licensing regime for digital payment token services, fostering a secure and innovative DeFi ecosystem. Meanwhile, India is exploring regulatory frameworks that balance innovation with security, with the Reserve Bank of India (RBI) examining the potential of a central bank digital currency (CBDC) that could integrate with DeFi applications. Such regulatory clarity is crucial for ensuring the safety of DeFi participants while fostering innovation.

Key technological trends are also shaping DeFi’s evolution. Platforms like [Aave](https://x.com/aave) leverage AI to optimize lending protocols with dynamic interest rates based on real-time data. [Fetch.ai](https://x.com/Fetch_ai?utm_source=Twitter&utm_medium=social+media) uses AI to enhance trading strategies, improving efficiency and user experience. Privacy is a growing focus, with platforms like Aztec Network adopting zero-knowledge proofs to enhance transaction security.

Sustainability is another emerging trend, with projects like [KlimaDAO](https://x.com/KlimaDAO) working to offset carbon emissions by tokenizing carbon credits, allowing users to support sustainable practices. 

As more users and institutions embrace DeFi, the industry is set to redefine how we think about and interact with money, paving the way for a more inclusive and decentralized financial future.

## technologies driving DeFi in 2024
In 2024, DeFi is being reshaped by several cutting-edge technologies that are pushing the boundaries of innovation and functionality:

**\> Layer-2 scaling solutions:** Technologies like Optimistic Rollups and zk-Rollups are increasing transaction speeds and reducing costs. Platforms such as [Arbitrum](https://x.com/arbitrum) and [Optimism](https://x.com/optimism) are utilizing these solutions to enable DeFi platforms like [Uniswap](https://x.com/Uniswap) and [SushiSwap](https://x.com/SushiSwap?ref_src=twsrc%5Egoogle%7Ctwcamp%5Eserp%7Ctwgr%5Eauthor) to handle higher transaction volumes efficiently, addressing previous scalability challenges.


**\> cross-chain interoperability:** Platforms such as [Polkadot](https://x.com/Polkadot) and [Cosmos](https://x.com/cosmos) facilitate seamless communication and asset transfers between different blockchains. This expansion of capabilities enhances user experiences by allowing access to a wider range of financial services across multiple blockchains without centralized exchanges.

 **\> decentralized autonomous organizations (DAOs):** DAOs offer new governance models, granting users direct decision-making authority. Examples like [MakerDAO](https://x.com/MakerDAO) and [Compound](https://x.com/compoundfinance) allow participants to propose and vote on protocol changes, promoting inclusivity and democracy in project management within DeFi.

**\> artificial intelligence:** AI-driven algorithms are used for risk management, market predictions, and personalized user experiences. Platforms such as [Numerai](https://x.com/numerai) and Fetch.ai are using AI to enhance the efficiency and security of DeFi by analyzing vast data sets to optimize operations and provide valuable insights.

## emerging trends and opportunities in DeFi 2024
As the DeFi evolves in 2024, several emerging trends and opportunities are shaping the future of DeFi, offering innovative solutions and expanding the reach of financial services:

**\> decentralized identity (DID) solutions:** With data privacy concerns rising, DID solutions like [Civic](https://x.com/civickey/?referrer=home-twitter) enable users to manage and share personal information securely without relying on centralized entities. This trend allows DeFi platforms to enhance user privacy and security through integrated identity verification.

 **\> tokenization of real-world assets (RWAs):** The tokenization of assets such as real estate and art is broadening DeFi’s scope. Platforms like [RealT](https://x.com/RealTPlatform) and [Maecenas](https://x.com/maecenasart) enable fractional ownership and trading of RWAs on blockchains, democratizing access to traditionally illiquid assets and offering new investment avenues.

**\> decentralized insurance products:** As DeFi expands, innovative risk management solutions like [Nexus Mutual](https://x.com/NexusMutual) and [Etherisc](https://x.com/etherisc) are emerging. These platforms provide coverage against smart contract failures, enhancing security and building trust in DeFi services.

**\> real-world use cases and adoption:** The focus is shifting to practical DeFi applications. Initiatives like [Celo](https://x.com/celo) are offering financial services, such as loans and remittances, to underserved populations, showcasing DeFi’s potential for driving financial inclusion.

 **\> regenerative finance (ReFi):** ReFi focuses on using DeFi for environmental and social causes. Projects like [Toucan Protocol](https://x.com/ToucanProtocol) create blockchain-based carbon credit markets, aligning with demand for responsible investments and integrating ESG considerations into DeFi platforms.

## challenges and future outlook
Despite its rapid growth, DeFi faces significant challenges that could impact its future trajectory. Regulatory uncertainty remains a major hurdle, as inconsistent global regulations create barriers to widespread adoption and innovation. Security risks, such as smart contract vulnerabilities and hacks, pose ongoing threats to user trust and platform stability. Additionally, the complexity of DeFi protocols can deter mainstream users, highlighting the need for more user-friendly interfaces and educational resources.

Looking ahead, the future of DeFi holds immense potential. As regulatory frameworks mature, DeFi could become more integrated with traditional finance, fostering greater collaboration and innovation. Advances in technology, such as improved security measures and increased scalability, are expected to enhance platform reliability and user experience. By addressing these challenges and embracing opportunities for growth, DeFi is poised to transform the financial landscape, promoting a more inclusive and decentralized future.



In 2024, decentralized finance (DeFi), stands at the forefront of financial innovation, shaping a future that seemed unimaginable a decade ago. Imagine a world where anyone, anywhere, can access financial services without needing a bank account or a credit score.

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Reimagining DeFi: 2024 and Beyond

# âtv Timelock & Staking 

![afi-timelock-staking.png](https://aarna-blogs-media-content.s3.ap-southeast-1.amazonaws.com/afi_timelock_staking_a35a132c18.png)

âtv timelock & staking program is a protocol TVL and liquidity building program. it’s designed to reward early deployers of capital in quant âtv vaults from 800 series (such as **âtv 802** and **âtv 808**), and in the process secure sustainable TVL build up, and create a positive reinforcement cycle for the protocol and token engineering.

This program is a secure and flexible staking plan designed for  âtv vault users who deploy capital for accessing âtv vault strategies. This program rewards users with on top APY and pre-sale access to $AARNA. Users can lock âtv tokens for a chosen duration to earn these incentives, thus aligning longer term protocol liquidity (ie TVL growth). Early participants receive higher rewards in the form of higher APY (up to 25%), the rewards are proportional to the lock-up period and the quantum of âtv tokens locked by the users.

![timelock-table.jpg](https://aarna-blogs-media-content.s3.ap-southeast-1.amazonaws.com/timelock_table_57091083e5.jpg)

## what is ASRT >

Rewards are distributed in the form of a shadow token, âtv Staking Reward Tokens ( ASRT ), which is non-transferable and does not hold any real value by itself but can be exchanged for $AARNA, once the protocol token is released. Thus, the ASRT holders have pre-sale access to the $AARNA tokens and will receive them at pre-sale valuation. For calculation purposes, ASRT tokens are assigned a value of $1 USD per token, and their emission would be linked to the APY earned by the users who have staked their âtv tokens. 

## how does âtv TimeLock work >

The token cycle in the âtv Timelock & Staking program starts when a user deposits assets into the âtv vaults and receives the âtv tokens in return. Once the depicted stables are cumulatively swapped by the vault into underlying portfolio tokens of the vault, which could take anything from 2-20 hours, these âtv tokens can then be staked in the âtv Timelock contract to earn additional APY rewards. The non-debit locking mechanism ensures that staked âtv tokens remain securely locked in users' wallets, preventing physical withdrawal during the staking period. Users can initiate the unstaking process  to regain control of their âtv tokens and access their initial deposits. Rewards are calculated based on the longest lock period before unstaking. 

As a simple illustration, if a user invest in any âtv vault during the initial 3 month beta phase, and lock the âtv tokens for 6 months, then at the end of 6 month lock period the user will be able to redeem an APY of 15%, whereas if user unstakes only after 5 months then the APY will be calculated at the longest lock period before 5 months ie. 3 months, so user’s APY will be 12.5%.

## âtv staking is a limited program

The maximum cap is set at 2% i.e., 2 million $AARNA for the Launch period to incentivize early participation, and a subsequent 10% i.e., 10 million $AARNA is set for next 24 month period to encourage long-term commitment. The seed round valuation of $AARNA is $0.40 USD. Assuming this to be the minimum conversion price, ASRT supply is limited to 2mn tokens as well, as conversion ratio of ASRT : $AARNA is expected to decrease over time as the protocol progresses. 

**security >**

All contracts of the âtv tokenization platform are thoroughly tested and have undergone intensive security audit by Certik. The audit azores and reports can be accessed on [Skynet >](https://skynet.certik.com/projects/aarna-protocol). 

âtv Timelock & Staking Program is a protocol TVL and liquidity building program. It’s designed to reward early deployers of capital in âtv vaults, and in the process secure sustainable TVL build up, and create a positive reinforcement cycle for the protocol and token engineering.

âtv Timelock & Staking

# Navigating the way to invest in DeFi Ecosystem

## > DeFi today.
In recent years, DeFi has experienced a remarkable surge in users, with approximately **50 million** unique addresses currently engaged in the ecosystem. Remarkably, 2021 witnessed the highest monthly unique user count, highlighting the growing interest in decentralised finance. The total value locked (TVL) in DeFi is **$63.9 billion**, with steady growth since its peak of around $200 billion in 2021. While Ethereum remains a primary hub, emerging platforms like Arbitrum contribute to a diverse and dynamic DeFi landscape. By eliminating geographical barriers and requiring only internet access and a crypto wallet for participation, DeFi offers many financial opportunities. Through automated processes that replace conventional intermediaries, DeFi significantly reduces the costs associated with financial services while enabling seamless peer-to-peer transactions globally.

![defi-tvl.png](https://aarna-blogs-media-content.s3.ap-southeast-1.amazonaws.com/defi_tvl_eac40dc4d1.png)
Source: [https://defillama.com/](https://defillama.com/) 

**> DeFi over CeFi** Currently, centralised authorities control all our assets and investments, and concerns regarding manipulation and transparency have become increasingly noticeable. Traditional banking systems often offer poor returns to depositors while retaining significant control over their assets, and we must go through several intermediaries for any financial need, from home loans to bonds. However, emerging technologies are reshaping the financial sector, offering a viable alternative: Decentralised Finance (DeFi). DeFi runs on peer-to-peer relationships; within Defi, users can engage in the same activities offered by traditional banks, such as lending, borrowing, obtaining insurance, and earning interest, all without intermediaries, significantly accelerating the speed of financial transactions. DeFi leverages blockchain technology to create an open and transparent financial ecosystem, giving power to individuals with complete control over their finances. Through platforms like Ethereum and innovative smart contracts, DeFi extends beyond conventional cryptocurrency transactions to include a wide variety of financial services such as lending, insurance, and asset tokenisation on a global scale.

**> Advantages of DeFi.** Decentralised Finance (DeFi) dApps work without intermediaries, using automated rules in smart contracts on the Blockchain to ensure safety and fairness. These smart contracts execute autonomously, so there is no need for manual intervention. DeFi is transparent, meaning everyone can see what's happening with transactions. Moreover, DeFi services are available worldwide, using public blockchains that anyone can join, and transactions go straight to users' crypto wallets. Different DeFi apps can work well together, enhancing their ability to complement each other securely. Additionally, because the Blockchain can't be changed or messed with, it keeps everything secure and reliable when using DeFi apps for financial transactions.

![defi_users_stats.png](https://aarna-blogs-media-content.s3.ap-southeast-1.amazonaws.com/defi_users_stats_de4dfc697f.png)
Source: [https://www.statista.com/statistics/1297745/defi-user-number/ ](https://www.statista.com/statistics/1297745/defi-user-number/ )

**> How does the DeFi work?** DeFi relies on smart contracts that are self-executing contracts with terms written into code, enabling automatic execution without intermediaries. Transactions are recorded across a network of computers securely and transparently. Offering users competitive, customisable, and decentralised services without relying on central authorities. Users have direct control over their assets, and protocols can be combined for enhanced functionality. DeFi systems comprise settlement, application, and interface layers: the settlement layer ensures transaction completion and obligation fulfilment through blockchain consensus protocols, the application layer manages crypto assets and offers financial services like lending and trading via smart contracts, and the interface layer provides user-friendly front-ends accessible through web or mobile platforms. DeFi allows for the tokenisation of real-world assets, enabling them to be represented as digital tokens on the blockchain and traded, lent, borrowed, or used as collateral. Users can engage in peer-to-peer lending and borrowing, participate in decentralised exchanges (DEXs) for trading digital assets directly, and utilise protocols for staking and yield farming to earn rewards. DeFi aims to democratise access to financial services by leveraging blockchain technology to create transparent, efficient, and censorship-resistant economic infrastructure. 

Know more about DeFi: [https://www.aarna.finance/understanding-defi-the-future-of-finance](https://www.aarna.finance/understanding-defi-the-future-of-finance) 

**> How to invest in DeFi.** Investing in DeFi can offer various opportunities, but it also comes with different levels of risk and reward. For instance, yield farming lets investors lock their crypto assets in DeFi protocols and earn interest. Staking requires investors to lock their tokens in smart contracts to get rewards and have a say in governance. Tokenisation is another feature of DeFi, which enables any asset, such as real estate, art, stocks, bonds, intellectual property, identity, or data, to be converted into digital tokens on the blockchain. These tokens can then be traded, lent, borrowed, or used as collateral on DeFi platforms. Moreover, liquidity provision involves supplying assets to DeFi platforms and receiving fees and rewards. These are ways to invest in DeFi and potentially generate high returns. Still, they also entail risks, such as impermanent loss and smart contract flaws, that must be carefully assessed and researched before investing.

**> Risks Involved.** You can Invest in DeFi to get a lucrative way to generate passive income and diversify your portfolio, but it also comes with risks. You may encounter market volatility, smart contract bugs, and regulatory uncertainties when you invest in DeFi platforms and protocols. However, these risks can be reduced by doing homework, spreading your investments, and keeping up with the latest trends in the DeFi space. By doing so, you can maximise your returns and benefit from the innovation and growth of decentralised finance. With the right strategies and a clear understanding of the DeFi landscape, you can invest in DeFi confidently and take advantage of its opportunities.

Know more about Risk Management Strategies: [https://www.aarna.finance/risk-management-strategies-for-defi](https://www.aarna.finance/risk-management-strategies-for-defi) 

**> Navigating DeFi Safely: How to Avoid Mistakes?** When you invest in DeFi, you should avoid common pitfalls that could jeopardise your returns. Don’t fall for platforms or projects that promise unrealistically high yields, as they may be unsustainable or fraudulent. Instead, do your due diligence to verify their credibility and compare them with other options. Also, don’t let greed or fear cloud your judgment when taking profits and cutting expenses; have clear exit plans for every investment; and track their performance using trustworthy tools. Moreover, be careful when interacting with new platforms or projects, and make sure reputable security firms audit them to reduce smart contract risks. Finally, protect yourself from scams, such as phishing or fake websites, by using secure browser and wallet solutions and not sharing personal information with unverified entities. By being informed and cautious, you can invest in DeFi more safely and effectively.


**> Aarnâ** offers an opportunity to invest in DeFi for both newcomers and seasoned investors; leveraging human expertise and AI-driven intelligence, Aarnâ simplifies access to the DeFi Ecosystem's complexities. The protocol's commitment to decentralisation, composability, on-chain provenance, and tokenisation ensures transparency and trust within its ecosystem. Through its multi-sided platform, Aarnâ enables collaboration between crypto fund managers and data scientists to design well-defined investment strategies tokenised into structured products called â_fi vaults. These vaults will utilise various techniques, using machine learning and artificial intelligence, offering users customised investment options, thereby maximising returns.

Explore the opportunities, risks, and strategies involved in investing in the DeFi ecosystem. Learn about yield farming, staking, tokenization, and liquidity provision, along with tips to navigate safely through this decentralized financial landscape.

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Investing in DeFi Ecosystem: Opportunities, Risks, and Strategies

Navigating the way to invest in DeFi Ecosystem

# > diving into ETFs and crypto ETFs
Imagine this: you want to invest in 10 companies but do not want to analyze the performance of these stocks deeply or individually deal with having to buy, track, or sell each. In comes an ETF. This ETF will come along claiming, “Oh, don’t worry, we are an asset that is a sum of those ten companies. Buy our ETF and only manage one thing instead of 10 separate stocks while maintaining the ability to sell at any time, just like a stock! We’ll handle the rest of the paperwork and asset optimization; all we ask for is a slice of the profits.”. But why would you go through so much trouble to invest in 10 companies when you can bet all your money on one? Short answer: diversification and risk reduction.

## > ETFs in TradFi
ETFs are broadly available in 4 categories. There are index ETFs that are benchmarked to the equities market. Secondly, there are gold ETFs that are indexed to the market price of gold. Thirdly, sectoral or thematic ETFs that are benchmarked to a portfolio of stocks in a particular industry. Lastly, there are international ETFs that invest in funds abroad.

ETFs account for only a fraction of the total global financial market in equities and fixed income, ranging from 4.6%-13% of equities and 0.4%-2.8% of fixed income assets by region. You would be surprised to know that Bitcoin spot ETFs have overtaken the silver ETF market share! With these stats, you can also imagine how much potential there is in the upcoming crypto market.

Below is a list of the top ETFs, including the new Bitcoin spot ETFs that were recently released.
![commodity_etf_list.png](https://aarna-blogs-media-content.s3.ap-southeast-1.amazonaws.com/commodity_etf_list_d390aefa5c.png)

## > eli5: ETF vs. Mutual funds
ETFs and Mutual Funds differ in a few key ways. For one, ETFs can be actively traded on exchanges just like any other shares, while Mutual Funds can only be purchased from a fund house, even if they are listed on exchanges. Additionally, ETFs typically have no minimum lock-in period and can be bought and sold at any time by investors. On the other hand, Mutual Fund units often have a minimum lock-in period, and selling them before this period can result in a penalty. Another difference is that fund managers or professionals actively manage Mutual Funds. At the same time, ETFs are passive investments that track the performance of an index or similar set of companies/assets. One of the significant benefits of ETFs over mutual funds is their inherent tax efficiency. 

## > how does a Crypto ETF work?
ETFs typically track indexes by holding a selection of underlying assets. However, the methods utilized by crypto ETFs to monitor digital currency performance differ slightly. Spot ETFs directly hold the cryptocurrency, forming a portfolio that mirrors the performance of the digital assets they contain. Other crypto ETFs invest in futures contracts, which are agreements to buy or sell crypto at a predetermined date and price.

### > spot ETFs 
Spot ETFs securely hold bitcoins in a digital vault managed by registered custodians. The purpose is to mirror the price of bitcoins in the crypto market. The ETF buys crypto and stores it in a digital wallet with extra layers of security. It then issues shares corresponding to the bitcoins it holds, and these shares are available for public trading on traditional stock exchanges. Market makers ensure the ETF's liquidity and efficiency. Spot ETFs provide more opportunities for investors to speculate on the crypto without the technical challenges of managing a cryptocurrency wallet or the security concerns of safeguarding private keys.

The SEC recently approved [spot bitcoin ETFs](https://www.sec.gov/news/statement/gensler-statement-spot-bitcoin-011023), allowing investors more accessible access to the cryptocurrency. These ETFs substantially lower the barriers to entry into the crypto market, make buying and selling bitcoins easier, and are subject to regulatory oversight to ensure transparency and protect investors. On the first day after approval, they had  $4.6B of trading volume.

### > futures ETFs:
Futures contracts are financial derivatives that obligate the buyer to purchase or the seller to sell an asset at a preset future date and price. In the stock market, futures contracts are traded electronically on exchanges like the CME Group. 
In the current market, major asset management firms are opting for spot ETFs over futures ETFs due to concerns about price trailing or, more commonly, a loss due to contango (simply put, buying high and selling low and taking that loss). People also prefer the WYSIWYG model of trading, i.e., what you see is what you get, which is what spot ETFs offer.

## What is a Bitcoin ETF?
Bitcoin ETFs are ETFs that track the price of Bitcoin, allowing users to invest in Bitcoin without having to own the Bitcoin and deal with the hassle that comes with it.
 Major players in this area include the Grayscale Bitcoin Trust (GBTC) with an AUM of over $28B, iShares Bitcoin Trust ETF (IBIT) with an AUM of $2.7B, and many other relevant players.
 
The bitcoin ETF marketplace has become more crowded with the recent SEC approval of 11 spot bitcoin ETFs.

Outline below are some differences between directly buying BTC and investing via ETF.
![btc-etf.png](https://aarna-blogs-media-content.s3.ap-southeast-1.amazonaws.com/btc_etf_f1a70dadd5.png)

### > the bottom line
Exhange-traded funds represent a cost-effective way to gain exposure to a broad basket of options. With the rise of these crypto ETFs- namely the Bitcoin-based Spot ETFs coming up, users can build a diversified portfolio, dipping their toes into the vast world of crypto.


\> At aarnâ, with our **âfi 100** series vault, you can participate in our equal-weighted crypto index vault, which gives a balanced exposure encompassing the top 11 crypto tokens. We might plan to release a similar product or realign the existing 100 series product to mimic ETFs! So keep a lookout for that.




Discover the world of Crypto ETFs, including Bitcoin spot ETFs and futures ETFs. Learn how they work, their benefits over traditional investments, and how to gain exposure to the crypto market through these innovative financial instruments. Explore the potential of crypto ETFs and find out how you can invest in diversified portfolios with ease.

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Unlocking Investment Opportunities: Exploring Crypto ETFs in the Modern Market

diving into ETFs and crypto ETFs

# Crypto AI: the next paradigm of DeFi

Since the launch of ChatGPT the public interest towards artificial intelligence has exploded exponentially. With millions of people transitioning to work with AI, the crypto and DeFi space has also seen an influx of AI projects and experts. However, most of these projects are not actual integrations between crypto and AI, but merely AI startups with an ERC-20 token. aarnâ is one of the few DeFi projects that has integrated AI on a practical level and used AI to build a real competitive advantage.

At aarnâ we have built an in-house machine learning model that expands out into investment strategies and decision making frameworks for traders. This fusion of blockchain and AI gives us a unique positioning, achieving impressive returns exceeding 76% over an extensive twelve-month backtesting period. In this article we’re taking a deeper look at how our AI model works and how decentralization plays a big part in the future of AI.

## aarnâ's predictive intelligence framework

At the core of the aarnâ protocol lies our tokenization platform and crypto AI engine. The intricately designed flagship AI model alpha [30/7] draws its decision making framework from extensive blockchain metadata and social sentiment analysis. Through multiple iterations of refinement, this model has proven to possess robust predictive capabilities, offering invaluable insights for navigating the complexities of DeFi markets. These predictive outputs cater not only to individual users on aarnâ's engine DApp but also extend to crypto and DeFi experts within the aarnâ DAO ecosystem. On a practical level the alpha [30/7] model makes predictions for long positions over 7-day periods. The model uses a 30-day lookback window to conduct the analysis based on on-chain and social sentiment data, and then proceeds to make predictions based on the results.

Not only has the alpha [30/7] model yielded great results but it is also designed to measurably keep downside protection in mind for the investor, meaning if the model detects instability in the market, it will keep a market neutral position. In fact, over the past 12 months the model has remained market neutral for 30 out of 52 weeks, yet still gaining a 76,69% return as visualized below.

![aarna_ai.png](https://aarna-blogs-media-content.s3.ap-southeast-1.amazonaws.com/aarna_ai_bde0f1324c.png)

## How decentralization and open-source principles tie in to crypto AI

In pursuit of a decentralized future for finance, we recognize the role of decentralized governance processes. However, innovation is challenging when coordinated in a decentralized manner, and most good ideas come from concentrated pools of talent with a high execution power. For example, our alpha [30/7] model is built in a fully centralized fashion, but our tokenization engine allows for the model to become decentralized and truly democratized, being accessible to everyone on-chain.


The commitment to progressive decentralization includes open-sourcing the feature set and making models available within the aarnâ DAO. This encourages data scientists globally to contribute their expertise, constructing sophisticated models for alpha discovery and enhancing the ecosystem for individual users. This dedication to decentralization aligns with aarnâ's mission to democratize the DeFi space.

## Introducing the â_fi 800 series: aarnâ's crypto AI-driven structured vaults

Representing the culmination of nearly two years of development, aarnâ introduces the algorithmic â_fi 800 series. The inaugural Crypto AI structured product, â_fi 802, leverages algorithmic recommendations from the alpha [30/7] model. As aarnâ evolves, it will provide more opportunities for data scientists and AI protocols to contribute to aarnâ's infrastructure, designing future â_fi 800 vaults as part of the progressive decentralization process.

With a strong backtest track record, aarnâ's Crypto AI engine, coupled with its decentralized Crypto AI roadmap and tokenization platform, underlines its potential in creating intelligent and user-friendly DeFi asset management solutions.

Join aarnâ in reshaping the DeFi narrative, leading the way in innovation, and disrupting traditional finance through the synergy of human and machine intelligence. Explore our vaults here: [www.aarna.finance/afi](https://www.aarna.finance/afi)


With millions of people transitioning to work with AI, the crypto and DeFi space has also seen an influx of AI projects and experts. However, most of these projects are not actual integrations between crypto and AI, but merely AI startups with an ERC-20 token. aarnâ is one of the few DeFi projects that has integrated AI on a practical level and used AI to build a real competitive advantage.

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Dive into the cutting-edge world of Crypto AI at aarnâ. From the alpha [30/7] model to the â_fi 800 series, experience the evolution of intelligent DeFi asset management. Explore the power of blockchain and AI synergy reshaping the decentralized finance narrative.

Revolutionizing DeFi with Crypto AI: Exploring aarnâ's Integration of Blockchain and Artificial Intelligence

Crypto AI: the next paradigm of DeFi

# Understanding DeFi > the future of finance

DeFi, short for 'Decentralized Finance,' is an umbrella term encompassing various financial services on public blockchains such as Ethereum. Within DeFi, users can engage in the same activities offered by traditional banks, such as lending, borrowing, obtaining insurance, and earning interest, all without the need for intermediaries, which significantly accelerates the speed of financial transactions. DeFi is built utilzing smart contracts, which run on blockchains that are ultimately distributed ledger technologies enabled in simple terms by multiple, distributed participants, eliminating the need for a single centralized authority.

![defi.jpg](https://aarna-blogs-media-content.s3.ap-southeast-1.amazonaws.com/defi_fa9b095a3b.jpg)DeFi vs. TradFi

The importance of DeFi lies in its power to overcome centralization, intermediaries and custody. The pitfalls of centralized finance have been made obvious through multiple cycles of financial crisis caused by mis-aligned incentives and the custody-structure of traditional finance (TradFi) markets.

Think of DeFi as TradFi, but without middlemen. Instead, decentralised applications (dApps) and smart contracts handle everything automatically based on transparent sets of rules. In banking, transactions are logged in private ledgers, controlled by centralized institutions. In contrast, a blockchain is a public ledger shared by all market participants, recording transactions in encrypted code, providing security, and preventing fraud. Moreover, in DeFi, no intermediary entity like a bank actually takes custody of client assets. The deposited quantums are always on-chain, or on smart contracts, and clients have direct custody of the investments in their wallets, and could redeem their positions directly and in a permissionless manner without needing anyone's approval. 

This is made possible as smart contracts execute code automatically based on specific conditions, making them execute complex transactions once covenants are met or when depositors of capital directly initiate and authorise transactions from their wallets. DeFi therefore executes complex transactions once covenants are met or when depositors of capital directly initiate and authorize transactions from their wallets. DeFi is therefore a highly adaptable solution for building the next generation of finance on a decentralised infrastructure.

## The Importance of DeFi

Traditional financial markets rely on complex chains of intermediaries containing different actors like banks, clearing houses, advisors, brokers, lenders and more, which result in added complexity, information asymmetry and higher fees for participants. Blockchain technology and smart contracts allow market participants to directly access global financial markets and services in a transparent manner while being the sole custodian of their own assets. While transaction costs are not completely removed in the world of DeFi, they are negligible in comparison to the associated costs of traditional financial institutions. With an increasingly digitized world, self custody of digital assets is growing in importance in order to reduce counterparty risk.

The emergence of DeFi has the potential to disrupt financial markets as we know them. Broadly speaking, DeFi is reshaping the following areas in financial markets:

#### Accessibility
DeFi streamlines access to financial markets through the permissionless principles of blockchain technology and smart contracts. To interact with DeFi protocols all you need is an internet connection, a wallet and some digital assets.

#### Principal-Agent Problem
DeFi effectively addresses the principal-agent problem, as self-enforcing smart contracts reduce the need for intermediaries, creating less principal-agent relationships. The transparent nature and decentralization of DeFi protocols also significantly reduce the risk for agency costs.

#### Flexibility
DeFi is built on permissionless protocols DeFi lowers switching costs for users, It boostings user flexibility. by eliminating intermediaries, while offering a wider array of financial services more efficiently.

#### Transaction Costs
DeFi offers the prospect of very low fees compared to the traditional centralized finance framework. This cost efficiency arises from the smart contracts, eliminating the need for intermediaries and their associated fees.

## DeFi Applications

Unlike traditional apps you would find on your phone or computer, decentralised applications (dApps) are digital programs operating on blockchains. A dApp is programmed using smart contracts, resulting in a transparent, secure and automatic functionality. DApps serve as the execution layer for building a functioning DeFi ecosystem on top of a blockchain such as Ethereum. Like the blockchains distributed ledger itself, dApps are also secured by the blockchains decentralized system. When you are interacting with DeFi outside of simply transferring funds, you are interacting with a dApp.

To understand how DeFi dApps work, let’s consider prominent DeFi lending protocols To understand how DeFi dApps work, let’s consider prominent DeFi lending protocols Compound Finance and Aave as examples. These protocols have created a completely trustless and permissionless lending market. Here’s how they work:

- Lenders deposit crypto assets into liquidity pools governed by smart contracts.
- Borrowers borrow against collateral from the liquidity pools, without direct lender interaction.
- In return for lending, Compound Finance provides tokens known as cTokens, while Aave provides aTokens, denoting the amount of crypto assets supplied and the yield earned on those assets. This is a mechanism in place for the smart contract to keep track of the loan book.
- Lenders earn interest, also received in the form of these Tokens, calculated by algorithms based on market dynamics.
- When the loan is repaid, the cTokens and aTokens are redeemed for the cryptocurrency provided.
- If a loan would not be repaid, the collateral provided by the borrower would be sent to the lender. The smart contract governed loans described here are always over-collateralized to ensure there is no incentive to not repay the loan.

Simply put, the DeFi dApp described above enables trustless lending and borrowing against collateral in a fully automated and transparent manner. Let’s take a look at another example involving Real World Assets (RWAs).

Centrifuge is a dApp that enables DeFi participants to invest in RWAs like real estate, invoices and royalties through the use of Non-Fungbile Tokens (NFTs). NFTs are blockchain-based tokens with a unique identifier, meaning it is possible to distinguish each NFT from another. Let’s dive in to the Centrifuge tokenization and investment process:

- Owners of RWAs (originators), let’s say a commercial real estate property yielding rent every month, connect their crypto wallet and perform KYC or KYB required.
- The originator then proceeds to upload all relevant documents concerning the RWA onto the Centrifuge protocol dApp.
- In the dApp, the asset documents are verified and the asset can then be tokenized to NFTs.
- When the documents are tokenized, the originator enters into a legal contract with Centrifuge.
- As an investor, you can then invest into real estate using cryptocurrency like $ETH or $USDC fully on-chain.

While RWA protocols like Centrifuge are a great way of providing additional liquidity to owners or RWAs and allowing DeFi investors to diversify their holdings from crypto markets on-chain, KYC requirements and legal contracts are TradFi features that have been merged into operations to ensure reliability and regulatory compliance.

Now that we have covered lending platforms and RWAs, let’s take a look at some other practical use cases for DeFi dApps:

## Decentralized Exchanges (DEXs)
DEXs are online platforms that enable the exchange of cryptocurrencies, allowing users to trade directly with each other without the need for a trusted intermediary. Similarly to the lending platform described above, DEXs are based on smart contract governed liquidity pools.

#### Stablecoins
SStablecoins are a category of cryptocurrencies intricately pegged to external assets, typically conventional fiat currencies like the U.S. dollar or euro. This pegging mechanism serves as a stabilizing force in DeFi to counteract crypto volatility.

#### Prediction Markets
In DeFi, prediction markets allow betting on various future events, including sports outcomes, without intermediaries. They replicate traditional markets while benefiting from blockchain's transparency and security, increasing accessibility and trust.

## DeFi Adoption

The adoption of DeFi and its rapid increase in market size shows its transformational trajectory. Grand View Research predicts that the size of the DeFi market will grow at a compounded annual growth rate (CAGR) of 42.5% from 2022 to 2030. Historically, unique users in DeFi increased by 40% in 2022 despite market conditions, going from 4.7 million at the beginning of the year to more than 6.5 million at the end of the year. This momentum becomes even more impressive given the fact that DeFi had around 940,000 users at the beginning of 2021, marking an increase of almost 700% in two years.

![defi-users.png](https://aarna-blogs-media-content.s3.ap-southeast-1.amazonaws.com/defi_users_a98c01c20f.png)
Source: [Nansen](https://www.nansen.ai/guides/defi-statistics-in-2022#defi-growth-statistics)

Interestingly, In the context of grassroots cryptocurrency adoption, India has emerged as the top-ranked country in a comprehensive analysis conducted by the blockchain data analytics company [Chainalysis](https://www.chainalysis.com/blog/2023-global-crypto-adoption-index/). This ranking surpasses notable contenders such as Nigeria, Vietnam, and the United States, among a total of 154 countries included in the assessment. This data underscores India's significant role in fostering organic cryptocurrency adoption, marking it as a pivotal player in the global cryptocurrency landscape.

![crypto-adoption.png](https://aarna-blogs-media-content.s3.ap-southeast-1.amazonaws.com/crypto_adoption_3f4b9bfb37.png)
Source: [Statista](https://www.statista.com/chart/30867/ranking-of-countries-on-the-global-crypto-adoption-index/)

## On- and off-ramping in Defi
To enter the world of DeFi, you need cryptocurrency assets and a crypto wallet. But how do you turn cash into crypto assets? This is where crypto on-ramps come in.. On-ramps are the gateways that allow users to convert fiat currency into cryptocurrencies.

![on-ramp.png](https://aarna-blogs-media-content.s3.ap-southeast-1.amazonaws.com/on_ramp_2ecf148665.png)

Typically, regulated cryptocurrency exchanges serve as on-ramps. Users kickstart the process by depositing fiat onto an exchange and submitting a purchase order to acquire the cryptocurrency they desire at the current market price. Next, users send their acquired crypto assets to a crypto wallet, such as MetaMask. These wallets are where you custody your crypto assets and private keys, aka the cryptographic signature you use to authorize transactions. After depositing crypto assets to a wallet users can then explore DeFi freely.

When users decide to move assets out of the DeFi landscape or convert their cryptocurrency assets back into cash, they engage in a process known as off-ramping. Crypto off-ramping refers to the exchange process that facilitates the conversion of crypto assets into fiat.

![off-ramp.png](https://aarna-blogs-media-content.s3.ap-southeast-1.amazonaws.com/off_ramp_5fe3700f03.png)

DeFi's operation hinges largely on crypto ramps, acting as bridges between traditional finance and blockchain-based DeFi. While these ramps can simplify access and exit, broadening DeFi's reach, they also serve as single points of failure should governments step in and fully regulate the on- and off-ramping market.

## Risks and challenges in DeFi

As with every emerging market, the opportunities crowding DeFi are followed by a significant amount of challenges. In this chapter we will review some of the biggest obstacles for DeFi gaining mainstream adoption.

#### Security 
To this day, there have been over 148 successful cyberattacks targeting DeFi platforms. These cyberattacks, or exploits as they are called, have caused over $4.28 billion dollars worth of crypto assets to be lost.

![defi-theft.png](https://aarna-blogs-media-content.s3.ap-southeast-1.amazonaws.com/defi_theft_a9b4b94827.png)Source: CHAINALYSIS report of APRIL 14, 2022

#### Complexity
Inherently DeFi is a highly complex technology and can be difficult for users to understand. While the technology is fundamentally trustless, it is hard for users to trust something they do not fully understand, creating major educational challenges in onboarding new users to DeFi.

#### Regulation
Up until present day, DeFi has been highly unregulated. During 2023 and 2024 we will see regulators ramp up significantly with the MiCa directive coming into force in the EU and the SEC currently pursuing several lawsuits of digital asset companies in the US. At the end of the day, regulators will have the final say in what centralized entities such as on- and off-ramps are allowed to do and not do.

#### Scalability
We are currently seeing above 6 million unique users in DeFi and a daily trading volume of around $6 billion dollars for the major DeFi tokens. In contrast, the SWIFT network processes over $5 trillion dollars on a daily basis, so the DeFi infrastructure still has some scalability tests to pass before major global adoption can occur.

#### Custodial Requirements
In the realm of DeFi, your cryptocurrency assets rely entirely on safeguarding your wallet's private key. Misplacing a private key results in forfeiting access to your funds, as there exists no recourse for recovering a lost private key. This is something the Ethereum foundation is currently addressing with account abstraction, but we are yet to see a practical solution for this dilemma.

#### Customer Service
In the absence of a central authority, customer support in the DeFi sphere is almost non existent. Of course developers of specific dApps can assist users with understanding the applications by designing better products and taking user feedback into account. However, given the custodial and immutable nature of DeFi, if you happen to send a mislabeled transaction, there’s no one to call to get it undone.

## The Future of DeFi
As DeFi has maintained good activity and active users continue to grow, it becomes evident that this is only the beginning. The rapid pace of innovation within this space promises an exciting future, shaping the way we interact with financial markets. In this final chapter we will take a look at what lies ahead for DeFi.

#### Tokenization – Bridging the Material and Digital Realms in DeFi
Tokenization refers to minting assets, either digital or physical, onto a blockchain using a smart contract. This can be done either using fungible or non-fungible tokens. The tokenization of assets paves the way for putting on chain a wide range of assets like traditional financial market products, to real estate, to expensive art, and to complex digital asset structured products. Which will lead to increased liquidity, and democratized access to complex financial products easily, and fractionally. As various assets are tokenized, DeFi platforms can develop new financial products with the potential to build truly permissionless financial markets.

#### UX improvements and complexity abstraction
While DeFi has made remarkable strides, its true potential lies in reaching individuals and institutions alike across the globe. Given the complex user journeys, the current state of DeFi remains gated for technically proficient individuals. The ongoing efforts to enhance user interfaces and abstract away the complex processes DeFi is built on will contribute to making DeFi more accessible to a broader audience. As the technology becomes more user-friendly, we can anticipate a surge in adoption, bringing decentralized finance into the lives of individuals around the globe. Account abstraction has the potential to improve accessibility, reducing entry barriers for a wider audience. It streamlines decision-making by allowing users to focus on financial choices rather than grappling with protocol specifics.

#### Regulatory developments
As regulators around the world grapple with the implications of DeFi, the industry is at a crossroads. The recent introduction of the MiCa directive in the EU and the SEC's scrutiny in the US underscore the growing need for regulatory clarity. How DeFi navigates these regulatory waters will undoubtedly shape its future. The community's proactive response and collaboration with regulators will be pivotal in fostering a regulatory environment that allows DeFi to thrive responsibly.

#### Scalability, Interoperability & Liquidity
Scalability remains a critical challenge for DeFi as it strives to handle larger transaction volumes. However, ongoing projects and innovations aimed at improving scalability hold the key to DeFi's ability to compete on a global scale. Addressing these challenges head-on will pave the way for a more robust and efficient decentralized financial infrastructure.

The future of DeFi may also see increased interoperability between different networks. The ability to seamlessly communicate and transact across various chains has the potential to unlock new possibilities and enhance the overall efficiency of decentralized finance. Liquidity in any new asset class is a hurdle, especially for long tail assets. Cross-chain compatibility and cross-chain liquidity will help scale DeFi significantly.

The collaborative efforts of innovators, regulators, and the global community will shape the destiny of DeFi, ushering in an era where financial systems are open, transparent, and accessible to all. The journey continues, and the future of DeFi holds the promise of not just a more inclusive financial landscape, but a new & open financial system where the financially buoyant can access opportunities which were reserved for the 1% earlier. .

We hope you have enjoyed this article on DeFi and that we have sparked your curiosity to learn more about the world of crypto assets. Crypto is evolving fast to reach its rightful position as a foundational technology, and a transformative asset class.

DeFi, short for 'Decentralized Finance,' is an umbrella term encompassing various financial services on public blockchains such as Ethereum.

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Understanding DeFi > the future of finance

# aarnâ's Commitment to Community: Early User Referral Program

Listening to our community is vital for our philosophy, and mission to decentralize the alpha value chain. After receiving valuable insights from our existing users, we unveiled the aarnâ Early User Referral Program, an extension of our ongoing [Early User Rewards Program](https://www.aarna.finance/beta), for a limited duration of 3 days. This program was designed to make your experience with aarnâ even more rewarding and collaborative.


## How It Worked


Signing into the [aarnâ engine](https://engine.aarna.finance/) granted you access to your own unique referral link. This link empowered you to bring in more web3 natives into the aarnâ ecosystem and earn rewards in the process.

For every successful signup, where a user connected their wallet, the referrer received one aarnâ token. Taking this a step further, if the referred individual executed a transaction, the referrer got two additional aarnâ tokens. 


### Unprecedented Response and Responsible Growth


The response to the aarnâ Early User Referral Program has been phenomenal. In less than 3 days, over 3,000 new users joined aarnâ, drawn by the prospect of earning rewards while engaging with our platform. So, now we have 5000 users!,This enthusiastic adoption showcased the inherent potential of DeFi and its ability to incentivize meaningful participation, when channelized on a user focused platform like aarnâ.

While we were thrilled by the overwhelming adoption and demand, we believe that responsible growth is essential to maintaining the integrity of the project. Hence, we've implemented certain curbs to make sure the program is utilized fairly and ethically:

- **Maximum Rewards:** Each user can earn a maximum of 20 $ARNA tokens through the referral program. This measure ensures that rewards are distributed fairly among our community members. The total available supply of $ARNA tokens for this program is 20,000. 

- **Guarding Against Malicious Activity:** We're committed to providing a secure experience for aarnâ users. In cases of malicious use or abuse of the referral link, any tokens earned will be canceled and the malicious referee accounts will not be eligible for the airdrop. Neither will the new referred accounts be eligible for beta rewards. This step is crucial to safeguarding the program's integrity.


### Watch out for this space!


At aarnâ, we believe that the power of DeFi lies not only in its potential for financial growth but also in its ability to foster a sense of community. The aarnâ Early User Referral Program was a testament to this belief, offering an avenue for users to actively contribute to our community's expansion while enjoying the benefits of their efforts.

Stay tuned as we work on the next iteration of the referral program and look forward to more members joining the aarnâ ecosystem, whilst we reward existing users who are contributing to the aarnâ ecosystem. 


Listening to our community is vital for our philosophy, and mission to decentralize the alpha value chain

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aarnâ's Commitment to Community: Early User Referral Program

# aarnâ early user rewards program >>

TLDR > aarnâ’s Early User Rewards Program is a great opportunity for early adopters to earn rewards while contributing to the growth of aarnâ protocol. By connecting their wallets and exchanges, managing crypto & DeFi portfolio, doing transactions on various integrated DeFi protocols, being active during the beta, users can earn up to 50 aarnâ tokens  and be whitelisted for an airdrop when the token is released. And most exciting, by investing in the alpha discovery â_fi vaults, users could have transaction fees waived, and also earn more aarnâ tokens . If you're interested in DeFi and want to be part of the future of decentralized asset management, join the aarnâ beta today!


aarnâ protocol, a next-generation decentralized finance (DeFi) platform, is offering an exciting Early User Rewards Program for beta testers who contribute to the protocol's growth. The program will reward users in aarnâ tokens , the native token of the platform, and is designed to incentivize genuine early adopters who bring usage, and assets under management (AUM), and total value locked (TVL) to aarnâ.

## earn 50 aarnâ tokens  > 
Under the program, users will be eligible for up to 50 aarnâ tokens and will be whitelisted for an airdrop when the token is released. The rewards will follow a contribution-based system that encourages users to connect their wallets and centralized exchanges to the aarnâ engine for portfolio management, do transactions on various integrated top DeFi protocols directly from aarnâ, and be active during the 3-month beta by doing transactions on various integrated top DeFi protocols directly from aarnâ. This includes popular protocols such as Uniswap, Compound, Aave, and Ribbon among others, including liquid staking on Lido. By using aarnâ as a single platform for their DeFi transactions, users can save time and reduce the complexity of managing multiple protocols. As beta users, they will be among the first to experience the platform's advanced features and provide valuable feedback to the aarnâ team.

## access to aarnâ AI > 
Users can use the earned tokens to subscribe to aarnâ AI, the machine learning and AI driven recommendation system of the protocol. The monthly access fees of $25 would be waived for the beta period by utilizing 5 aarnâ tokens to access the AI engine.

## alpha discovery â_fi vaults > 
At the heart of aarnâ protocol is its smart tokenization engine comprising six smart contracts that create â_fi vaults that help users discover alpha. Users who invest in the â_fi vaults will be eligible for higher rewards, and can also use 1 aarnâ token for every $500 investment in â_fi to offset transaction fees of 1%, up to a max of $5000. High value users who contribute investments for more than $10,000 will be rewarded 10 aarnâ tokens for every $5000. For users who stay invested longer in â_fi vaults, aarnâ would be launching the â_fi time lock staking, which would add on top APY of up to 18% for early users.

The alpha discovery â_fi vaults are a unique feature of the aarnâ platform that enable users to invest in multiple DeFi strategies as per their goals - actively managed or passive, yield optimization or high value growth, or even algorithmically structured products. By investing in these vaults, users can potentially earn higher returns while diversifying their portfolio.

## join aarnâ beta >
The Early User Rewards Program is a win-win for both aarnâ and its early adopters. By offering rewards to genuine early users who bring usage & feedback, and AUM and TVL to the platform, aarnâ can attract more users, make the protocol better, and grow its ecosystem. At the same time, early users can earn rewards and be among the first to experience the platform's advanced features. To participate in the Early User Rewards Program, users can sign up for the aarnâ beta by joining aarnâ engine [here](https://engine.aarna.ai/)

aarnâ’s Early User Rewards Program is a great opportunity for early adopters to earn rewards while contributing to the growth of aarnâ protocol. By connecting their wallets and exchanges, managing crypto & DeFi portfolio, doing transactions on various integrated DeFi protocols, being active during the beta, users can earn up to 50 AARN

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aarnâ early user rewards program

# welcoming aarnâ new dao members

It's been a crazy year at aarnâ as we continue to build an alpha discovery platform - the first of its kind web3 native on-chain decentralized asset management platform. We are on a mission to decentralize the alpha value chain, and we believe that it is vital for managing risk and rewards for all crypto and web3 participants and essential for mainstream crypto and DeFi into the future.

## three primary components of aarnâ
The three components of the aarnâ protocol ecosystem are the front end aarnâ engine of the intelligent dApp ([join our beta](https://www.aarna.finance/)), the aarnâ tokenization platform (which is getting into security audit shortly), and the aarnâ dao which will bring together human expertise and AI for creating alpha via â_fi crypto structured products, leveraging composable DeFi strategies. 

Safe to say that we are one step closer to our mission as we welcome our first members of aarnâ dâo, **Nitin Gaur** and **Simon Dingle**. 

## more about Nitin and Simon
Nitin is a leader in fintech, who has helped and built technologies for the Fortune 500 companies. Nitin is an expert in demystifying and distilling complex ideas into simplified presentations. Currently he serves as the global head in Digital Asset and Technology Design at State Street. His list of publications and his accomplishments as a global speaker is immense. Nitin also holds 100+ patents. Nitin strongly believes in our thesis of the criticality of a web3 native on-chain asset management platform for responsibly putting the power of participative wealth management in users hands. Nitin’s deep experience will help shape aarnâ dao’s governance mechanism as he joins us as our first Council Member.  

Simon, our first Alpha Creator comes from a background in crypto and fintech. He is a two time author and currently works as the founder of Inves Capital. Having worked with some major crypto projects like Luno(formerly BitX), Binary, etc. in the past and helped in product development, he comes with immense experience, and is an OG in the space. Simon’s recent book ‘Beyond Bitcoin’ explores the ….DeFi …. Simon resonates strongly with aarnâ’s mission and is committed to creating structured products for autonomous alpha discovery, and lending us a helping hand in realising our purpose.

## conclusion
We’re getting ready to launch aarnâ protocol. Our engine beta is already live, join us to see the difference in our approach to responsible & decentralized asset management. We’d love to get all your feedback as we put the platform together. Please email your feedback to us on support@aarna.finance, or dm us on Twitter @aarnasays. 

FAQs: 

What is DeFi ?
Decentralised Finance or DeFi is an emerging field in crypto. It represents a system that is not governed by a centralized management. The users or investors are always in complete control of their assets and do not have to transfer the custody of their funds to an intermediary

What is a dao ?
Decentralized Autonomous Organization or dao is a governance structure for the upcoming web3 projects. Instead of a centralised authority, a group of people with a common goal take decisions for the organisation. Anyone can join a dao and participate in the governance. The process of decision making is executed by an on-chain consensus mechanism by a smart contract.

What is autonomous alpha discovery ?
Alpha returns made possible by an AI predictive model by studying and analysing information, market insights and sentiments. 

What are crypto structured products ?
Investment strategies or products made by combining underlying digital assets in a proportion that increases the returns and hedges against potential market risks.


aarna dao has two new dao members on board. Simon and Nitin. 

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aarnâ dao members announcement

# Risk Management Strategies for DeFi

Decentralized finance (DeFi) has completely transformed the cryptocurrency market. Traders are interested in this domain, both as a promising infrastructure project within the crypto industry and as an opportunity to profit off turbulent token fluctuations.

At the same time, this turbulence has a flip side: a rather high risk. Let’s go through a few strategies for the DeFi market that can minimize these risks on a DeFi protocol.

From the beginner phase, investors adored the DeFi investing domain, since decentralized finance gives them more control over their money. And while early on decentralized finance floated toward loans and credit, DeFi is now at least 5 full-fledged, interconnected fragments: blockchain, decentralized exchanges (DEX), decentralized derivative platforms, loans and credit, & insurance.

Despite its relative firmness, the DeFi segment is still prone to risks, as an investment. The volatility in the tokens of various projects undeniably pulls new investors. However, high yield also means high risk. There are several efficient ways or strategies for managing risks in DeFi.

## **Strategy #1: Position Sizing**

Position sizing formulates how many crypto coins or tokens a trader is willing to buy. The probability of realizing huge profits in crypto trading tempts traders to invest 30%, 50%, or even 100% of their trading capital. However, this is a disordered action that puts you at serious financial risks. The golden rule is: never put all your eggs in one basket. Here are three approaches to achieving position sizing.

-   **Enter Amount vs Risk Amount:**  This approach considers two different capitals. The first involves money you are willing to put in every single deal. Traders are advised to analyze this amount as the size of each new order they take, regardless of its type. The second is the money at risk, i.e. the money that you afford to lose if the trading fails.
-   **Elder’s Sharks & Piranhas:**  This approach relates to diversifying your investments which brings forth two basic methods:

Limiting every position to 2% risk. Dr. Alexander Elder, who is credited with the concept, correlated risk to a shark bite. At times, you would wish to risk a huge capital, but the risk would be huge and disastrous as a shark bite.

Limiting trading sessions to 6% per session. In a losing streak, you may end up disposing of everything you own little by little. Elder correlates this risk to a piranha attack, which takes small bites of its victim until it devours it all.

-   **The Kelly criterion:**  It is a formula developed by John Larry Kelly in 1956. It is a position sizing approach that defines the percentage of the amount to risk. It enhances long-term trading.

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## **Strategy #2: Diversified Portfolio**

In this strategy, investors fill their portfolios with the most assuring, underrated, and non-overlapping DeFi projects. This compresses the risk of the portfolio losing significant value because of a single asset. You can identify assuring tokens by their market cap to total value locked (TVL) ratio. Tokens with the minimal correlation of these values can be considered underrated, which means there is logic to expect these assets to “catch up” with others in their valuation and growth. Therefore, by buying these cryptocurrencies, traders stabilize their portfolios for the medium & long duration.

For additional diversification of your risks, you can choose projects on different blockchains, such as Ethereum or Binance Smart Chain. Another way is to select negatively correlated tokens, meaning that when one token is highly turbulent in day trading, you should choose a more stable asset for balance.

Diversifying your portfolio by including an insurance project is even better since the demand for safeguarding capital within the decentralized finance ecosystem is only going to increase. Having such tokens in your investment portfolio will help you to significantly counteract an adverse situation if one were to suddenly occur.

## Strategy #3: Staking

You can also minimize your risks of value loss with stake-able tokens. The cryptocurrencies of certain DeFi projects offer the feature to profit just by storing them. For example, users of the international cryptocurrency exchange CEX.IO can earn up to 16% annual interest for storing their tokens. And the gain from staking rises when the coin’s price rises. For example, if a trader invests $100 in XYZ token at $0.20 per coin, with 16% interest for staking they would get approximately 580 XYZ at the end of the year as their reward. If in that period the price has increased from $0.20 to $0.40, the trader would get $232 when they cash out. Considering the coin’s price surge, the profit increases to 132% instead of 20%.

To safeguard your portfolio against major fluctuations, you can invest in stablecoins that provide staking, such as Dai. On one hand, the passive yield from your tokens can increase your total profit from investing in the DeFi sector, and on the other hand, it can cushion potential losses if the market ramps down. Additionally, traders can restrict their losses to the amount of their prospective staking reward. As soon as the losses on their positions get near to the profit they would get from staking, traders can simply close them.

## Strategy #4: Hedging

In the fundamental hedging process, while buying an asset on an exchange, traders open an opposing position in the associated derivative at once. These derivatives could be futures, alternatives, or contracts for difference. So if a trader buys XYZ on the exchange, to hedge the risk of the asset losing value they would immediately sell a contract for a difference for the same amount. In the end, if XYZ gains in price, the losses on the contract for difference would be cushioned by the rise in the cryptocurrency’s value. However, if the price for XYZ decreases, this difference would be covered by the contrasting position on the contract for difference.

Derivative trading is offered by specialized platforms where you can use them to gain from turbulence in the prices of cryptocurrencies without having to physically buy them and hedge assets you’re holding. A contract for difference permits traders not to participate directly in DeFi and escape the technical risks, uncertainty, and complexity linked with it. To manage risks, most of the platforms use automatic safeguard orders, such as stop-loss and take-profit.

Many platforms allow users to draw out maximum profit from fluctuations in the DeFi market and, if necessary, apply strategies to efficiently protect their capital.

Decentralized finance (DeFi) has completely transformed the cryptocurrency market. Traders are interested in this domain, both as a promising infrastructure project within the crypto industry and as an opportunity to profit off turbulent token fluctuations.

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Risk Management Strategies for DeFi

# Dollar-Cost Averaging

With the pandemic drifting away after a prolonged period, the businesses and incomes are coming back on track, and people are looking forward to resuming their investment goals rapidly. When you see the market, the crypto industry is on a trend, gravitating investors’ interest. However, the account of being a new concept amongst people and beginner investors in maximum parts of the world is a typical mindset of the majority to consider it unstable and/or unreliable.

Comparing the strategies people have been using for a long time in the market, one would fear losing his money in the volatile crypto market as they neglect this domain to invest and are influenced by negative reviews of the numerous amateur investors. One needs a balanced strategy to build his own experience in the crypto investment market with low-risk investment and significant profits. Here, DCA kicks in!

Dollar-cost Averaging (DCA) is a reliable strategy used by market investors for a long time. DCA works by minimizing the risk of investing or purchasing assets along with high price volatility. It focuses on investing a predetermined amount of money at regular intervals regardless of asset price or ups and downs of the market, instead of investing a lump sum amount at once. To analyze the strategy of Dollar-cost Averaging thoroughly, we will walk you through a simple example.

**For example, the initial price is $100 for X cryptocurrency, and you choose to invest $100 every week.

Week 1: $100 per coin & you buy 1 coin. Total invested = $100

Week 2: $50 per coin, you buy 2 coins. Total invested = $200

Week 3: $200 per coin, you buy 0.5 coins. Total invested =$300

At the end of 3rd week, you now own 3.5 coins of X at an average price of $85.71 per coin.**

It is how Dollar-cost Averaging works. By investing the same amount at every pre-decided interval of time, no matter what the market is doing, you will buy more cryptocurrency when the market is low and less when it is high. On average, you will get fair prices and significant overall profit. The fundamental part lies in investing on a fixed schedule which will build you a strong investing position in the near future.

On the contrary, a few groups of investors would argue that the best way to score high gains is to invest a lump sum amount of money at once. It is true, but it does not recognize an individual’s tolerance for risk. Historical statistics clearly highlight that lump sum investments always exceed the return of partial investments, however, that comes at an extensive risk. When markets go up, using your lump-sum investment money to buy crypto and generate profit takes full advantage of market growth. But it is impossible to time the market with accurate precision, especially for the beginners in the market. This strategy would give them a prominent exposure to the crypto market, accompanying a massive risk.

It is too hard to determine the market’s structure at any point in time. It can either be a span of distribution where the asset is about to fall big, or it can be an accumulation span where market giants buy plenty of coins and surge the asset high. No matter which situation the market falls into, it puts the investors at risk. For some, the loss of an investment may be a manageable blow, but for bulk of investors or beginners, such a loss can be a harsh blow to their bread and butter. Dollar-cost Averaging helps you to put your foot in the market without the risk of losing it all. It takes advantage of the market’s natural volatility by lowering the average price you pay for the crypto.

People normally accumulate a lump sum amount and invest when the time is appropriate. It would be great if we could buy a cryptocurrency when the market is low and sell it when it is comparatively high. Regrettably, investors endeavor to ‘time the market’ often has an adverse effect, and they eventually buy and sell with poor timing. Dollar-cost Averaging helps you invest a fixed amount regardless of the market’s fluctuations, aiming to avoid your temptation to time the market, along with shielding your losses in case of sudden market decline.

Dollar-cost Averaging (DCA) is a reliable strategy used by market investors for a long time. DCA works by minimizing the risk of investing or purchasing assets along with high price volatility

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Dollar-Cost Averaging

# Safeguarding Your DeFi Investments

Decentralized finance has been successful in gaining the confidence of investors. However, there are several questions about the trustworthiness and reliability of this technology. It is a result of DeFi security vulnerabilities related to the increasing frequency of fraud attacks.

Check out this piece, we have tried to outline some key pointers to secure your Defi projects from DeFi hacks! 

## How to Protect your DeFi Projects from Hacks?

Even with all the work put into creating and maintaining a rock-solid platform, the DeFi sphere still faces security vulnerabilities. Anyone who wants to succeed in this fast-paced environment, whether they are a novice user, a seasoned veteran, or somewhere in between, must have a solid understanding of how to navigate it. 

Below are some ways to save yourself from increasing hacks and exploitations in the DeFi world:

**1. A Private Key is Private For a Reason**

A private key is the only way to demonstrate that the money in your wallet belongs to you. It should NEVER be discussed with or made public. Even if a person is an administrator of a group or a member of your project team, never give them access to your private key. The only thing someone needs to steal your tokens is your private key. 

**2. Your Wallet Needs a Strong Password**

For wallet applications, you should always use a secure password or passcode. Explore the multiple password management tools online. Such tools are excellent for keeping the wallet safe. Using the same password everywhere can result in catastrophic money loss and personal data.

**3. Research Should Not Be Compromised**

No matter what project you’re working on or what project you’re planning to invest in. As an investor in the DeFi space, it is essential to do your due diligence and understand the authenticity of the contract/token you plan to interact with. As it's rightly said, better be safe than sorry.

**4. Do Not Interact with Every Project**

DeFi is a space where being nit-picky pays off. It is advised to engage only with credible and established projects. Audits, tools for multi-factor authentication, the time the company has been in business without hacks, and the community following the project are a few things to check for before diving into anything new. A brief search in the browser can widely contribute. 

**5. Multi-Factor Authentication Helps**

Having two or more layers of access to your money is particularly important for wallet applications since, in theory, it will be twice as difficult for bad actors to move money out if there are two or more tiers of access.

## Conclusion

Undeniably, one of the most potent cryptocurrency markets today is the DeFi market. A significant rise in the capital can be achieved by investing here. But, since every risk is associated with something in return, every gain encounters obstacles along the path.

Undeniably, one of the most potent cryptocurrency markets today is the DeFi market. A significant rise in the capital can be achieved by investing here. But, since every risk is associated with something in return, every gain encounters obstacles along the path.

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5 Ways to save yourself from increasing hacks and exploitation in the DeFi world

Safeguarding Your DeFi Investments

# Impact of Blockchain on Healthcare, Government, Retail and Information Technology

With the advancement of applications of blockchain technology, the major sectors of the world market have highlighted the scope of development, this technology can bring to every domain. As common people, a brief outline of blockchain technology can give you insights into the evolution it is bringing in prime domains like finance, entertainment, etc. But if we go in-depth, we will find other underrated territories where blockchain is rapidly mutating the framework at its core. Here are a few of such domains:

## **Healthcare**

As of now, healthcare institutions are unable to securely share data across platforms. But with the proper application of blockchain technology, healthcare institutions may get access to better data collaboration between providers without compromising data security and integrity. This change would bring out more accurate diagnoses, more effective treatments, and more cost-effective healthcare. Moreover, a blockchain-based credential verification system is being developed for physicians, to prove they’re licensed to operate in certain areas.

Additionally, blockchain provides real-time visibility into the supply chain, which empowers the system to quickly respond against supply disruptions, making it crucial to the distribution of vaccines and medicines during a pandemic.

## **Government**

Public service management, often bogged down by bureaucracy, is yet another domain where paper-based processing, fraudulent activities, and accountability between authorities can be streamlined with the application of blockchain technology.

Authentication of voters’ identity, secure record-keeping to track votes, and trusted tallies to determine the winner are crucial requirements in elections where blockchain tools could serve as a foundational infrastructure for casting, tracking, & counting votes, potentially ending the need for recounts by taking voter fraud and foul play off the table.

In law enforcement, blockchain’s distributed ledger gives many opportunities concerning gun ownership and usage. If information related to gun possession was logged and connected through blockchain, it would be simple to track where weapons came from in the event of unlawful use. Moreover, a distributed and hard-to-falsify record kept via blockchain could provide an added layer of security to the evidence-handling process to maintain the integrity of the chain of evidence in a police investigation. Also, police can get a heads up whenever an individual involves in suspicious financial activity when they would implement blockchain for flagging specific transaction patterns.

## **Retail & CPG**

Blockchain technology can revolutionize e-commerce by minimizing transaction costs and strengthening transaction security. Many e-commerce giants are trying to develop and integrate decentralized blockchain utilities to connect manufacturers, brands, retailers, third-party sellers, content providers, and consumers, without an intermediary. Establishing a decentralized marketplace is in motion, which is designed to empower retailers by giving them total control over their retail space.

By using a decentralized ledger to record, store, and track data, blockchain will help to monitor the food supply chain and trace any contamination issue to its root. The food processor will be able to avoid sending harmful items to distributors, the retailer can cut down on or respond more quickly and effectively to recalls, and the consumer can trust that what they are buying is safe to consume.

## **Information & Communication**

Telcos can hold their position by offering blockchain-based identity management services to the customers, which would enable customers to choose whether to permit telcos to share certain types of data with certain companies, using a tamper-proof mechanism like an access token. In exchange for their data, the customer may choose to get paid or receive a discount for using that company’s services. We can also notice several messaging platforms integrating blockchain and crypto-features into their apps to enhance user security and privacy.

## **Enterprise Technology**

The inefficiency of cloud services in launching IoT products, due to vast computational resources and data storage capacity, can be resolved using blockchain’s decentralized cloud services, more connectivity and security, and computational power. Cloud exchanges, based on blockchain and decentralization, are less vulnerable to fraudulent transactions and cyberattacks. Various people and organizations would be able to offer their computing resources, spurring competition and incentivizing fair pricing.

In the current web, establishing your true identity and no interoperability on your personal information used by company servers is a major concern. Blockchain technology would decentralize the system to allow certain trusted DAOs to issue credentials to users, who can use them to prove their identities to other organizations, enhancing personal privacy and streamlining the verification process.

This would also help in conducting background checks and verifying employment histories by HRs or authorities, as employment and criminal records stored in a blockchain ledger would be free from the possibility of falsification. Business accounting is also a major division that would benefit from the transparency provided by features of blockchain, like smart contracts and verifiable transactions.

With many more domains to cover, the emerging blockchain technology is still in its embryonic stage and with its growth in upcoming years, it is not an exaggeration to state that this technology will be the future of advancement in every terrain of the global market.

With the advancement of applications of blockchain technology, the major sectors of the world market have highlighted the scope of development, this technology can bring to every domain.

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Impact of Blockchain on Healthcare, Government, Retail and Information Technology

# Analyzing the Decline of LUNA and terraUSD

Stablecoin is an interesting crypto product. A stablecoin is meant to maintain its price at $1 compared to a particular Fiat currency like USD, EUR, or GBP. Their existence is meant for crypto-natives to get in & out of the dollar easily without requiring a bank’s approval for deposits and withdrawals. Most of the crypto trading volume is facilitated by stablecoins, on top of them empowering DeFi.

Some of the popular stablecoins in the market are USD coin (USDC), tether (USDT), dai (DAI), and binance USD (BUSD). Also, quite prominently, there was terraUSD (UST) in this category as well. They were the five biggest stablecoins, demonstrating roughly $160 billion in the crypto market. USDC, USDT, and BUSD are collateralized and issued by centralized institutions. These institutions possess a vast reserve of dollars supporting each coin, by which the holder can redeem it for $1 from the issuer.

UST was different as it did not have any collateral at all. It was an algorithmic stablecoin driven by the Terra protocol and supported by LUNA, a crypto token, to stay in symbiosis. When the price of UST surged (>$1), the protocol incentivized users to burn (destroy) LUNA and mint UST. When the price of UST toppled (<$1), the protocol incentivized users to burn UST and mint LUNA. This was a smart strategy. Simply put, if the demand for UST was high enough to surge its price to $1.01, the protocol minted some UST in exchange for burning some LUNA.

In May 2022, terraUSD (UST), which was supposed to stay at $1, was no longer at $1, and this situation was not good because, on top of that, the value of LUNA, its backup, was also falling. On May 7, the price of UST, the $18-billion market cap algorithmic stablecoin, which was supposed to maintain a $1 mark, began to wobble and fell to 35 cents within two days. Moreover, its associate token, LUNA, which aimed to balance the price of UST, fell from $80 to a few cents on May 12. On this date, the prices of LUNA fell 96% in a single day, pushing it to less than 10 cents, along with the official halt of Terra blockchain, for the first time, at block height 7603700, putting the network’s security at peril. Since UST plunged under $1, all endeavors to recall UST to $1 failed, both by the Terra protocol algorithm and by the lending out of LFG reserves to trading firms, and as a result, Terra’s decentralized finance applications incinerated $28 billion as a majority of investors left the Terra ecosystem. The collapse of TerraUSD stablecoin threatened the entire crypto ecosystem.

Naturally, you’d assume that the mechanism malfunctioned, but it didn’t. It functioned as designed, which can be proved by looking at the amount of LUNA issued as the protocol tried to algorithmically bring UST back to $1 while LUNA’s price was also sinking. Hence, Terra’s odyssey from the underdog phase, as a South Korean payments app, to a $60 billion crypto-ecosystem concluded as one of the biggest failures in crypto.

At its peak, terraUSD (UST) was the third-largest stablecoin. Honestly, UST was a wild success in the crypto market, until the moment it was not. Now, what was the exact reason for this downfall, does not matter much, but what matters is that in adverse situations, Terra broke down completely, which was disastrous. This event supports the hypothesis that an undercollateralized, algorithmic stablecoin can depeg and lose significant value.

Stablecoin is an interesting crypto product. A stablecoin is meant to maintain its price at $1 compared to a particular Fiat currency like USD, EUR, or GBP.

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Dead Blockchains! Investigating the fall of LUNA and terraUSD

Analyzing the Decline of LUNA and terraUSD

# DeFi’s Accessibility Conundrum

Ever since its emergence, people from around the globe have been trying to explore the use cases of DeFi efficiently. DeFi has successfully offered a variety of solutions to the traditional, centralized approach toward customer/user data. But with its growing users each day, the question of sustainability comes up? How sustainable is DeFi?

Here, we have tried to outline the role and importance of sustainability in DeFi. 

## How DeFi is Breaking the bounds of Status Quo

The new and famous financial system called decentralized finance (DeFi) is built on safely distributed ledgers, comparable to those used by cryptocurrencies. The system eliminates the authority that financial institutions, including banks, have over money, financial goods, and financial services. There is no central authority looking over your money. Everything DeFi focuses on consensus. 

There is no doubt that Blockchain has the potential to develop into a robust monitoring and transactional tool that can lower congestion, decrease corruption, build trust, and empower users. The question of interoperability and transparency has taken a backseat ever since the phenomenon of Blockchain gained some traction.

In a time of accelerated technological innovation, DeFi is offering opportunities that have been crucial for growth and prosperity in every generation before them, providing a lifeline for human progression and potential. It also enables people to take advantage of the redistribution of wealth and information. But how does DeFi do that? 

Ever since the pandemic struck, governments and economies from all around the globe have been struggling to recover from its impact. Meanwhile, the emergence of DeFi and Blockchain has presented a chance to disrupt the existing status quo to level the playing field for the underrepresented. 

One example could be accessibility. A variety of projects are in the making and lie beyond the periphery of DeFi. These projects are developed to widen the accessibility of Cryptocurrency among individuals. A remarkable array of services and layer two solutions, made expressly to increase the usability of existing financial instruments, continue to support the increased acceptance of cryptocurrencies and rebuilt finance.

## Conclusion

DeFi, Blockchain or any other technology, it's vital to understand that every technological choice should align with the vision of a sustainable future. A future with ease of accessibility for all. DeFi has come a long way and has a bright future ahead. With so many new projects launching each day, we must understand and support projects that benefit investors of all kinds without any barriers. 

DeFi is establishing itself as a pioneer in the blockchain space by breaking the social constructs amongst investors from all around the globe.

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DeFi and Its Accessibility Amongst an Average Investor

DeFi’s Accessibility Conundrum

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