Bulls vs. Bears. Two animals have been fighting each other for years on Wall Street. This long-standing history has led to the rise of crypto markets. The bulls are now in retreat and the bears have seized control after a long period of dominance. That said, most of us are aware that the market conditions right now aren’t the most trader-friendly; stable coins have been destabilized and there’s a bloodbath with red candlesticks taking dips.
What could an investor or trader do to help? It’s simple: diversification. Or the golden rule that one should not put all of your eggs in one place. Finding the perfect balance when it comes to diversification can be difficult. This is why the right tool or mechanism can make the difference.
What exactly is diversification?
Diversification means spreading assets among multiple asset classes, in order to limit your exposure to just one. This method is intended to help minimize your portfolio’s volatility over time and maximize returns by investing in different assets that would react differently under the same circumstances. Diversification has many benefits:
- Loss risk minimization:Diversification of assets reduces your risk of losing money on a single type asset. Because one asset, or class of assets can perform poorly, another asset, or class, performs well. This balances out the portfolio and reduces risk.
- Conserve capitalDiversifying assets lowers capital loss risk. Capital preservation is possible by including debt instruments as part of your portfolio.
- Higher returns at the same risk:Diversification in institutional finance has proven to be more profitable than taking on the same risk. It is possible for certain asset classes to perform exceptionally in the markets, so it pays to have a portfolio that’s well-diversified. On the contrary, especially during a bear market, some assets won’t perform as well, and having a diverse portfolio will average the losses.
Durafi, which is a tool that traders, but more importantly crypto traders, need to diversify their portfolios, can be used to help them trade in bear markets.
Durafi, a decentralized market, what does it do?
Durafi, a DeFi protocol to trade cryptocurrency index derivatives as well as structured products, is called Durafi. The goal of Durafi is to open up access to high-powered crypto derivatives. It also lowers the costs associated with active trading by making it more accessible and easier for traders to diversify their portfolios. Their first product, Durafi Fund Token(DFT), was created to help people invest in important cryptocurrency trends.
Durafi is able to combine the strengths of traditional and decentralized finance, allowing it to be the best of both. Some of Durafi’s top tier features include:
- Durafi’s patented Durafi Liquidity Engine combines the benefits of decentralized liquidity pools with high-speed order books and proprietary innovations to maximize slippage and market effect based on each trade’s parameters.
- Trade DeFi derivatives fast and at low cost: Users may exchange single tokens or index derivatives at high speed and low-cost thanks to Durafi’s Derivatives Generator and Liquidity Engine.
- To Support Active Trading Strategies Durafi’s derivatives products trade without lockups or other limitations. You can trade them at very high speeds via their API. This was designed by and for high frequency traders.
All of this is possible thanks to “Durafi Fund Tokens” (DFTs), which are traded on their exchange and track the performance of cryptocurrency baskets like the Durafi Crypto Index, which tracks major cryptocurrencies, the Durafi DeFi Index, which tracks major decentralized finance protocols, and the Durafi NFT Index, which tracks major NFT platform tokens.
Each token is intended to represent the index components’ total market performance, thus making diversification easier than ever. Durafi allows you to put your eggs into different baskets and diversify with no restrictions.