Next Generation DeFi ETFs: DeSyn | TKX Research

6 min readJun 23, 2022

by @Yuwen0823 and @FriedWagyuu (ed.)

TL;DR

DeSyn is a protocol for issuing and buying crypto ETFs
Founded by experienced crypto veterans with specialities in trading platforms
Both investors and KOLs are incentivized for promoting their portfolios
$DSN token allows you to reduce fees and participate in pre-sales of portfolios

Introduction

DeSyn Protocol is a DeFi protocol that allows users to create and trade pools-based assets such as ETFs/Portfolios, structured assets, and more via smart contract.

Website：https://www.desyn.io/
Twitter：https://twitter.com/DesynLab
Discord：https://discord.com/invite/ByQv4WHYPs
Whitepaper：https://www.desyn.io/whitepaper.pdf
Community: Twitter 37K; Telegram 38K; Discord 22K

Backgrounds

In the traditional financial sector, mutual funds and market index funds are the most widely accepted financial instruments among retail investors. At the end of 2019, mutual fund assets and ETF assets in the US alone were $26.7 trillion and $4.9 trillion, respectively. In the US, 23% of household financial assets are held in mutual funds and ETFs.

Both mutual funds and ETFs are ideal core portfolios for investors and they are often professionally managed. The average investor lacks the knowledge, time, resources, etc., and mutual funds and ETFs allow diversification and lower transaction costs. In addition, as financial markets become sophisticated and most fund managers struggle to outperform the market, ETFs that track market performance has become more popular in recent years because they have lower management expense ratios compared to mutual funds.

Referring to traditional financial markets, ETF portfolios will grow rapidly in the crypto world as long as the overall crypto market continues to grow with more users, investors, projects, and more. DeSyn provides a platform and tools for users to create their own portfolios of ETFs to meet the growing demand. They can be used by all parties for investment, ETFs portfolio creation, market making and advanced derivatives.

Protocol Features

For Investors:

ETF portfolios on the DeSyn platform allow retail and institutional investors to diversify and manage risk across any given asset class. If an investor does not know which individual crypto asset to purchase, but believes in the market as a whole or one of its sub-sectors and wants exposure, they can purchase a portfolio of ETFs.

For example, an investor who wants to invest in the top 10 tokens in DeFi by market cap for the long term can do so by purchasing a single ETF token consisting of the top 10 tokens in DeFi by market cap for ERC20. For ETF portfolios that do not exist, investors can invent/create their own pools using the protocol.

DeSyn has created the following key features/functionality to facilitate the process of investing in a portfolio of ETFs throughout the cycle from an investor’s perspective:

Explore ETFs/Portfolios: Investors can explore and select their preferred Exchange Traded Funds/Portfolios
Buy and Sell ETFs/Portfolios (Secondary Market): Once investors decide to buy and sell Exchange Traded Funds/Portfolios, they can go to AMM to buy and sell Exchange Traded Funds/Portfolio Tokens.
Issuing and Redeeming ETFs/Portfolios (Primary Market): Once investors decide to buy/sell ETFs/Portfolios, they can also issue/redeem them directly to the Portfolio Manager.

For KOLs (Fund Managers):

The DeSyn platform allows anyone to become an on-chain asset manager. This design opens up the protocol to all participants who want to manage their money. For example, you are an institution that wants to offer structured projects with a high AUM prospect to your clients. In addition, DeSyn provides KOLs with a variety of tools to manage their portfolios of ETFs, including creation, fundraising, day-to-day fund management and more. Including:

ETFs Portfolio Creation: KOLs fund managers can create their own ETFs/portfolios through a simple process. (By a few clicks)
ETFs Portfolio Management: KOLs fund managers can perform daily management here, such as liquidity fees, trading, etc.
ETFs Portfolio Trading: KOLs fund managers will rebalance ETFs/portfolios through our own smart routing technology.

KOLs can access the “Portfolio/ETF page” every day to do three important things:

Distribution: Buy, sell, distribute and redeem your exchange-traded funds/portfolios
Fees: set up and charge investors fees.
Trading: Trade the various assets in your exchange-traded fund/portfolio.

In addition, DeSyn supports KOLs to strongly promote their portfolios: the platform will incentivize future management fees for KOLs (called liquidity fees here). Also, investors who refer other investors will receive a percentage of money in return.

Token Economy

$DSN is the DeSyn Protocol’s Native Token

Utilities for Investors:

Pay for protocol fees, staking to save fees
Stake DSN to participate in pre-sale of ETFs/Portfolios
Stake DSN to share revenue from the DeSyn vault

Utilities for Portfolio Managers:

Pay for protocol fees, staking to save fees
Stake DSN to participate in ETFs/Portfolio launch pad
Stake DSN to be a member of partnership program for portfolio managers

Buyback

All protocol fees including manage and trading fees (up to 70%) will be converted to DSN dynamically and be distributed as performance rewards.

Governance

DSN will gradually transit to community governance, allowing the community to decide the future of the DeSyn Protocol.

Token Allocation

Team

Lin Yuan, CEO

Former COO and CEO (China) of Lightnet Group, CSO of Yeahmobi, previously Baidu, BlackRock, and Tudor Investment. An advisor and investor to two crypto social trading platforms, Kikitrade and BingX.

Donnie, Co-founder

Former CTO of Qingshi Securities, Founder of Blockchain Vibe Tech, previously the CTO of FORMAX Fintech, and Senior Architect in Tencent, Xunlei, etc. Donnie is a technology pioneer in the trading system, who built the first generation FX copy trading system in Formax and crypto copy trading system in BingX.

Catherine Su, Co-founder

Former Legal Officer of Lightnet Group, Legal Director of Bixin, Compliance Partner in Nova Exchange, ExShell exchange, Legal Officer of Aladdin Fintech, PhD of Lanchester University, UK. 6 years + experience in crypto and blockchain and focus on digital finance field.

Veron, Co-founder

Former Strategy Director of BingX, Head of Business Operations of Lightnet Group, Senior Positions & Advisor role of Country Garden Group, Peak Capital & Asia Pacific Investment & Digital Bank, OCBC Bank, Standard Chartered Bank. 13 years+ experience in Fintech and Finance in South East Asia and China.

Highlighted Investors

Three Arrows Capital, TPS Capital, Febushi Capital, LD Capital, TKX Capital, Spark Digital Capital, Mentha Partners, Outliers Fund, Chiron Partners, Zonff Partners, SNZ, Bing Venture, OKX Blockdream Ventures, MEXC, Mirana Ventures, BitMart &Cipholio Ventures, TRON, NEO ECO Fund, Joseph Eagan ( Co-founder and CEO of Acme Crypto holding and Former President of Polychain Capital) and Jeff Pan (Softbank China Partner and Founding member of Alibaba’s Strategic Investment Department), Lihong Wang (Ex-Bain Capital China CEO), and more.

Summary

DeSyn Protocol gives retail and institutional cryptocurrency investors a way to passively invest and track the market. Investors who believe that a particular industry is promising can buy ETFs/portfolios in that industry to participate in the market. DeSyn offers this possibility by staking DSN tokens to buy ETFs/portfolios, allowing cryptocurrency investors to buy financial instruments similar to traditional finance with low transaction costs.

DeSyn supports everyone to create their own portfolios. DeSyn is well designed in terms of attracting investors and promoting the platform: investors who invest early in KOLs’ portfolios and promote them to other users are rewarded with KOLs.

Overall, the ETFs/portfolios on DeSyn offer many advantages to investors, such as asset diversification, lower costs and reduced maintenance requirements.