aHYPE performance review (03/2022)
Growth and performance of the Avalanche Social Index in the second month of its journey
This second month the pool saw its TVL reach a historical minimum since launching of 338,626 USD due to the strong devaluation of most of the pool’s tokens. However, investments kept coming and swap volume has maintained a steady level, two good signs of health.
Entering the month of April the markets are rising up again and the TVL followed suit reaching 556,425 (USD), just 17% short of the highest Total Locked Value of 669,007 USD.
After a tough first month, we are beginning to see happier times for the pool and the strategy. We believe that if the market continues to deliver the pool is ready to start growing more rapidly since its foundation is solid. Let’s begin.
In this section, we’ll discuss the aHYPE performance compared to other assets and portfolio strategies having at least 5% of allocation in an asset.
We can see that although the KACY has dropped by around 50%, the aHYPE index had positive returns, following the AVAX in a very similar way.
Since the launch of the aHYPE crypto index (01/27/2022), we have the following ROIs for each of its assets individually:
The aHYPE token has performed well, gaining ~29% since its’ inception, even though some of its’ composing assets dropped down by more than 25%, such as PNG and KACY.
In the last month (3/1/22 to 4/1/22), we had:
In the last month, the aHYPE token had a positive result, by almost 10%, although some of its components dropped down by 20% or more, probably due to the Ukrainian-Russia war issues and the FED signalizing quantitative tampering for the next following months.
Between 01/27 and 02/28 we optimized a minimum variance portfolio strategy and a maximum Sharpe Ratio using the Markowitz theory and then we compared their performances in the following month, the results can be found below:
aHYPE VS minVAR VS maxSR
We can see that the aHYPE portfolio has for the most part a very similar result to that of the minVAR and maxSR portfolio strategies, but with the advantage of acquiring rewards while staking it. :D
The assets’ weights for the minVAR and maxSR portfolios are respectively:
wrapped-avax 42.4% and 41.3%
joe 5.0% and 5.0%
benqi 5.0% and 5.0%
kassandra 5.0% and 5.0%
crabada 5.0% and 33.7%
avalaunch 32.6% and 5.0%
pangolin 5.0% and 5.0%
The minVAR portfolio prioritizes assets that don’t have greater volatility on the optimized timeframe, so it will choose the assets that are more stabilized, such as AVAX and AVALAUNCH, while the maxSR will prioritize the assets that gave more returns on that same period, such as AVAX and CRABADA.
The weekly volatilities of the portfolios strategies are plotted below:
We can see clearly that the aHYPE portfolio has very similar volatilities to the other two strategies, although being slightly greater.
The annualized returns, volatilities, and Sharpe Ratio of each portfolio can be found below:
Returns Volatilities Sharpe
aHYPE 1.298556 0.769038 1.688547
minVAR 1.376205 0.768186 1.791498
maxSR 1.478984 0.771106 1.918003
Those returns do not account for staking rewards and swap fees for rebalancing a portfolio such as those two strategies we mentioned.
Overall Pool Stats
Overall stats, between March 01 and April 01:
Above we have the most important pool stats. With these metrics, it is possible to have a general idea about how the pool is doing. In this period we have a net value of 42,319.55 USD going into the pool. On the graph below a more precise view of investments and withdrawals is shown.
Most of the money going in or out of the pool happened in the beginning of March, with some big withdrawals on the first days of March balanced with a large investment on March 02. The rest of the month saw little action but for the 25th of March with more than 40k USD going to the pool. The pool had, just like last month, a net positive daily mean, now summing up to 1322.48 USD.
The withdrawal fees (3%), as expected, are concentrated in periods where there were lots of money leaving the pool. These fees are going to a wallet controlled by the DAO, and in this second month, the DAO earned 5019.15 USD in fees. This sums up to approximately 1% of the Total Value Managed by the strategy converted to DAO fees.
This month the TVL took a steep dive but was able to recover during the rest of the period. At the beginning of March, there was considerable swap volume, given that the large number of token withdrawals made possible some good arbitrage opportunities. Again, for the rest of the period, nothing major happened if you think that the TVL recovery is not good enough. The mean daily swap volume was 12309.34 USD.
Next graph we can see the swap fees (0.3 %), the daily mean totaling 37.03 USD. The swap fees go to the LPs, i.e, pool investors.
Above we have the supply of the LP token (aHYPE) since the pool’s launch. We hope to see the supply increasing since it will mean that the pool is getting more popular and bigger.
The first month of the pool saw larger volumes being moved in and out with fees paid to be higher. In the second month, both volumes and fees were smaller, as expected. From now on, a steady rise in volumes and fees will be desired and the team will work towards building a larger community of Kassandra users.
Important to note that as time goes on, new people keep investing and withdrawing money from the strategy, keeping a very consistent value under management, and making the DAO earn consistent withdrawal fees. For the time being, all those fees are stored in a multisig wallet, but soon enough we’ll be announcing a buyback and burn program for KACY tokens using those funds.
The content in this article is for informational purposes only, you should not construe any such information or other material as legal, tax, investment, financial, or other advice. There are risks associated with investing and you should always do your own due diligence and be consulting your financial advisor.
Kassandra is an audacious project to delegate money management in a decentralized, efficient, and customizable way, working as a marketplace for tokenized and data-driven investment strategies.