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Strategy Tokens: What Are They and How Do They Work?

Easy access to active management of crypto assets has been Sommelier’s mission from day one, and the recent launch of the first strategy is a major milestone in this journey. Now, the Sommelier team is extremely excited to announce the launch of Strategy Tokens with two new strategies coming to the platform.

Strategy Tokens enable anyone to get exposure to actively managed crypto asset portfolios just by holding a token. These tokens can be obtained on the most popular decentralized exchanges, making the onboarding process that much easier for those unfamiliar with the process of interacting with a smart contract to provide liquidity. While you hold these tokens, the smart contract algorithms for the associated strategies will do all the portfolio management. And when you’re ready to exit, all you have to do is sell the tokens.

Never before has it been this simple to access transparent, non-custodial, active crypto portfolio management. The simple act of holding a token gives users access to the most revolutionary development in DeFi to date. Retail investors can now put capital into sophisticated strategies that use custom machine learning algorithms to track many market signals to dynamically adjust strategy portfolios. These strategies are designed by world-class quantitative finance professionals and are back-tested and vetted, giving users peace of mind while their funds go to work.

ClearGate Capital’s forthcoming Trend Following Portfolio in BTC and ETH plus its Momentum Portfolio in BTC and ETH will be the first strategies to have tokens representing them. The ticker for the former will be ETHBTCTrend and the latter will be ETHBTCMom, and both will be available on Uniswap V3 in trading pairs with USDC. Each token represents a share in one of these actively managed strategies, and they’re fully liquid, so you can sell your share when it best suits you.

These ETH and BTC strategies are perfect for the launch of this new asset class because the tokens give users the ability to hodl strategies that are specifically designed to outperform static portfolios of those assets. The average hands-off crypto investor will now be able to sit back while ClearGate’s machine learning-powered strategies work to deliver better performance and lower risk through active, data-driven trading.

As more and more strategy providers bring strategies to Sommelier, users will be able to invest in the Strategy Tokens most suited to their investment objectives. Down the line, Strategy Tokens may even launch that aggregate Cellars into portfolios with different time horizons or risk tolerances, for instance. The possibilities are truly endless, and Sommelier’s natively multi-chain architecture makes it the ideal platform for launching the most sophisticated investment strategies in DeFi, for the benefit of all.

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Users of the Sommelier website should familiarize themselves with smart contracts to further consider the risks associated with smart contracts before adding liquidity to any portfolios.

Note that the website may change, and we are under no obligation to update or advise as to these changes. There is no guarantee that the Sommelier Mainnet, including any software, products or token use cases mentioned on the website, will be built, or offered by Sommelier. In particular, actual results and developments may be materially different from any forecast, opinion or expectation expressed in this website, or documents contained in it, and the past performance of any portfolio must not be relied on as a guide to its future performance.

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