Set Protocol – the sector-leading asset management platform – has upgraded select Robo Sets to introduce enhanced rebalancing features via a Time-Weighted Average Price (TWAP) mechanism.
1/ Today, we’re excited to launch the first upgraded RoboSets on @tokensets ??
These new Sets take advantage of TWAP, a new mechanism that reduces slippage & impact on market price during large rebalances which ultimately benefits Set holders!
Read more:https://t.co/KfKlDBax1D
— Set (@SetProtocol) June 12, 2020
As TokenSets continue to grow in value, the potential for slippage during rebalances becomes more likely. For those unfamiliar with Sets, they each consist of different components (like WETH and USDC) which are changed each time a rebalance occurs. In order for this to happen, the existing collateral must be auctioned in exchange for the new makeup. In the case of the top Robo Sets like the ETH 20-Day Moving Average (ETHMACOAPY) Set, this means more than $1M of ETH needs to be exchanged in short time frames.
Now, while slippage has not historically been an issue during these rebalances, the new introduction of TWAP is set to nip that idea in the bud before it even begins.
“Time-Weighted Average Price (TWAP) is a trading strategy used to slice up big orders into smaller chunks sold over a period of time with the goal of reducing slippage.”
With TWAP, each chunk uses the latest oracle price at the start of its own rebalance at the most updated price – allowing rebalances to close quicker with less slippage.
What’s To Know?
With the introduction of TWAP, a number of Robo Sets have been upgraded to accommodate the new rebalancing metric. In particular, this includes:
- ETH RSI 60/40 Yield Set
- ETH 26 Day Exponential Moving Average (EMA) Yield Set
- ETH 20 Day Moving Average Yield Set
What this means is that if you held any of these Sets prior to the upgrade, you will need to migrate to the new version via your TokenSets dashboard. To do this, simply sell your Legacy Set and purchase the new Set, indicated by a (II) next to the name.
Outside of the upgrades to existing Sets, the TWAP mechanism also introduces an exciting capacity for Robo Sets to support new ERC20 assets like WBTC which have historically been prone to slippage due to poor liquidity.
This means that Robo Sets are likely to see a number of new makeups, including brand new asset types which have yet to be introduced to date! As our frequent readers may recall, Set’s last introduction of LINK signalled that more ERC20 tokens are inevitable – and this upgrade further solidifies that notion.
Set It and Forget It
As we head into a new market cycle, Set Protocol serves as a fantastic asset management tool for traders of all shapes and sizes.
Just this month alone, we’ve seen proposals for TokenSets to be used by DAOs for treasury management and as collateral in Aave’s next Money Market.
To this end, we expect Sets to enjoy enhanced composability in the coming months, and encourage you to take a look at the platform if you haven’t already!
Until then, be sure to stay up with Set Protocol via Twitter, and keep an eye on rebalancing notifications via the TokenSets Twitter. For those looking to get more involved in the conversation, join the Set Discord!
Cooper is the Editor of DeFi Rate. He is an ambassador of Set Protocol and an active contributor to MetaCartel where he seeks to find emerging consumer-facing applications that propel the Ethereum ecosystem. He often works with projects as the Director of Fitzner Blockchain Consulting where he coauthors the weekly publication Token Tuesdays.
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