1/ Today, we’re excited to reveal Set V2, a new protocol built to give users and portfolio managers access to all of the exciting opportunities available to them in DeFi!https://t.co/7gCQEpkiuJ pic.twitter.com/K86FIHnnmA
— Set ⚖️ (@SetProtocol) August 5, 2020
Since it’s launch in August of 2019, Set Protocol has captured $24M worth of TVL, making it a leading contender for anyone looking to take advantage of automated trading strategies called TokenSets. We’ve been pretty vocal about our support for Set and their innovative approach to portfolio management, but there’s no denying that the yield farming craze has segmented attention away from the protocol in recent weeks.
Now, Set Protocol is shaping up to release a V2 upgrade – a combination of key features centered around offering a more holistic, versatile trading experience for both Set traders and Social Set creators.
“With the explosion of new DeFi protocols, assets, and yield opportunities, it is impossible for the normal person to have the time and effort required to keep up.” CEO Felix Feng told DeFi Rate “Set V2 opens up passive access to the normal user, and will dramatically lower gas costs as strategy executed is pooled.”
While none of the features we’ll dive into are live, the blueprint for V2 sets the protocol up to enjoy a renewed wave of activity in the coming weeks.
What’s to Know?
Underpinning all Sets are a makeup of different ERC20 tokens. Up until now, Set Protocol only supported highly liquid tokens like ETH, stablecoins and to a lesser degree, WBTC. Now, with their new TWAP rebalances, the flood gates can open for a more diverse range of assets, including popular DeFi tokens like LEND, KNC and SNX.
This comes with underlying support for yield farming, meaning that Sets which incorporate cTokens like cUSDC benefit from COMP rewards or those that leverage Balancer liquidity benefit from BAL. Outside of the more notable strategies, we expect this to expand to emerging farming opportunities like mStable MTA and yearn‘s YFI just to name a few.
Most importantly, Set V2 will introduce gas optimization for entering and exiting different TokenSets. As any Set trader knows, current Sets are faced with anywhere from $15-50 in trading fees, a big onramp for those looking to enter positions with minimal amounts of capital. While it’s unclear exactly how much gas will be reduced, we’d expect to see those entry costs closer to the $5 mark whenever they are rolled out.
For Set Managers, V2 also introduces Set Portfolios which offer flexible index allocations across a variety of assets and TokenSets offered on the platform. This comes in tandem with new types of trade execution including limit orders and margin trading for more risk-savvy, experienced managers.
Last but not least, V2 is likely to bring about lending support for more of DeFi’s top protocols including Aave, Curve, and Compound along with derivatives and liquidity from Balancer and Synthetix among others.
For Social Traders, the ability to flex their trading knowledge has never been more opportune. Set Protocol is sure to create a diverse market of competitive traders capturing alpha and sharing it with their holders. Thanks to their trading fee upgrades, managers can incentivize themselves to do well with their capital pool as it directly benefits their return.
Set it and Forget It
The launche of V2 signals the core goal for DeFi traders to be able to enter a position and have it passively accrue value in different market conditions. As DeFi becomes ever more complex, the average user is better suited to leave it to the full degens, and Set serves as a great product to benefit from other’s expertise without having to mimic their every move.
In the coming months, it will be interesting to see how Set competes with other platforms offering liquidity mining incentives to capture market share. While rumors have been touted that Set could one day tokenize their protocol, it’s not something we expect to see in the short term, and with that, the team will have to be especially creative with how to route liquidity into their top-performing strategies.
Cooper is the Editor of DeFi Rate and an active contributor to leading DeFi media outlets like The Defiant, DeFi Pulse, and Bankless. He works with early-stage teams through Fire Eyes DAO to incubate governance models and grassroots community development. He is an ambassador to Set Protocol and an author of a weekly publication called Token Tuesdays. To stay up with Cooper, follow him on Twitter.