Nested Strategies

Description on how Vault-to-Vault investing works in Aspis Protocol

Nested strategies on Aspis Protocol refer to the capability of an asset manager to invest in multiple Vaults that meet specific criteria or strategic goals, rather than developing a strategy from scratch. This approach leverages the collective expertise and performance of various managers and their strategies, allowing for diversified and optimized asset management.

1. Efficient Diversification:

   Concept: Instead of creating a single, standalone strategy, an asset manager can allocate funds across multiple Vaults, each managed by different experts with unique strategies.

   Benefit: This diversification minimizes risk by spreading investments across various strategies and asset classes, thus enhancing the overall stability and potential returns of the portfolio.

2. Leveraged Expertise: Concept: Managers can tap into the proven track records and expertise of other managers by investing in their Vaults. Benefit: This approach allows managers to benefit from specialized knowledge and successful strategies without needing to develop and maintain these strategies themselves.

3. Automated Analysis and Selection: Concept: Aspis Protocol’s AI execution layer can analyze multiple Vaults based on predefined criteria such as performance metrics, risk profiles, and strategic alignment. Benefit: Automated analysis ensures that the chosen Vaults meet the manager’s specific investment objectives and risk tolerance, facilitating informed decision-making.

4. Dynamic Position Management: Concept: The AI execution layer continuously monitors the performance of invested Vaults, adjusting allocations dynamically based on real-time data and market conditions. Benefit: This dynamic management optimizes the portfolio by reallocating funds to the best-performing Vaults and reducing exposure to underperforming ones.

5. Simplified Implementation: Concept: Managers can easily implement nested strategies through the Aspis Protocol interface without needing advanced programming skills or in-depth knowledge of each individual Vault. Benefit: This user-friendly approach lowers the entry barriers, making sophisticated investment strategies accessible to a broader range of managers.

Example Scenario:

Manager A decides to use a nested strategy approach. Instead of developing a complex algorithmic trading strategy, Manager A selects several high-performing Vaults managed by other experts on the Aspis Protocol (Manager B, Manager C). The AI execution layer analyzes these Vaults based on performance, risk, and strategic goals. Manager A allocates funds accordingly and sets the AI to dynamically adjust the positions as market conditions change.

Vault 1 (Manager A): Focuses on low-risk, steady returns through stablecoin lending.
Vault 2 (Manager B): Specializes in intra-day trading with cryptocurrencies.
Vault 3 (Manager C): Invests in promising DeFi projects for long-term growth.

By investing in these Vaults, Manager A diversifies the portfolio, leverages the expertise of other managers, and ensures optimal performance through the AI-driven dynamic management system.