Rari Capital has launched the second iteration of its DeFi Robo-advisor. No deposit limits, new pools and integrations, and decentralized governance are also included.

The fast pace of change and high-risk characterized the DeFi space in 2020. Navigating various platforms quickly enough and making the right moves is difficult, which means only a  few players manage to rake in the rewards. The vast majority of users, who dare to DeFi, walk away with much smaller gains or lose their investments entirely.

Automated services are a good alternative to capturing DeFi yields. Platforms like Set Protocol and yEarn Finance both YFI gained popularity among the investors, capturing market interest in set-and-forget crypto investment strategies. 

Rari is similar, except that it takes a unique stance on risk management.

Rari goes against the DeFi “degens” recklessness, who showed readiness to pile millions of dollars onto unaudited smart contracts like Yam. The team carefully rolled out its first iteration with limited capabilities.  V1 allowed for only $350 deposits per user, and there was a single stablecoin pool with conservative APY.

Rari co-founder Jack Lipstone told Crypto Briefing that “by not associating ourselves with the hype and mania surrounding DeFi recently, we have been able to drive home our idea of long term sustainable yield.”

The platform has also been audited by Quantstamp, one of the leading startups in blockchain security. Moreover, Rari initially generated yields from only a few selected protocols like Compound and dYdX, using a limited set of strategies. These constraints gave the team more control over risk management and thus improved safety for users. 

Today, the team has removed some of these restrictions in the V2 launch. The cap on deposits is gone, Aave and mStable integrations have been added, and the pool selection is now extended from one to three. The pool now includes Rari Stable Pool (USD-based), Rari Yield Pool (USD based), and the Rari ETH Pool (ETH-based).

On future updates, Lipstone added:

“In terms of integrations, if the DAO believes a protocol should be integrated and passes our risk assessment framework then we will integrate it into one of the 3 pools”

Rari V2 is more versatile than V1 in the sense that its pools have different risks, as well as rewards. 

The highest theoretical APY on the platform reached 109%, which may be attractive for higher risk tolerance users. The high yields are achieved by constantly monitoring several DeFi protocols and reallocating funds to achieve maximum efficiency.

Beyond functional improvements, the platform will receive decentralized governance tools, in line with the DeFi ethos. 

The Rari Governance Tokens (RGT) will be used to control things like integrations and pool parameters. Moreover, staking RGT will enable fee discounts. Finally, 70% of the platform’s revenues will be used for buybacks and burns, which potentially creates demand pressure for RGT.

Importantly RGT will be distributed through a liquidity mining event, which begins today. 87.5% of the total supply will be up for grabs over 60 days, but the largest portion will be distributed within the first 15 days.

In addition to the protocol’s governance, Rari V2 users will influence decision making on other platforms through the “Passthrough Governance” feature. 

Passthrough Governance enables users of pools that extract governance tokens like COMP and BAL as rewards for using these tokens to influence the underlying protocols.

Finally, the Rari team is working with the Chicago DeFi Alliance to create a vibrant ecosystem that will appeal to traditional financial players. The stock market is already familiar with Robo-advisors, so approaching crypto from the same angle will make their exploration of the space smoother.

Lipstone said partnerships like these will help Rari reach “institutions and traditional family offices and bring DeFi to the masses through autonomous yield-bearing strategies.”

All in all, Rari V2 is worth considering if investors are interested in relatively stable and high passive income. The team’s focus on risk management and controlled feature rollout are also good indicators for those who care about their hard-earned money.

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