Did DeFi Just Get Its S&P Moment With This Decentralized Yield Diversification Fund?

Thetanuts Finance has introduced decentralized "vaults" that diversify users' risk by spreading yield-earning assets around numerous decentralized finance (DeFi) protocols.

What happened: The newly-launched Thetanuts Stronghold Index Vault allows its users to stake their cryptocurrencies into DeFi Option Vaults which according to the company "performs a similar function to the S&P 500 in stock trading," according to a Tuesday statement shared with Benzinga.

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Funds deposited through the protocol are "automatically deployed into specified covered selling option strategies through the use of smart contracts" with the base yield being obtained through the payment of premiums instead of the token rewards typical of other DeFi yield-earning products. Users of the Thetanuts Stronghold Index Vault receive a yield-bearing token in exchange for their deposit.

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Thetanuts Finance collateralizes users' vault positions on other protocols and allows for the withdrawal only after the vault expires. The indexes are backed by multi strike, multi tenor, multi-asset options vaults represented by the firm's token which purportedly protects users from excessive draw-downs during market downturns. The protocol is live on Ethereum ETH/USD, Binance Smart Chain BNB/USD and Avalanche AVAX/USD.