Inje Yeo, Co-Founder of Set talks about a mission to make wealth management accessible to the world.
Hello! What’s your background, and what are you working on?
Hi, I’m Inje Yeo, Co-Founder and CPO at Set, and the one who coined the word DeFi. I handle the design, front end engineering, and product at Set. My crypto origin story started in college around 2010 when my friend pulled up the terminal on my computer, started typing, and told me that my computer was now “mining Bitcoin”. I had no idea what was going on at the time, but I left my computer on for months mining Bitcoin. Today, the Bitcoin that were mined on that computer are gone, and how many Bitcoin were on that computer will forever be a mystery.
Today, I’m with my amazing team working on Set, with a mission to make wealth management accessible to the world. We’re the creators of TokenSets, a platform that allows you to easily manage your crypto and the protocol itself that powers the whole thing. We felt the pain of riding crypto down turns and not buying in early enough, and wanted a system that can help you manage your crypto to avoid those pains. Eventually we created the Set protocol and TokenSets with the goal of helping people carry out asset management strategies using smart structured products.
We’re also one of the creators of DeFi. Back in August 2018 before DeFi was born, Blake Henderson from 0x, Brendan Forster from Dharma, and I all had this feeling that there was a wave of financial products that were emerging in Web3, creating the infrastructure for globally accessible financial system outside the realm of the traditional banking world. With that notion, we started brainstorming on ideas on what to call this movement and why it was important. We landed on DeFi since it captured the idea that we wanted to think differently than the system that was already in place and take finance as a whole to the next level.
The first utterances of DeFi in a brainstorming session with the original DeFi creators.
What’s TokenSets backstory?
TokenSets was born from the idea that structured products in crypto were going to be huge. In finance, ETFs ten years ago had $700 billion cash invested. Today it’s $5.1 trillion, increasing by more than 7x. Combine this with crypto where anyone in the world with an internet connection can participate in the global financial system, it can become a powerful tool for wealth creation. With this vision, we raised funding from Craft Ventures, Vy Capital, DFJ, Social Capital, Kindred Ventures, Haystack Ventures, and move the needle forward on building smart financial products made for the crypto market.
At the end of the day, we wanted to create a product that solved our own problem. We wanted to make a product that was smart enough to enter and exit out of positions at the right times based on market conditions, and do it without the emotional risk or pouring hours of time staring at charts for buy and sell signals. We obviously weren’t the only ones facing this issue, and when we asked our crypto friends, they overwhelmingly agreed that they’ve felt these pains.
We built TokenSets to help people easily buy an asset that does all of the smart management for the user holding the Set. The magic for each Set you buy happens in the Set Protocol layer. The protocol monitors crypto market conditions and manages the assets based on if there’s a buy or sell signal depending on which strategy you choose. It helps remove the emotional risk from panic selling when prices are too low or fomo buying when prices are too high.
You can think of each Set as a smart container around the component assets you have inside with the ability to automatically rebalance based on the asset management strategy that you choose. A Set is an ERC20 token with added benefits, so all you need to do is hold that Set in your wallet and you gain all of the benefits of automated asset management.
For example, if you believe that the price of Bitcoin will go sideways for a while, you might consider executing a Range Bound strategy where you sell when the price of Bitcoin goes up, and buy when the price of Bitcoin goes down, effectively increasing the amount of Bitcoin that you have. We have a collection of Sets that execute this exact strategy handling either Bitcoin or Ethereum with Dai that’s listed on TokenSets today.
What went into building the TokenSets ?
A lot when into building TokenSets. In the beginning, we built TokenSets and our protocol to only handle baskets of tokens. That led to us creating a top 10 basket, thematic basket of DEX tokens, and a stablecoin basket. We realized that we needed smarter strategies of handling crypto assets since holding a top 10 or DEX basket rises and falls just as hard as Bitcoin or any other crypto asset would.
In hindsight it makes complete sense, but what we realized is that a strategy that tracks the top assets, like the S&P 500, works for stocks because stocks have fundamentals that you can use to calculate an intrinsic value for that stock. Crypto in its current state is speculative and derives its value based on what price the people after you buy or sell at. With this in mind, we created Sets that continuously adjust their positions based on market conditions using asset management techniques people are using in crypto today.
Before shipping, we went through an extensive audit with 3 different top smart contract auditing firms including Trail of Bits and Chain Security, with Chain Security’s claim to fame being when they caught a bug in the Constantinople upgrade which would have allowed people to steal other people’s funds using a re-entrancy attack. On top of this, we through our own extensive internal audit until we felt confident in our system’s security. We’re generally paranoid people when it comes to smart contract security so we checked for security vulnerabilities multiple times until we gained enough confidence to release our contracts to MainNet.
What’s your business model?
At the end of the day, we have multiple ways for us to make money. One is to take a spread during rebalance auctions, have a trading fee when buying or selling on TokenSets, and taking a small compensation on the protocol when rebalances execute just to name a few. At the moment, we’re focusing on growth for our platform and getting the flywheel spinning. After that, revenue will be the easy part.
The target market for our product is someone who is more technically savvy, has crypto, and doesn’t have the time to constantly monitor their portfolio on when to buy, sell, or rebalance to different weights. It’s for people who have missed certain market opportunities in the past and would rather have a product that’s monitoring crypto trends 24/7 for them instead of having to worry about crypto price swings at each given moment.
What are your goals for the future?
We have a 3 part plan that we’re rolling out.
- Create Our Own Sets - Create a collection of Sets and strategies for users to choose from to help users carry out asset management strategies automatically, and to showcase what the technology can do.
- Open Up Set Creation For Others - Allow others to create Sets using the infrastructure that we created while building out our previous Sets and strategies.
- Become a Hub For Structured Crypto Products - Host the Sets that people created so that users can have a one stop shop for any Set they’re looking for given their chosen crypto asset, time horizon, risk profile, etc.
We’re currently building out step 1. Each new strategy and Set we build becomes a tool that users can plug into and tweak when we eventually open up step 2. From there, people will naturally want a platform for them to share their Set on, and we’ll be able to facilitate that on TokenSets.
What are your future thoughts for the DeFi market?
Currently DeFi is one of the only things in crypto that’s showing traction, and I can see that trend continuing as time goes on. A few years ago, the only companies that had traction were crypto exchanges which ended up spawning the Binance juggernaut in only half a year in 2017. It’s not far fetched to think that another unicorn can emerge in the DeFi space similar to how Binance did a while back during the crypto exchange era, we’ll have to wait and see.