Tokensets

TokenSets is a platform for automated crypto asset management that provides a user-facing interface for buying Strategy Enabled Tokens, or Set tokens. Each Set token is an ERC-20 token representing a portfolio or basket of underlying crypto assets, with creation, issuance, redemption and rebalancing functions implemented by the underlying Set Protocol, a non-custodial protocol built on Ethereum.

Each Set periodically rebalances its portfolio according to a strategy encoded in its smart contract. When rebalancing criteria are met, a grace period allows holders to opt out; afterwards transfers are paused until the rebalance completes through a modified Dutch auction, in which the auction price is a predefined function of time that increases in different manners across three stages. Rebalances draw liquidity from open market participants rather than a single liquidity source such as Kyber, which the project states is intended to limit unpredictable slippage; liquidity providers can earn from the price spread during these auctions.

TokenSets offers two product categories: Robo Sets, a range of predefined, hard-coded strategies such as trend trading, range-bound and buy-and-hold; and Social Trading Sets, which follow strategies executed by human traders. Set Protocol V2 extends the system with multi-asset strategies (single asset, pairs and 3+ assets), margin trading via a native lending pool enabling leveraged long and short positions, tokenized positions using third-party protocols such as Compound, Aave, Balancer, Uniswap and Curve including retrieval of airdropped tokens from yield farming, trader subscription and performance fees, protocol fees, and support for on-chain distribution of a prospective protocol token.

Founding story

According to IQ.wiki, TokenSets originated from the view that structured products would become significant in crypto, drawing an analogy to the growth of ETFs from roughly $700 billion in assets a decade earlier to $5.1 trillion. The founders describe building a product to solve their own problem: an instrument smart enough to enter and exit positions based on market conditions without the emotional risk of panic selling or FOMO buying, or the time required to monitor charts for buy and sell signals.

Business model

TokenSets operates as the consumer-facing application layer on top of Set Protocol, a non-custodial Ethereum protocol. Users buy Set tokens that represent managed portfolios; the underlying protocol handles issuance, redemption and rebalancing. Sources describe fee mechanisms at the protocol and strategy level: traders can implement time-based (subscription) and performance-based (profit) fees on their Sets, and Set Protocol V2 contemplates protocol fees on protocol-native transactions such as dutch-auction trading, borrowing from the protocol's lending pool, and a share of subscription/profit fees.

Sources describe fee mechanisms rather than company revenues: subscription (time-based) and performance (profit) fees charged by Set traders, and protocol fees on protocol-native transactions such as dutch auction trading, lending-pool borrowing, and sharing of subscription/profit fees.