As a result of more than a decade of evolution, the cryptocurrency markets are now a multi-layered and complicated place to make money, much like their traditional forebears. Even as recently as 2017, "buy and hold" was still the investment strategy for most, and if you bought in before the end of 2017, it’s probably served you well.
However, these days, the cryptocurrency markets are a significantly more complicated place to invest. With hundreds of tokens circulating across just as many trading venues, the added complexity of the decentralized financial markets, and instruments including futures, options, and tokenized versions of other assets, decision-making can be a dizzying prospect.
Some centralized exchanges have attempted to make it easier. For instance, KuCoin recently introduced a trading bot that purports to offer users the chance to make stable passive income through dollar-cost averaging (DCA). However, a DCA strategy doesn’t necessarily guarantee stable returns in the volatile cryptocurrency markets. Furthermore, an investor still has to determine which tokens to purchase using a trading bot and DCA.
For this reason, a project like Rocket Vault Finance appears to hold a lot of promise for those wanting to generate genuine passive income from their cryptocurrency holdings. In contrast to trading bots that require a significant amount of user input and decision-making, Rocket Vaults are automated smart vaults that hold cryptocurrencies in a pool, applying artificial intelligence and machine learning algorithms.
They crunch vast amounts of historical data to find patterns, make predictions, and manage user’s funds automatically in a way that maximizes gains while minimizing the risk of losses.
How Does Rocket Vault Finance Work?
Rocket Vault Finance adopts a data-driven approach to user fund management. It monitors up to 800 listed cryptocurrencies across various global trading venues, including Binance, Bitfinex, OKEx, Uniswap and others.
Machine learning algorithms identify the assets that have the most upside potential and those that show signs of risk. The algorithms then execute trades automatically based on current market conditions, rebalancing assets 24/7 in response to movements.
The algorithms are programmed to ensure that the portfolio is diversified across a range of tokens. The protocol takes a share of the profit and directs it into a treasury. The treasury disburses profits back to investors each quarter, with payments made in stablecoins. The portion of profit that isn’t paid out is reinvested automatically by the protocol, meaning that investors also benefit from the compound effect.
Under the Hood
The technology that drives Rocket Vaults comprises a series of engines that work together to handle different fund management processes. A data fetching engine monitors the markets across multiple exchanges. It feeds its findings into a prediction engine, which applies advanced AI and machine learning capabilities to process all the data and generate predictions. It does this by examining the data for patterns, ensuring no human emotion is involved in making the predictions.
Based on the predictions, a treasury management engine determines how much to invest in any given asset and how much to keep in reserve for user payouts. This decision always factors in a "safe" reserve value for users who may want to withdraw their holdings. The payouts are also automated, handled through smart contracts.
Finally, a monitoring engine continually watches the open orders and makes dynamic adjustment decisions based on evolving market conditions.
The program is free to join for retail users, who will need to hold the platform’s native RVF tokens in their wallet from the time they deposit funds. They’ll also pay a small percentage of profits as a fee. If the user chooses not to hold RVF tokens, they will pay an additional 5% fee, providing a strong incentive to hold RVF, particularly for larger investors.
Institutions will pay a 2% fund management fee from the outset and will also pay 5% of profits in fees.
It’s also worth highlighting that the user must leave their deposit in the Rocket Vault until the quarterly payout is made to be eligible for their payouts for that quarter. For example, if they receive a quarterly payout and decide to withdraw one month later, they will forfeit their share of the profit for that month.
Rocket Vaults appears to have hit on a gap in the market – a truly automated, passive investment tool that doesn’t involve any human intervention. Furthermore, the returns look promising. However, as with any investment, users should ensure they take appropriate steps to manage their individual risks.