Overexposed: DeFi indexes aren't as diversified as you think
New research suggests that indexes based on decentralized finance tokens lack diversification which is less than ideal for advanced investors seeking to mitigate risk. Diversification is one of the top reasons investors flock to indexes, but after analyzing the DeFi Pulse Index the researcher found that just four assets accounted for 77% of the portfolio's total risk.
The issue appears to be common with other DeFi indexes such as Synthetix’s sDEFI which is also heavily weighted with just four tokens — Compound, Maker, Kyber Network, and SNX — making up almost 60% of the portfolio. At the time of writing, the DPI token was trading at $100, down 6.7% over the past 24 hours as DeFi tokens followed the general crypto market pullback.