FAQ
Frequently Asked Questions (FAQ)
Last updated: 18 July 2024
What is the OpenWorld Finance?
OpenWorld is a non-custodial, automated protocol designed to optimize liquidity pool investments through active management and diversification, aiming to optimize returns for liquidity provider positions.
What is a liquidity Pool?
A liquidity pool is a crowdsourced pool of cryptocurrencies or tokens inside a smart contract that is used to facilitate trades between the assets on a decentralized exchange (DEX). Instead of traditional markets of buyers and sellers, many decentralized finance (DeFi) platforms use automated market makers (AMMs), which allow digital assets to be traded in an automatic and permissionless manner through the use of liquidity pools
Traditionally, the AMM enters the liquidity pool by depositing 2 currencies of the same dollar amount allowing others to use the liquidity provided to exchange among the supplied currency pair(s).
What makes OpenWorld special?
Unlike investing directly into liquidity pools, with OpenWorld Portfolios, you can invest using one token, like USDT, and it will automatically diversify you into the various liquidity pools
OpenWorld Portfolios allow you to invest into a diversified portfolio of high-yield, low-risk liquidity pools, and does all of the rebalancing, keeping you in range, and auto-compounding for you.
OpenWorld constantly monitors the market for the best set of LP’s and uses its unique specialization to choose and combine LP’s across various platforms to optimize returns for investors.
How do liquidity pools generate income for the investor?
Trading fees are generated when users use decentralized exchanges to trade tokens. The fees generated from those trades are given to the investors to provide the liquidity inside the liquidity pools.
OpenWorld Fee Structure for Portfolio products explained
Management Fee: 0.45% per year, calculated on the net asset value (NAV) that users have deposited in the Portfolio
Performance Fee: 4.5%, of the rewards (yield) that users earn from providing liquidity
Additional information on fee structures can be found here:
What are the risks associated with Liquidity Pools?
LP positions will face risks such as impermanent loss, smart contract risk, liquidity risk, rug pulls, and exit scams
OpenWorld provides DeFi users with tools to minimize these risks through automation and aggregation of carefully selected low-risk/high yielding LP pools across the Defi ecosystem. Our smart contract that has been audited by Verichains, and founders and staff are found online and in our various online communities.
Why is rebalancing important?
Regular rebalancing helps minimize impermanent loss by adjusting positions to reflect changing market conditions. This reduces the risk of losing potential returns due to price fluctuations.
Is OpenWorld Audited?
Verichains Lab finalized the Security Audit Report for OpenWorld on May 27, 2024.
Verichain Lab is a leading blockchain security firm with 200++ clients and $50 billion assets under protection
Audit details can be found here: https://wiki.ow.finance/security
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