Formation Fi is Bringing Risk Parity to the Defi Party: Parity is Live on Mainnet

3 min readDec 16, 2022

We are pleased to announce that Parity is now live on Binance (BSC) mainnet after the successful completion of several rounds of tests in the testnet environment.

Our Risk Parity Product is the first investment vehicle that will provide diversified returns, tailored to the risk appetites of each investor, entirely on a highly secure blockchain environment.

Alpha, Beta and Gamma are our three main funds with different levels of risk and expected returns. Our investment mandates will be to ensure that, under most circumstances, Alpha will be more risky than Beta and Beta will be more risky than Gamma. Investors will be able to combine the three funds depending on their risk appetites using our Graphical User Interface (GUI). Mixing Alpha, Beta and Gamma will give the Risk Parity portfolio.

Risk Parity will generate returns for investors that factor the risk of the individual assets, with each asset contributing equally to the overall risk of the portfolio. The end result will be a decentralized investment fund, which will tailor the preferences of each investor, providing diversified and risk adjusted returns. This superior risk management and yield enhancement happens with all the assets being maintained on-chain, following standard blockchain practices, while being secured from both external and internal incursions.

Please see our roadmap for the many exciting features we are developing for our investors, Roadmap: Essential When Setting Sail For Uncharted Waters

There are several independent, and distinct components, that interact to manage our funds generating excess returns and minimizing risk. The overarching goal in designing our system has been to keep each piece as separated as possible, but with well defined interactions with the other components. The rationale for this design objective is to ensure that improvements to any one piece, at any time, will not affect the smooth operation of the other pieces. The effect of incorporating such an approach will be a better functioning of the entire system.

Risk parity, for all investors, will be the consequence of the seamless integration of all the various pieces. The order in which the components are created, and enhanced, might change depending on various considerations including but not limited to fund flows, component specific performance, market sentiment, user feedback, timelines for deliverables, etc.

Please see our earlier articles for the many innovations we are bringing to the blockchain space. The following link, which is the first article in our series of seven articles titled the “Eiffel release”, describes how our funds will secure investors assets, DeFi Security: Turning the weakest link into the strongest attraction

The Parity product will be rolled out to Ethereum and Polygon mainnet networks in the coming days. We are still in the community testing phase. We will complete smart contract audits soon, before we can move beyond community testing. The following link has detailed information for someone who wants to start investing in Parity as part of our community testing initiative: Community Testing Document.

For more information on what Risk Parity is, why it is necessary and what are the benefits it will bring for investors, please see below articles.

  1. Risk Parity: The Kryptonite To Alleviate Crypto Market Uncertainty
  2. The Risk Parity Line: Moving from the Efficient Frontier to the Final Frontier of Investments