Yield farming alternative Haru Invest leverages market inefficiencies through algorithmic trading – SlateCast #32

Haru Invest offers an alternative to yield farming by providing a custodial solution to leverage market inefficiencies through algorithmic high-frequency trading. Such trading strategies are often reserved for OTC trading firms and hedge funds. However, Haru leverages crypto markets to give access to retail investors.

Investors deposit crypto into the Haru Invest app available on Android and iOS, and funds are added to a liquidity pool which is then used to look for inefficiencies in the market. Strategies lean heavily on arbitration which is a method of buying and selling assets across multiple platforms where there is a discrepancy in pricing.

Speaking on the latest episode of the SlateCast, Haru’s CEO, Hugo Hyungsoon Lee, discussed some of the specifics of Haru’s trading strategy. Lee emphasized that Haru utilizes strict risk management to ensure strategies are only exposed to the necessary third-party risk of holding assets on an exchange.

The core strategies deployed by Haru Invest are

• Arbitrage Trading that leverages the price gap between crypto exchanges
• Market Neutral Strategy based on the price stability mechanisms at crypto futures exchanges
• Spread trading that focuses on the volatility of BTC/ETH futures contracts

The above techniques mean that it is possible for Haru to generate profits even in a bear market. Still, no method of wealth generation can be free of any downside risk. It is important to remember that custodial services always come with the third-party risk of not holding assets in a private crypto wallet.

However, the potential stress and technical knowledge required to participate in the current iteration of DeFi may deter some investors. Further, strategies such as yield farming need the investor to become exposed to the underlying assets. Therefore, a neutral approach such as those deployed by Haru Invest offers an alternative to entering into the world of DeFi or earn programs offered by centralized exchanges.

A prime example of Haru Invest’s risk management was their ability to exit positions on exchanges such as FTX before any funds were lost. In addition, Haru operates a risk-scoring mechanism for exchanges to facilitate its strategies, meaning when risk levels increase, even profitable strategies are withdrawn if the stability of the underlying platform becomes untenable.

Earn potential on Haru Invest

Haru offers several earning opportunities to investors who deposit funds onto the platform. The base offering includes up to 6.5% APR, no lockup period, unlimited 24/7 withdrawals, and daily compound earnings.

The Earn Plus product offers up to 14% APR with flexible lockups from a minimum of 15 days to a maximum of 365 days. The Haru team informed CryptoSlate on the latest episode of the SlateCast that the lockup periods are a requirement of specific strategies such as leveraging medium to long-term options.

A statement from Haru shared with CryptoSlate stated

“Ensuring zero financial risk for our members is our first priority–which is why we don’t apply any high-risk strategies subject to the price fluctuations of the market.”

It is important to remember that no investment objectively has ‘zero financial risk’; however, Haru’s commitment to this goal is paramount to its investment strategy. Assets not actively participating in trading strategies are held with BitGo, a crypto custodial solution used by many leading institutional players in the crypto industry.

This article does not constitute financial advice. Due diligence on Haru Invest’s trading practices is limited to publicly available information, together with documentation provided to CryptoSlate by the Haru Invest team. Investors should be aware of all risks involved before investing assets with any custodial service.