Are There DeFi Alternatives to Traditional ETFs?
A clear comparison of Lorenzo Protocol’s OTFs with other ETF-like products in DeFi.
In decentralized finance, several products aim to replicate the role of traditional ETFs—but in very different ways.
Lorenzo Protocol offers one of the closest equivalents through On-Chain Traded Funds (OTFs). These are tokenized investment products that bundle structured strategies—such as stablecoin yield, real-world assets, or quantitative trading—into a single on-chain token. Unlike ETFs, OTFs settle instantly, trade 24/7, and expose all allocations and rules transparently via smart contracts.
Other DeFi alternatives take different approaches. Liquid staking derivatives like stETH or rETH provide yield-bearing exposure to staked assets while remaining liquid. Structured product vaults automate options or derivatives strategies to target specific risk profiles. Decentralized index funds offer passive exposure to baskets of crypto assets.
Key insight: OTFs focus on active, fund-style management, while most DeFi alternatives emphasize passive exposure or yield mechanics.
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Educational comparison for Binance Square readers
Disclaimer: Not Financial Advice
