Brahma Console | December 2023 DeFi Report

Following an extended bear market, over a year and a half long, 2023 has shown promising signs of recovery, and possibly a trend reversal, sparking enthusiasm across investors.


Among the prominent narratives, anticipation grows for the much-awaited approval of the first spot Bitcoin ETF, expected in early January 2024, between the 5th and 10th.

Aside from its role as a market catalyst, a spot ETF approval would symbolize a broader regulatory acceptance of Bitcoin and other digital assets.

Amidst the context of a clearer regulatory landscape, we foresee a surge in institutional investor involvement in DeFi, transcending conventional ETFs, as shown by the increased amounts of Large Transaction in Bitcoin.

The increasing sophistication of crypto institutional investors is born of their need to adapt to the ever-shifting cryptocurrency landscape. The development of a cross-chain ecosystem, with yield opportunities laying across different protocols, means institutional investors face a dilemma: whether they should take a passive approach to the market, or maximise all the opportunities present with an active approach.

The latter necessitates proper tools to navigate this increasingly complex landscape.

However, most current solutions prioritise toolsets interacting with centralised or decentralized exchanges, at the expense of building a UX which can remove friction and improve execution directly on-chain, creating a market gap for more specialised and efficient solutions.

A Guide to DeFi Best-Practices

As the DeFi landscape grows more intricate, the potential for security risks expands accordingly. The recent events that saw the Ledger console-kit incident underscore the importance of robust opsec within one’s portfolio.

In this short report, we present some of the best practices that can help anyone safeguard their assets when interacting with Decentralized Applications (dApps) and protocols.

Sub-accounts and Risk Segregation

Operating across multiple different accounts, each for specific purposes, is a crucial strategy, and one of the best practices to be aware of. Users can exercise granular access control, managing the permissions of different sub-accounts, with their desired degree of risk segregation.

Automation and Optimised Execution

According to Murphy’s law, the best trading setups happen while you are asleep.
Automating your transaction execution ensures you never miss out on any opportunity.

Those include strategies like Dollar-Cost-Average and Time Weighted Average Price, Swap Automations, Lending Automations, as well as Position and Risk Management, such as automatically rebalancing a loan according to its health factor, or automatically withdraw based on de-peg or liquidity triggers. All of those require much less active involvement with the proper automation setup in place.

Self-Custody and Tailored Solutions

High-standard security practices, such as operating from a multi-sig wallet and with full self-custody, are essential in DeFi.

However, alone they might not be enough! We recognise that ultra-secure solutions can sometimes hinder active engagement within DeFi, as they are often cumbersome to use.

The current one-size-fits-all approach fails to capture the different needs of investors. With the help of appropriate tools, different sets of users will be able to customise their interactions with DeFi protocols according to their needs: DAOs might be more concerned with governance and internal operational management, funds will be focused on investing, while DeFi degens on yield farmings or meme coins.