Dfund: Why we Invested
In traditional equity markets, investing in hedge funds and leveraging liquid assets through lending, are two highly profitable activities. However, high-barriers to entry prevent the majority of investors from taking advantage of these financial instruments. The recent rise in cryptocurrency popularity has enabled the inception of alternative blockchain-based financial tools. This brings us to dFund, an exciting new platform that aims to make decentralized loans and hedge funds accessible to all.
In general, investing in a hedge fund requires an individual to have significant initial capital as well as a special status under financial regulation laws. This status excludes all but the top echelon of investors from participating. Investors then have to store their funds in retail financial instruments which are not professionally managed, intelligently designed or strategically diversified. Further, the performance metrics as well as the activity of the assets are not always presented with full transparency.
Similar to the exclusivity of hedge funds, being able to profit from lending is difficult to do in traditional financial markets. Usually, lenders tend to be banks, financial institutions or ‘payday’ loan businesses. Thus, creating income by lending money to consumers is in most cases unattainable for the individual. One alternative for the typical person is through peer-to-peer financial platforms. Although this may allow for individuals to lend their money, the platform’s loan terms, rates and conditions are controlled. This centralized approach limits the customization and freedom in establishing ideal variables for the lender. Dfund’s potential as a market disruptor is cruxed on its ability to democratize and decentralize these two traditional financial instruments in the cryptocurrency market.
Decentralized hedge funds offered through the dFund platform are accessible to anybody able to utilize blockchain technology. This empowers any investor, big or small, to engage in a prestigious investing architecture and reap the rewards of a high performing portfolio. Presenting this type of service on the blockchain also ensures that all actions within the hedge fund portfolio, such as asset movements, purchases or sales and portfolio rebalances, are easily observable. Individuals looking to invest can sort through and select hedge funds by performance ratings and weigh this against the associated fees; giving them all of the required information to make an educated decision.
DFund also gives the common person the power to earn money from lending assets and uses the blockchain to provide security within this process. Firstly, lenders can create the terms of their loan by choosing their collateralization ratio and interest rates. So individuals who are more risk-averse can set a collateralization ratio of 120%, for example, and an interest rate of 8%, while someone else may want to enjoy an interest rate of 20% but allows a collateralization ratio of 50%.
Furthermore, the collateral is secured and automatically distributed with smart contracts; making it nearly impossible for a lender to be taken advantage of. Finally, dFund’s synthetic exchange allows for lenders to sell their loans, giving up some interest profits in lieu of immediate liquidity. Overall, all of these features make dFund an advantageous and accessible solution for lenders.
The project has inspired the confidence of well-respected investors alongside GD10, including Exnetwork and A195 Capital. DFund has also partnered with TrustSwap Launchpad who boasts an impressive record of launches with noteworthy projects.
DFund benefits from being a first mover in offering decentralized hedge funds and loans within the Polkadot Ecosystem. It is evident that early investors are enthusiastic about this concept as the initial raise before launch was tallied to be just over 5 million dollars.
The founding team is composed of talented professionals who are well suited to steward the project’s development. CEO Savo Vukcevic, formerly of RPC Fund Management, was the world’s youngest hedge fund manager. His expertise in hedge funds is matched with his knowledge of cryptocurrency, obtained by working for EURS, the company behind the largest euro-backed stablecoin. He is supported by other blockchain developers as well as professionals who have experience in traditional accounting and finance firms.
We have decided to add dFund to our portfolio because they have the potential to offer a service that was once deemed an elusive opportunity only available to the financial elite. By creating a decentralized marketplace for hedge funds and loans, dFund will allow investors to make money in unique ways which were previously unavailable in traditional markets and the cryptocurrency space alike.
For more on dFund, check out our First Look article here.
Graphic Design by Caelan Flemmings