Sygnum DeFi+ Core Strategy: Participate in the Decentralised Finance Megatrend
WHAT IS THE OPPORTUNITY?
DeFi is becoming an important part of the digital asset space at the intersection of blockchain and financial services. It describes the replication of various financial products and service offerings on
decentralised platforms, often with innovative
enhancements enabled by the technology.
Decentralised platforms operate without the
need to trust a central counterparty, while
removing the need for intermediaries which
introduces greater efficiency and the potential
for cheaper fee models.
The recent growth in the total value of
collateral capital locked (TVL) in DeFi
applications demonstrates the fast adoption
of these platforms by users. TVL rose from
around USD1 billion in June 2020 to above $100
billion 1. by November 2021 .
Currently the largest DeFi sectors are lending/
borrowing services followed by decentralised
exchanges, with asset management,
decentralised insurance, payments, and asset
creation also showing promise.
want to gain exposure to the fast growing ecosystem of DeFi protocols
want to broaden their crypto asset exposure beyond the dominant protocol tokens (bitcoin, ether)
are looking for interesting return opportunities in a world of high valuations and low yields in traditional finance
This product might interest investors who
"DeFi will become even bigger and getting access in a systematic way makes sense."
SYGNUM DEFI+ CORE STRATEGY INVESTMENT STRATEGY
The strategy provides the investor with access to the market return of a diversified portfolio of governance tokens of the most successful DeFi protocols. The tokens are carefully selected according to a set of quantitative investment criteria such as ecosystem growth, traded volumes, market capitalisation, and the risk score of the smart contract code. The Strategy invests in a diversified portfolio of up to 10 tokens with the aim to capture the upside potential of this decentralised finance megatrend. The portfolio is rebalanced quarterly, with real time monitoring of the underlying projects for any adverse developments. The product offers equity like risks and returns and can be viewed as a sector portfolio with a different set of valuation drivers. Risk management focusses on minimising the divergence from the allocations prescribed by the quantitative model. No leverage is used. The product only invests in tokens where a highly secure custody solution is available. Key risks include technology (e.g. smart contracts, cyber risks) and execution risks. Due to the highly volatile nature of the underlying tokens, the strategy may exhibit significant market risk and potential for drawdowns.