Depth info on ALPHAPROTOCOL
What is a fund
What exactly is the fund? In the most popular terms, the fund is an asset management method that brings together all the money, hands it over to professionals, and conducts diversified investments.We are now in a "great era of asset management" and the fund is the real king. At the end of 2016, assets managed by various global funds were about 50 trillion US dollars. What is the concept of this? This is equivalent to three times the US GDP that year and four times China's GDP. Therefore, to say that the fund industry is "rich can be an enemy" is really an underestimation of the fund.
From a personal point of view, because of the limited personal funds, it is difficult for you to effectively diversify your investment, and the size of the fund can cover more investment targets and spread risks. The stock funds that we are usually familiar with, usually it will buy dozens or even hundreds of stocks, involving multiple industries. This is what it is difficult for ordinary people to do on their own. And when you buy a fund, it is equivalent to using a small amount of money to achieve decentralized investment. In addition to decentralization, specialization is also a major advantage in fund investment. According to Chinese ancient sayings, there is specialization in the surgery industry. Compared with ordinary people, the fund has great advantages in investment scope and investment skills.
What is a hedge fund
Hedge funds have the following characteristics:Feature 1: There is a threshold, which generally requires Qualified Investors (Accredited Investor) to invest, the United States for qualified investors is defined as investors must have at least $ 1 million in net assets, at least $ 200,000 in annual income, or must be in the transaction China invested at least 150,000 U.S. dollars, and this investment should not exceed 20% of the investor's assets.
Feature 2: Large Personal Stake means that the person who created the fund should also put his own money in the fund instead of spending all of the customer's money.
Feature 3: With a minimum investment (High Minimum), hedge funds do not play with small scale, investment thresholds of hundreds of thousands of dollars or more are very common. This feature corresponds to the first one. Qualified investors have higher risk tolerance. The investment is relatively stable, unlike small ones. Once one fell, it was thinking about redemption all day.
Feature 4: Lock-In Period, this can be long or short, and it is relatively common to lock the warehouse for one year. If you vote, you don't need to move easily. Otherwise, many strategies of the fund will be limited by fluctuations in the amount of funds.
Feature 5: Infrequent Redemption, only a few days of the year can apply for redemption funds. It is also the prevention of excessive fluctuations in the management of funds.
Feature 6: Variety of Investment. Hedge funds and hedge Hedging may not necessarily be linked. In fact, they are only subject to fewer restrictions. They can play more free and diverse investment methods. /Short), Event Driven, Global Macro, All Weather Strategy, etc. The Asian financial crisis was well-known for George Soros. It was because of the relaxed supervision and diversified investment strategies of hedge funds. As a result, they gathered billions of dollars worth of US dollars to make trouble in Asia.
Feature 7: High management fees (2/20 Gains). The management fees of hedge funds are high. Regardless of whether they make money, they generally receive 2% of the management fee first. If they are profitable, then the profit portion will receive another 20%. The number of teams in a typical hedge fund is small, so for a small team that manages hundreds of millions of dollars, it's fine to just take the annual management fee.
Feature 8: Leverage. More or less hedge funds use different financial derivatives to conduct leveraged transactions. Generally speaking, leverage and risk are simultaneously expanded in leveraged transactions. However, due to the complexity of financial derivatives, some risks can also be reduced by hedging.
Basically, most hedge funds contain the above eight characteristics.
Project Analysis - Alpha Protocol Alpha Protocol (ALP)
Website: https://alphaprotocol.com/
Having done so much to make it easier for everyone to understand what the Alpha Protocol wants to do, translate the vision of the project written on its white paper:In a word, the vision of the Alpha Protocol is to develop a decentralized community that involves digital currency investors and quantitative investment strategy analysts. The Alpha Protocol is designed to motivate quantitative analysts to contribute low-risk strategies and tools in the digital currency market to gain excess returns. The Alpha Protocol, as an open community, has a mechanism for coordinating the participation of all participants in the community economy. The contribution of the community to economic growth will eventually return to the community.
Let's talk about what is called Alpha Alpha strategy:
Those who have studied company finance should have heard of the Capital Asset Pricing Model (CAPM). The formula is as follows:
Total return = risk-free rate of return (cash) + market rate of return (Beta) + excess return (Alpha)
Therefore, according to the above theory, funds are generally divided into active management of Alpha investment , aimed at reducing the correlation with the market and obtain excess returns; and passive tracking of Beta investment , to fully track the market, so that investors obtain market returns, many large index funds It belongs to Beta investment.
What the Alpha Protocol does is to address the deficiencies in existing active Alpha Hedge Funds as follows:
1) Quantitative analysts are not well motivated. Many quantitative analysis strategies are researched and implemented separately. Strategy researchers do not know how well their strategies account for positions and how effective they are.
2) Investors are dissatisfied with opaque operations and high management fees for hedge funds. Investors are not clear whether they have obtained the ones they should get. For example, Dario’s “Water Bridge Fund”, which has recently become popular, can only be a legend for ordinary people.
3) Low liquidity due to the lock mechanism.
4) Hedge fund managers and investors may have inconsistent interests.
5) For ordinary investors and individual quantitative analysts, there will be resource mismatch issues. Many individual investors will ignore the market trading signals, and quantitative analysts may not get enough at the trading point. Assets to effectively execute trading strategies.
The Alpha Protocol community has so many components: ALP Holders, Alpha Producer, Strategic Pool
2) ALP holders can entrust ALP tokens to Alpha producers, and these commissioned tokens will be locked out of the secondary market.
3) Alpha producers use the tokens commissioned in the strategy pool to perform the quantification strategy. After the execution, the income is distributed according to a proportion. This entire process is completed with smart contracts and the process is transparent.
4) Alpha producers can borrow assets by entrusting part of the entrusted ALP. The amount of mortgage required will be calculated based on the maximum loss.
5) There will be mutual influence between the ALP holders and the alpha producers. On the one hand, how much assets Alpha producers can borrow is determined by the entrusted ALP. On the other hand, the ALPs that are entrusted will be redistributed to the ALP holders in each period. Therefore, if the Alpha producers selected by the ALP holders perform better, they will be able to allocate more ALPs. ALP holders will not be rewarded and will not be punished if they have not commissioned any Alpha producer.
6) The strategy pool will periodically use profit to buy back or destroy ALPs in the secondary market. This will put the ALP in a deflation appreciation channel and make the community profitable.
7) The strategy pool will periodically release ALPs to future members of the community, releasing it at a rate of 50% annually. This will increase the community, and it will also absorb more digital assets into the policy pool.
8) Third-party certification bodies can also use the Alpha community to delegate management assets by way of management fees. Management fees will be added to the strategy pool and will be used to reward the community in the future.
So, based on the above information, I think the value of Alpha Protocol is mainly reflected in:
1) Institutional investment and more specialized investors' entry into the market is a trend in the digital currency market. I have read several research reports and I have seen institutional investors allocate digital assets. Therefore, blockchain projects that provide platforms and services for professional investors are very worthy of attention. If we follow the market size of the current hedge fund, the future market space for this project is very substantial. Ten times that in the title is a very conservative prediction.
2) Investors (holders of ALP) and quantifiers (now Alpha producers) can connect directly, removing any intermediary organization. The Alpha Protocol provides another portal for investment in digital assets. Here, you can select funds with different strategies and you can see the performance of these funds before. The threshold for investing in quantitative funds has been reduced a lot. Whether it is the stock market or the currency market, the market is always divided into two groups. One group uses value investment, and the other uses quantitative investment or technical analysis. The number of the latter is far higher than the former, so there is a huge market.
3) Resource allocation is more optimized by using the consensus foundation of DPOS and redesigned incentives. Both ALP holders and researchers who conduct quantitative transactions receive higher returns than traditional hedge funds.
4) The use of blockchain technology can greatly enhance transparency, facilitate supervision, prevent unethical behavior, and protect investor assets.
5) The team members of this project have a number of doctors in mathematics from prestigious universities in the United States (the team's face value is also very high), and many members also have backgrounds in quantifying transactions. The resources of the consultant team are also very rich. Among the investment institutions is the Krypital Group, an emerging powerful investment bank that successfully operated CyberMiles and Arcblock.
1) Whether the existing platform based on ETH can support the tps needed to quantify transactions, and whether the underlying system can support huge transaction operations.
2) Because the entire blockchain industry is in the early stages, whether it can effectively supervise the use of client entrusted funds, whether there will be a third-party regulatory platform involved in supervision. If the digital currency market has a long-term bear market, the performance of such a platform will also be affected.
In summary, although there are risks, I am very optimistic about the field of Alpha Protocol, and I look forward to its performance in the secondary market.
Horizontal comparison of other asset management projects in blockchain (InvestDigital, AWARE, QUBE)
Take a side-by-side comparison of several other asset management classes to see potential competitors for the Alpha Protocol. Interestingly, the following three items are all invested by coin capital. I would like to compare these three projects, everyone will be more clear about the asset management project.1. InvestDigital(IDT)
Website: https://investdigital.info/In a word, InvestDigital is based on EOS development, helping fund managers to more easily establish, and securely manage digital currency funds to provide a platform for digital asset managers to provide one-stop solutions.
At InvestDigital, ordinary investors can buy fund products that meet their risk appetite with one click. To enable fund managers to make better investment decisions, InvestDigital also introduced different tools and data providers to provide different algorithms and quantitative models. Coin capital leads.
I think InvestDigital will be a direct competitor to the Alpha Protocol, and there are similarities in the business model between the two.
2. AWARE (AWR)
Website: https://www.aware.bi/In a word, AWARE wants to replace the traditional venture capital institutions and build a brand-new decentralized token investment management platform based on quantum chain development. The birth of the blockchain has greatly increased the speed of asset securitization. AWARE believes that equity investment will gradually decline, and investment in tokens will become more and more popular. The project was led by Coin Capital. The old cat was a consultant.
The AWARE platform mainly includes TIP, TIS, IES and the Community Economic System (ESC).
The AWARE platform will issue different kinds of token investment products. AWARE Innovation (AWI) is the first exemplary token investment product on the AWARE platform, focusing on China's blockchain team and primary market investment. In the next step, AWARE will also establish products that focus on long-term investment in the secondary market by splitting, and will gradually open up to third-party professional investment managers to form a decentralized digital asset investment management platform. AWI started its investment in October this year. Currently, it has invested in high-quality blockchain projects such as CMT, Ink and ITC, and achieved a 5-20 fold return.
2) Token Investment Service (TIS) token investment services:
Token Investment Service (TIS) is a professional token investment service system constructed by AWARE platform through smart contracts. Can provide a series of services for investors, such as: registration, investment, redemption, repurchase, information disclosure, joint investment and so on. My understanding is a bit like VC's post-investment service. These services allow investors to participate more in and understand the affairs of the community.
3) Innovative Ecology Service (IES) Innovative Eco Services:
AWARE's Innovation Eco Services (IES) will integrate the entire community and provide standardized services for the entrepreneurs they invest in, such as: strategic planning, resource integration, public relations, law and finance, overseas crowdfunding, and so on. IES is an important part of the AWARE ecosystem. These ancillary services will increase AWARE's market competitiveness as an investor because it allows AWARE not only to give money, but also to give the invested company better after-investment services. The company accelerated its growth.
4) Economic System of Community (ESC) Community Economic System:
The above three parts TIP, TPS and IES represent investors, fund managers and entrepreneurs, respectively. The trinity in the community, through the incentive of AWR tokens, has transformed the traditionally closed VC venture capital company into an investment management community where everyone can participate. The fund manager can invest in more and better companies. The invested company can grow better and investors can obtain higher returns. The mixed nature of the token AWR makes each AWR holder a user and beneficiary of AWARE, both for short-term incentives and for the long-term value of the community's digital asset growth. In this community economic system, the three promote each other and grow together.
3. QUBE
Website: https://qube.vip
In a word, QUBE 's vision is to be an artificial intelligence analysis tool in the blockchain era, like the Bloomberg Terminal in the traditional financial world, which provides institutional investors with specialized data consulting services.
QUBE is an intelligent quantitative analysis engine that integrates many large data processing programs and deep learning algorithms such as data compression, noise cancellation, feature extraction, and model training. The final output will be generated after optimization and normalization of the final artificial neural network. The core solution will handle an average of 5.6017T big data per day, including data from blockchains, various trading platforms, and public sentiment on the Internet. The QUBE engine also quantifies the behavior of various game behaviors in the cryptocurrency market through model training of artificial intelligence algorithms to perform model prediction and data quantification. The way to make profits is to sell data and models on the platform.
This project is also led by coin capital, and the team looks very strong. But I wonder if it is necessary for this project to issue a new token and whether it needs to operate in a decentralized form. If it were just a model and data service provider, it would be perfectly fine to pay with any other token, as if it were not necessary to reissue a token. The white paper also does not mention any decentralization issues. Is it not a more efficient data service provider that is not a centralized organization
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