The last 12 months have been exponentially beneficial for the Decentralized Finance industries and the cryptocurrencies, there is no doubt to that. Banks, hedge funds and other traditional finance institutions are currently still seeking better ways to become more exposed to the space of DeFi. Even the central banks have now started to embrace the idea of CBDCs (Central Bank Digital Currency) and stablecoins. This is all the result of tokenization, with the vast development of the whole sector, and the DeFi gaining growing acceptance from companies.
Only at the end of June, Andreessen Horowitz have started their $2.2 billion cryptocurrencies ETF. In the said last year, they also have grown impressively, and their team has expanded. Their new ‘acquisitions’ include ex Google, Netflix and Facebook employees.
Why all the fuss?
There is a high demand for the specialists in the field, as some, Point72 Asset Management’s Steve Cohen for example, claim the high need to invest in crypto right now. His company has recently sent their investors a letter, where they urged about getting engaged with the cryptocurrency market, that is supposed to be now worth $2 trillion.
We are currently witnessing a big increase in the sophistication and the scale of this new sector (or rather a sub-sector), which is the hedge funds based on DeFi and crypto. It’s really fascinating to watch it, as the growing commitment from the investors really looks like it could challenge conventional and established practice.
There are of course some personalities, that are causing big disruptions for the traditional finance, and the market activities. And one of those is Arthur Cheong, who works at DeFiance Capital, and who is one of the Founding Partners of the company. It is a Singapore-based cryptoasset investment fund, which uses a throughout research to develop the right approach while actively working on the market.
How does DeFiance work?
This extends the professionalism line, and is an approach, that if conducted properly and with the care needed, will provide the new dimension to the crypto markets. This rigorousness is indeed something, that has been lacking at moments for the cryptocurrencies world. DeFiance therefore wants to use those assets, called by them the ‘valuation methodology’ and ‘fundamental research’ to get the biggest share of the market by simply outperforming the competition. That is because most of it consists of unaffiliated (also very often amateur) investors, which gives their tactics a really fair fundament.
As Cheong explains in his blog entry, the data shows that besides a few top players, the market is dominated by nonprofessionals. Without the valuation methodology tools, they are obviously less capable of navigating smoothly and on the scale that affiliated investors do. Very often the individual investors tend to be lured in by the media, memes, and trends, meaning that there is still a lot of ‘professional’ ground to be still covered.
Therefore, the whole philosophy of the company is based on a belief that Decentralized Finance will eventually devour conventional finance, and all this is set to be happening in the next 10 years. DeFiance’s role in this is ‘bullish’, as Cheong calls it. He also announces that his company will not retreat from the trajectory that they have already chosen.
This all emerges from the belief that the new (and still shaping) ecosystem of DeFi is predestined to become superior to the conventional banking system. With that approach, Cheong’s company invests heavily into development on that market to grow as fast as it does. For them, this is something completely unprecedented, but they still can use some previous experiences.
To read a capturing piece by Harry Clynch, that focuses on these topics, you should use the following link and visit the Disruption Banking website. There, you’ll find a comprehensive analysis, quick look on the history, and the interview with Arthur Cheong, where he present his company’s philosophy and prospects for the next years: https://disruptionbanking.com/2021/07/06/how-is-defi-eating-traditional-finance/.