ICONOMI Investment Products. Part 1
If you heard about the ICONOMI ICO or read my previous posts and have a feeling that this is something ‘really great’ but still don’t understand the products that will be offered to the public by ICONOMI then this post is for you.
There will be two investment funds from the start — ICONOMI.INDEX and ICONOMI.PERFORMANCE. Both funds will be created, offered and controlled by the ICONOMI Operator (Cashila).
It is assumed ICONOMI.PERFORMANCE will show better results than ICONOMI.INDEX fund. At the same time the risks are higher in ICONOMI.PERFORMANCE fund.
ICONOMI.INDEX fund will be formed from the major ‘pure’ cryptocurrencies with the highest capitalizations. We know it will include Bitcoin, Ethereum, Lisk, Steem and others. We don’t know their distribution within the fund yet, i.e. Bitcoin percent, Lisk percent, etc. However, the above distribution can be changed by the fund operator from time to time at his sole discretion following some predefined rules and limitations. This fund will be open to the public and its tokens will be traded in many exchanges. Investors will be able to sell their ICONOMI.INDEX tokens fast and easily in an open market. The fund structure will be open and transparent. Will the total fund capitalization be known? I suppose it will because the tokens will be issued in Ethereum and will be seen in a block explorer. Will we be able to control the fund structure ‘from the other side’ and see all the fund wallets addresses in different cryptocurrencies? I don’t know. Possibly not completely due to security reasons. Maybe we can have access to the information about the greater part of the fund that is stored in a cold storage. The similar approach we are witnessing now in the ICONOMI ICO, when the collecting wallets addresses are published.
We are slowly moving to the next investment product — ICONOMI.PERFORMANCE. This fund will mostly include crypto tokens from the promising cryptoeconomy projects. Fund operator experience plays the most important role here. The participation is by invitation only. All ICONOMI ICO participants will be invited. Fund tokens will be only traded inside the ICONOMI. The process of exiting the fund is slower than ICONOMI.INDEX exit and may take several days.
Transparency maintenance is a complex and non-trivial task for the ICONOMI.PERFORMANCE fund. ICONOMI team claims to offer the best possible solutions to achieve the acceptable level of transparency and accountability. Surely the investors will have their tools to monitor the fund performance, capitalization and structure. But how can they verify the information provided? I assume the fund wallet addresses and operator performed transactions will be disclosed to the fund token holders, at least partially. But if one would even have the above information the verification becomes a very complicated process. Tens or hundreds of transactions in tens or hundreds different blockchains are extremely difficult to analyze and audit. This opens a new and unexplored market of the blockchain accounting services. A new profession may even appear — crypto accountant.
Anyway, the ICONOMI investor will be much closer to his investment than in the traditional financial structures.
After purchasing the ICN tokens at https://ico.iconomi.net all the ICO participants will have their share of profit from all the investments made into ICONOMI.PERFORMANCE fund not depending of the fund success. But of course if the fund is successful the profit share will be bigger.
The most interesting and promising ICONOMI product is OFM that is Open Fund Management platform. The product launch is planned for 2017 (more precise timeframe is unknown yet). This is a platform where everyone (meeting certain conditions) will be able to create his own investment fund including selected crypto app tokens. From the other side, everybody who likes that investment fund will be able to join it. The complexity level of such a platform is much higher than ICONOMI managed funds (ICONOMI.INDEX and ICONOMI.PERFORMANCE) platform. So the undefined launch date (month) is fully understandable at the current stage of the ICONOMI development. Only a small set of OFM functioning details is available now. Let’s discuss some rules that are yet to be defined. The community opinion should be important for the ICONOMI team especially if this is an ICN token holders opinion. Until now, the ICONOMI team members demonstrated a high level of transparency and communication with the public and this is a good sign. The community pays back with their trust nominated in the ICONOMI ICO funding volume.
The person who creates his own investment fund is called a fund manager. It’s evident a person willing to start his own investment fund should meet some predefined criteria. This should be a person having a certain experience in cryptocurrency trading and investment. How can he prove his experience? Should ICONOMI require the identity verification? Not an easy question. I would require. The fund manager should be an honest and open individual.
I also offer to require the fund manager to invest his own funds into the fund he creates. The investment amount should be more symbolic than substantial. But this measure will help to provide the more serious and responsible attitude from the manager side.
The ICONOMI ICO participation will add some positive points to the fund manager candidate reputation too.
Some due diligence checks should also be performed. A fund manager candidate can provide his exchanges accounts credentials to track his trading history. This should be optional and not required. I assume not many people will be ready to provide the above details. But the applicant must have accounts at several exchanges to prove his familiarity with the market and available instruments. There are ways to prove the exchange account ownership without revealing the account login, password and two-factor authentication details. For example, a candidate can be asked to submit a trade order for some arbitrary small amount. The order will be visible in the order table of the exchange platform (if the exchange supports open trades).
Some kind of interview with the ICONOMI compliance officers can be required. This could be a Skype chat for example.
Many could argue the measures I offered are too strict and not necessary in a modern anonymous crypto trading world. But the above requirements can effectively exclude newbies, cheaters and scammers looking for easy money. The measures proposed will also make the creation of duplicate accounts a much more difficult task. Reputation should be the greatest value for a professional trader. No doubts, the real fund manager names and other identity information should not be revealed to the public unless they (fund managers) agree.
The above post includes my suggestions only, the real fund managers application procedures may substantially differ.
Remember, it’s not to late to participate in the ICONOMI ICO at https://ico.iconomi.net. But take your decisions with great responsibility and never invest more than you can afford to lose.