The following is a personal question and answer session with the Singaporean founder of Finamatrix, Professor Dr Lanz Chan (assisted by Chief Technology Officer, W.H. Chai).
What is Finamatrix?
Finamatrix is a crowdsourced toolbox platform on Waves Blockchain with Risk-Cybernetics™ AI to reduce Selection Bias for greater Predictive Power in decision-making for any asset.
Finamatrix is a machine-learning risk control specialist, technology service provider and partner to fund management firms since 2006 with proprietary technologies in Risk-Cybernetics™ and is dedicated to building real value with our partners. Finamatrix (FIX) token is a digital asset that is fully backed by a non-biased, diversified & optimized portfolio of highly liquid assets, plus an intelligent token-pricing mechanism. The company is structured where team members are stakeholders in the business for sustainability and succession. Our name Finamatrix is derived from two words, fina meaning fine or finance, and matrix which we use to solve mathematical problems.
What real-world problem does Finamatrix solve?
In financial markets, the myriad of risk-return relationships are not completely understood. Finamatrix is solving this real problem of understanding the risk smorgasbord with advanced crypto methods. We code custom and crowdsourced Blockchain smart contracts using proprietary Risk-Cybernetics™ to automatically decode price discovery of any asset using our MVSK utility optimization for Selection Bias reduction, providing potentially supernormal returns from a diversified, risk-hedged portfolio. Finamatrix will create a toolbox in the form of smart contracts (for different types of users) for hedging, arbitrage, market-making, speculating, investing, etc.
What is the function of the FIX token?
FIX token owners gain access rights to our complete suite of ex-post and ex-ante AI-driven risk decoder applied to highly liquid asset portfolios, and participate in the bonus and buyback programs.
How different is Finamatrix? Could you give us an overview.
Finamatrix is unique in that our business model is a hybrid paradigm of crypto and real world assets. Plus we are immediately implementable and executable with most of our funds in stable assets. We are extremely low burn, low cost and with strict risk control in our lean structure. We would like to think of ourselves as the link between quality assets out there in both the crypto and financial space, using our AI to constantly search and optimize all the good assets for you and us. We are not an open platform for users, although one of the outcomes is to crowdsource for the best results. What our tech does is intelligent crowdsourcing from all the existing platforms out there and keep certain core tech within the confidentiality of our team. We believe in providing a super convenient solution for people. What Finamatrix does everyday is to enhance our self-learning algos that auto-allocate with smart contracts.
Please tell us a little history of Finamatrix.
I started Finamatrix in 2006 with 2 clients who supported my algo-trading. At that time, I was managing about USD 2m and in the past decade I focused on developing strategies for large fund sizes. In the past two years, we have grown substantially and have created a succession plan for the sustainability of the business. Last year we were planning for an IPO with our partners but we looked at the ICO market and we prefer the decentralized exchange model.
Why is Statistical Parsimony so important to Finamatrix and what are the benefits?
Yes. We are entrenched in the belief that an elegant solution is the best solution. We do not over-complicate matters which will waste resources. We have had our fair share of failures and we are speaking from experience. We attempt to reduce the number of moving parts so that everything works well. The benefits of this is to solve problems quickly and sufficiently while we survive and then give ourselves a chance to flourish. Our focus now is on custom and crowdsourced smart contracts and the links with the existing Waves blockchain and with other decentralized exchanges such as Lykke and new ones. We do like the concepts of Bancor Protocol, Tezos and others but it could be too early to tell and we do look forward to finding value in owning their tokens.
It sounds like you guys believe in getting the job done at the lowest cost, and at a very efficient pace?
Yes. We just get the job done. This has always been part of our Asian culture. Simplicity. Economical. Effective. Finamatrix token owners just use the Waves Lite Client (https://waveswallet.io) and access FIX. At our backend, Finamatrix will constantly integrate and link up with good apps and platforms with our smart contracts that we see value in, and this is actually so powerful for the end-customer, Finamatrix is a one-stop value shop and owners just have to evaluate regular news updates and our quarterly audited reports. We will also consider developing an APP for our users based on their feedback.
You mentioned that your Quant Fund is preparing strategies for managing up to a billion dollars. Could you tell us more about your growth plans?
Since last year we have had increasing requests to manage a larger fund size and to form a regulated structure. By adding up all the requests, we could be managing a few hundred million to a billion at this rate of growth. Hence we need to stress test our strategies further so as to measure the success of the strategies once our size increases. We have been approached by a few robo-advisory platforms to offer our quant fund and we are in discussion. Our ICO will definitely open a new channel for these potential collaborations to explore. We work with country and regional reps as well to distribute our products. A special mention here is that we are soon to start the Mongolian market with our new partner. These concerted efforts will increase our assets under management by multi-fold times.
Why should we choose FIX token? What are the utility and benefits for token owners?
We are alpha-driven to achieve absolute returns. The ownership of the FIX token in any quantity gives access rights to our crypto decoder and owners will need to use the FIX token to pay for additional value-added services such as customized risk statistics and decision nodes for selected portfolios. For eg. our customized portfolios satisfy different risk-return characteristics for different people (we will work closely with local distribution partners in each territory such as robo-advisory wealth management platforms). Also, Finamatrix is already operational and managing private funds and this year we have setup a regulated Cayman fund with 20m USD. So say for example if the ICO raises 100m US dollars, we will then be managing assets of 120m USD or more as we grow from our traditional channels. Hence the token market cap at ICO of 100m USD will be immediately undervalued compared to the market.
What is the 3-B token-pricing mechanism?
30% of capital raised will be allocated to the 3-B token-pricing mechanism. Think of it as a reserve ratio for liquidity in banks to safeguard themselves. We use at least 30% of the capital raised to potentially support our token price or asset value. In reality we actually have 70% or more in cash or liquid assets which shows our commitment in sustaining value for our token owners while pursuing quarterly performance.
We see the term “super-scalable”, does it mean we could be gearing up for a big ICO?
The value of the Finamatrix FIX token is backed by a non-biased, diversified & optimized portfolio of highly liquid assets plus an intelligent token-pricing mechanism. Since we will not be using leverage for 70% of the portfolio (our quant fund uses a leverage of maximum 10), we will have no problems with scale. We will be able to manage a billion dollars and it is within our comfort level.
The capital raised from the ICO will be initially allocated as follows:
Software & Infrastructure Development: 30.00%*
AI-Selected Cryptos & Global New Technology: 20.00%*
FIX-Token 3-B Pricing Mechanism: 30.00%*
Finamatrix Quant Fund: 20.00%*
*allocations subject to change according to market conditions and requirements.
The value of Finamatrix FIX token is a function of 4 factors:
- The quarterly audited performance of owning quality cryptos and liquid new tech assets.
- The quarterly audited returns of the highly liquid Finamatrix Quant Fund which trades volatility and holds on to very short term positions.
- The value of cash/crypto for 3-B (buyback/burn/bonus) token-pricing and liquidity mechanism*.
- The increase in value of Finamatrix intellectual property and/or real estate values, if any.
*The firm will use not more than 50% of net profits to buyback tokens. We will determine the equilibrium price and manage expectations (with regular updates) to promote balance, stability and predictability. Token owners can be awarded bonus FIX tokens according to quarterly audited performance. A maximum of 50% of net profits can be distributed in the form of FIX tokens. Therefore the FIX token, with its utility role giving access rights to our crypto decoder, is classified as a digital asset with intrinsic value.
Why did you choose Waves Platform?
Well, on 4th July 2017, Waves signed an agreement with Deloitte (https://blog.wavesplatform.com/deloitte-cis-and-waves-platform-to-shape-the-future-of-blockchain-674e17c3b067) and we believe that Waves will become a leader in its field, attracting huge volumes to their decentralized exchange for the long term. The partnership is aimed at providing clients with comprehensive ICO services and develop the legal mechanisms for regulating ICO projects. This is a positive and significant step towards mass application of blockchain technology in an orderly fashion.
When you say that Corporate Social Responsibility is important, what do you mean?
Finamatrix believes in empowering society to solve problems. Where there are failures, we must, as an organization help society when we are able to. Together we are stronger. Therefore we always welcome discussion for potential partnerships. Our FIX token becomes a very valuable and convenient tool for anyone.
Your marketing campaign is based on FIX. What is the concept?
Yes, “Get a Fix” and “Get Fixed” idiomatically mean to obtain something necessary, especially something compulsively sought after. So we tell people to own FIX to satisfy their needs, whatever they deem it to be. Fix could also mean Fixed Asset, which associates with stability like real estate.
Is Bitcoin overvalued? Is there a crypto bubble?
The key concerns for me are the applications and real value that cryptos bring to the community. Blockchains should be immutable, completely secure and should have zero down time. When applied correctly, they bring enormous value. There are teething problems and they are usually due to human error. Once all these vulnerabilities are dealt with, cryptos will fly.
What is the difference in owning FIX token and investing in traditional funds?
Conventional funds are usually only accessible to accredited investors. Owning FIX token provides access to a stable global portfolio at a very low minimum capital. 30 Euros is the lowest amount acceptable on Waves.
How do you compare cryptos with other assets?
Precisely understanding the risk-return of cryptos is among our objectives so as to sieve out the best for you and us. It is our commitment to offer real value in a high quality, comprehensive portfolio of “super assets” in the global liquid asset space with our AI-selection process, which is audited every quarter.
How do you prevent hacking?
We are using Waves Platform and hacking vulnerabilities are constantly checked for and eradicated.
Will there be a pre-ICO and when will be your ICO / Token Generation Event?
We had meetings with some partners and we have decided in an open-ended auction distribution.
According to current crypto valuation methodology, how would you value FIX?
Well there are 3 core aspects to the value of FIX.
- Firstly, FIX offers potential dividend-like bonus tokens and this is based on our audited quarterly fiscal performance. We expect every quarter to offer a stable and predictable performance since our portfolio will be highly diversified and the value-at-risk is low. We will distribute not more than 50% of quarterly net profits in the form of bonus tokens.
- Secondly, the FIX token has a buyback/burn mechanism that offers asset price protection. We will not utilize more than 50% of quarterly net profits for buyback.
- Thirdly, price appreciation in FIX token values due to increasing intrinsic demand for our crypto risk decoder and AI portfolios; performance from the global liquid portfolio of quant fund, crypto and new tech assets. We expect stable performance since our portfolio will be highly diversified and the value-at-risk is low. Under this framework and the fact that we have an operationally-ready business in place, there is a good chance that FIX will be perceived as undervalued once it is traded on the exchanges after the ICO.
Any other comments?
The future of cryptos is gargantuan. The global super asset portfolio comprises volatility instruments and short term placements, including cryptos, index and commodity futures, fiat currencies, etc. This is just the beginning of the crypto market just like when stock markets first started. The market cap will certainly grow year on year and we will create many opportunities for everyone.
Upgrade your portfolio and Diversify in FIX.