Tokenized ETF startup revolutionizes blockchain-traded fund management
It is not a secret that tokenization is a much-used innovative expression related to investment and fund management based on digitalization and blockchain. A tokenized ETF, known as a digital ETF or a BTE (blockchain-traded ETF) is one where shares or units in the fund, or a feeder fund for it, are digitally represented and can be traded and recorded on a distributed ledger. As the founders of DFetf, Dr Sasan Barak and his partners in DFO, Deep Finance Organization, have created a tokenized ETF that is not only an innovative BTE, but it also promotes investment safety and profitability level.
This article will go into more depth on some of the technical aspects of DFetf to the investors and researchers needs to consider to make them an effective proposition for use by members.
How DFetf work?
DFetf is a tokenized ETF managed by artificial intelligence considering thousands of variables and taking into account different risk measurements. DFO team has developed robust ML strategies and portfolio optimization methods with high performance and low risk; Strategies that were successful in different test scenarios and has been trading in the market for more than two years. In addition to taking advantage of AI and machine learning to increase revenue earned from the equity market, the DFetf fund utilizes a blockchain network to create a secondary marketplace independent of securities and exchange organizations.
In contrast to regular funds, DFetf’s shares are distributed on the blockchain network, making it easier for anyone worldwide to invest. Everyone can buy DFetf’s unit to benefit from its performance. Investors can store these units in different digital wallets and traders can easily trade them on different blockchain marketplaces. One of these blockchain marketplaces is the DFetf liquidity pool to ensure that investors can convert their DFetf units into ready cash without affecting its market price.
What are the advantages of the DFetf?
The benefits are clear and many: no trading stress, automated algorithmic trading with full transparency, no broker fees, no exit fees, a liquidity pool for supporting the token.
Is the DFetf safe and trustable token?
When dealing with financial assets, an infrastructure must exist to increase trust and eliminate threats. DFetf’s smart contract uses the BEP20 standard, which can be checked out on the bscscan.com website with a licensed MIT code. Investors may also take a look at the smart contract’s code on DFO’s GitHub repository and make sure there are no malicious components in the token; This code has been developed with the aim of maximizing the profit for investors so that they can continuously gain from the increase in the fund’s NAV as well as having a high level of security for their assets.
How much is the initial coin offering?
DFO is going to sell 200,000,000 units at a fixed price of 0.005$, which sums up to 1,000,000$. This ICO fund will be distributed between a liquidity pool (10%) and a trading account (90%). The liquidity pool is where all the resources to provide liquidity for the token are gathered to be used later. All the funds are gathered in the trading account and are used to invest in different markets.
The ICO will be held in one private stage and one public stage. Interested parties can participate in the private ICO before the public ICO on PancakeSwap’s decentralized exchange.
DFetf as a stable coin?!
A stable coin is an essential part of the crypto ecosystem that attempt to peg its market value to some external reference like the U.S. dollar or to a commodity’s price such as gold. Stable coins’ price is uncorrelated to the crypto market’s price fluctuations or market trends. In the case of the world’s first tokenized funds investors are allowed to get the diversification benefits of holding the market’s portfolio cryptocurrencies with the ease and simplicity of holding a single token but they are not the stable coin in the crypto market because they are highly correlated to the cryptocurrency prices’ volatility and crypto market trend. DFetf is the tokenized ETF startup that allows investors to get the diversification benefits of holding the US market’s portfolio.
The DFetf’s token management strategy is designed to ensure that the token value converges to the fund NAV with low-risk profit. It means that Dfetf is similar to the semi-stable coins and its market value attempt to the external reference, the fund NAV. DFO team has developed the token management system in such a way that it has the least dependence on crypto market price fluctuations and the most dependence on DFetf’s fund NAV to be efficient as a semi-stable coin. Token management strategy is comprehensively explained below.
Token management strategy
DFO team follows three objectives in order to manage DFetf:
1. Leading the DFetf’s price to the net asset value (NAV) per unit as much as possible.
2. Protecting investors from the huge fluctuation of price or market impact.
3. Facilitating token exchanging without affecting its market price.
The above objectives are achievable by selecting an optimized token management strategy that refers to all of the actions taken to manage the liquidity pool as well as the strategies used to raise and burn tokens.
DFetf’s liquidity pool
DFetf’s liquidity pool is responsible for providing liquidity for token exchanges whose smart contract is defined on the PancakeSwap exchange and DFetf’s price fluctuates around the net value of the trading account’s assets. In order to decrease the liquidity risk, the structure of the liquidity pool is designed in a way that there are always sufficient resources available to exchange. Consequently, assets can be traded at stable and transparent prices with lower investors’ risk since they can convert their units into cash easily. Moreover, individuals can be part of this pool and earn commissions on PancakeSwap.
Burning the liquidity pool
After the ICO, there is a great opportunity for investors since 90% of the raised fund is managed by a high return algorithm successful in various test scenarios. Algoport is profitable trading and portfolio/risk management AI system that tracks the opportunities in the market to invest in. Every time Algoport makes a 25% profit, 4% of the profit goes to fund managers, and all of the remaining money is invested in the liquidity pool.
This cycle is repeated until the ratio between the liquidity pool to the fund’s NAV reaches 1 to 2. At this moment, the liquidity pool resources are used to buy DFetf tokens at a fixed price from the market to burn. This action stimulates demand in the market and increases the token’s price eventually, consequently increasing the value of shareholders’ assets.
Raising to increase market capital
Raising to increasing market capital of DFetf’s token is used as a financing strategy or price bubble shield by the DFO team.
1. Financing strategy: when a great investment opportunity is discovered and the available budget is not sufficient. At this moment, one possible financing strategy is raising.
2. Price bubble shield: The capital increase can be used as a tool against price bubbles to eliminate the sharp negative price fluctuations. A percentage of the capital increase fund will be transferred to the liquidity pool as well.
It is noticeable that raising is a very strict process to ensure that all investors benefit from the token’s capital increase. DFO’s trading strategies and Algoport system are great fund management systems with outstanding budget allocation performance to new investment opportunities. Raising strategy is designed for the worst scenario such as an unpredictable financial crisis. This is also true for the liquidity risk and price bubble because the liquidity pool is managed by enough liquidity to reduce sharp price fluctuations.
DFetf fund at a loss? No problem, the liquidity pool is here!
It is notable that the probability of loss in financial markets is not zero and using machine learning and AlgoPort can reduce the probability of loss to a minimum level, but the occurrence of a black swan is still inevitable. Consequently, in some short-term scenarios, it is possible not to take expected profit or loss more than expectation. Therefore, there is a possibility with predefined conditions to withdraw the cash from the pool to take advantage of new investment opportunities in the market.
Fund Management strategy
Fund management strategy is very important because investors rely on them for achieving their investment goals. Each fund management contains two significant elements, trading and portfolio/risk management strategy to maximize the return over predetermined risk level. The first element is trading strategies. DFO team developed a variety of trading algorithm strategies based on profitable methods such as machine learning, statistical arbitrage, technical analysis, statistical and econometrics strategies in accordance with asset classes (stocks, commodity, currency, …), market and risk level.
The second element of the fund Management strategy is the portfolio/risk management system. Algoport is DFO’s portfolio/risk management system based on DRL (deep reinforcement learning) and machine learning as its main decision-making core; It was developed by a team of machine learning specialists and finance industry experts tested in extreme scenarios including incidents such as the covid and 2008 financial crisis.
Algoport allocates assets to a variety of portfolios with different risk levels (low, medium, high) to make a great profit while maintaining a minimal level of total risk.
DFO team plans to spend most of the DFetf project revenue on development plans in the future. These projects are including:
· Development of ML portfolio package
· Online Courses
· Deep NFT Artwork Creator
· Consultant Service
Disclaimer of Liability
· Before taking any action related to this White Paper, you should consult your legal, financial, tax, and other professional advisers.
· As described in this White Paper, the proceeds from the sale of the DFetf will be used to fund the company’s project, businesses, and operations.
· You are not eligible and you are not to purchase any DFetf token if you are a resident of Crimea, Guinea-Bissau, Iran, Afghanistan, North Korea, or are subject to U.S. export controls or sanctions.
· There are risks and uncertainties associated with the DFO company and its business and operations, the DFetf’s token sale, and the underlying assets, as described in this whitepaper.