Making of A Meritocracy: An Overview of Betoken
It took our team over half an hour to explain what Betoken was when we first started reaching out to potential users and investors, who already knew about blockchain, Ethereum, and smart contracts. Ah, those were the times.
Needless to say, Betoken is something hard to wrap one’s head around, and it’s perfectly normal to not “get it” immediately. Of course, we’ve gotten a lot more practice since our earliest pitches, so hopefully you will understand how everything pieces together in a few minutes, but if you still find it puzzling, please don’t hesitate to read it again (or several times), and feel free to ask us any questions you have in our Telegram group :)
What Is Betoken, And Why Should You Care?
Betoken is a hedge fund that’s accessible to anyone.
What does that mean?
A hedge fund works like this: you, the investor, give us your money, and we, the managers, invest your money into various assets for you. All the research, due diligence, paperwork, and the handling of the assets are all done for you by the managers. At a fee, of course. To put it shortly, you just give your money, and wait for profits. Simple, right?
However, currently, the most profitable hedge funds, like Renaissance Technologies, are closed off to the vast majority of the population. Even the less glamorous ones need you to be an accredited investor — fancy name for a multi-millionaire — to join.
This is why you should keep Betoken in your mind: we’re a hedge fund accessible to anyone, without any wealth requirements or minimum investment. We achieve this by being completely decentralized and utilizing the Ethereum blockchain to handle all the operations of the fund. Betoken offers a great investment opportunity to everyone, improving economic equity and closing the gaping class divides around the globe.
Other hedge funds serve the top 0.7%. We serve 100%.
We haven’t even gotten to the best part yet. Betoken is also the first and only hedge fund where it’s mathematically guaranteed that your money will be handled by the best people. This will be explained in the next section.
How Betoken Makes Investments — Incentivized Meritocracy
The defining question about any hedge fund is this: how are the investment decisions actually made? The answer directly determines the success or failure of the hedge fund; after all, no one wants to join a fund that makes poor investment choices.
Betoken uses a radically new governance system called Incentivized Meritocracy to make all its investment decisions.
Meritocracy means that the better a manager is at investing, the more money they can manage for the fund.
Incentivized means that the better you are at investing, the more your income will be.
In addition, anyone can join Betoken as a manager, no diploma or accreditation needed. This allows Betoken to utilize the combined wisdom of a global network of traders coming from diverse backgrounds, rather than a small group of well-groomed Ivy League graduates working at Wall Street.
How is this all actually implemented? To represent the investing merit of each manager, Betoken uses a custom ERC20 token called Kairo (derived from Kairos, the Greek word for “the right, critical, or opportune moment”). The more profits you make, the more Kairo you have, the more money you can manage. This is the core of Betoken’s Incentivized Meritocracy: by constantly redistributing Kairo based on the profit one makes for the fund, we can ensure that the best people manage the most money and get the most income.
Let’s say you want to start managing investments for Betoken. First, you would need to buy some Kairo, either from someone else or from an exchange. Hooray, you’re now a manger now! Say you want to invest 10 dollars in Apple stocks on behalf of the fund, you would need to stake Kairo proportional to the size of the investment, essentially putting money where your mouth is. Let’s use 100 Kairo for this example. After a week, suppose the price of Apple stocks rose by 20%, so the 10 dollars becomes 12 dollars. You decide to sell the stocks, and since you made a profit, the fund rewards you in Kairo, by the same proportion as the profits you made to the initial investment, which is 20%. Now, you have 120 Kairo! If, however, Apple stock price actually dropped by 20%, you get penalized in the same way, leaving you with 80 Kairo. As you can imagine, Kairo will be redistributed to the best managers over time, making sure that our investors’ money is handled by the best people.
Betoken also pays all managers once a month based on the amount of Kairo one has. If you have 100 Kairo and John has 10 Kairo, you would get ten times as much income as he does. Since Kairo can also be sold for money, managers are quite incentivized to make good investments and win Kairo.
We have mathematically proven that this system will ensure that Betoken makes the best possible profits for our investors. You can check out the proof here if you’re interested.
Walking Through An Investment Cycle
There are, of course, aspects about Betoken other than its Incentivized Meritocracy. We have found that a walk-through can best give one a picture of how Betoken operates as a whole, so that’s what we’ll do.
Betoken runs in 30-day investment cycles, meaning that investors will be able to deposit or withdraw their funds once every 30 days. Each cycle has three phases.
- The first phase is where investors deposit and withdraw their funds, which lasts 24 hours. When you deposit your funds, you will get Betoken Shares, an ERC20 token, as vouchers for your investment. You will give them back to Betoken when you withdraw your funds. If Betoken has made profit since your deposit, you will be able to withdraw more money for the same amount of shares, and if Betoken has lost money you will be able to withdraw less.
- The second phase is where managers buy and sell assets using the fund’s money, which lasts 28 days. Since Betoken is decentralized, managers will only be able to invest in crypto-assets such as Ether. All investments are handled by Kyber Network, a decentralized crypto-asset exchange. Manager must sell all the assets they’ve invested in before the end of this phase, in order to satisfy the withdrawing needs of the investors.
- The third and final phase is where managers collect their income using the Kairo they have, which lasts 24 hours.
To learn about other details of Betoken, go ahead and check out our whitepaper.
To share your thoughts or to learn more about the project, come chat with Zefram, Surya and Guillaume directly on Telegram or Twitter. We look forward to seeing you there!
Don’t forget to sign up for our alpha release at betoken.fund. Stay tuned for announcements on Reddit and Facebook. And we’re always looking for talented individuals to join the team. Please reach out to us at hello@betoken.fund.
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