Investor Stories: Mudrex
In our Investor Stories series, we spotlight some of the underwriters and liquidity providers investing in our platform. In this edition, we catch up with Ankit Verma, Founding Partner and CIO at Mudrex Capital. Topics covered include, the best way to tap into emerging markets, how DeFi is bringing innovation to traditional finance, and thoughts on the future of the Web3 space.
- What’s Mudrex, and what does Mudrex do?
Mudrex is a YCombinator (W’19) backed crypto investment platform with the vision of making crypto investments seamless and borderless. Mudrex Capital is the institutional arm at Mudrex, bringing 10+ years of systematic and quantitative trading to cryptocurrencies. The fund invests in strategies across various arbitrage and statistical neutral opportunities in CeFi and DeFi.
We have always been passionate about technological innovation and how it is evolving and benefiting people across the globe. We were fascinated to learn about Bitcoin and blockchain technology when we first heard about it in 2012, and began exploring and learning about it in groups. Realizing that this innovative technology could revolutionize finance for all, we proceeded to put in some solid research over the next few years.
Blockchain and crypto have the potential to create a level playing field to build wealth for all investors. Today, our goal is to simplify crypto investments as much as possible for retail or everyday investors through our mobile application, and for institutional players through our fund. Currently, we have an AUM of over $35 million.
- Did you previously have exposure to EM financing opportunities?
Mudrex has identified the Credix platform as a distinctive origination channel for EM credits, which complements our current origination and underwriting capabilities.
The Credix team has done an excellent job of considering these factors when estimating the risk of their LatAM borrower set and modifying their estimated risk premium in real-time to take into account the changing macroeconomic environment. Additionally, Credix’s advances in local deal structuring have given us confidence in our protections as lenders
Are you interested in also having exposure to high quality, cashflow generating secured assets? Subscribe here: https://app.credix.finance/
- How do you compare DeFi to TradFi lending models?
The most significant change that blockchain-enabled DeFi projects can facilitate is accessibility. People worldwide can borrow or lend money in crypto with a few clicks using a smartphone, and through DeFi, users can also have more control over their assets. Simply through decentralized exchanges, users can directly interact with the blockchain protocol to avail of financial services or execute trades.
Let’s try understanding how DeFi and blockchain can revolutionize fintech with a scenario.
Suppose you wish to get a loan. What would you do? Most people would opt to go to a bank to get a loan. Now let us go through the steps involved in achieving this. First, the bank would do its due diligence in terms of evaluating your creditworthiness. It would pull up all your financial records.
Later, you need to state the purpose of obtaining the loan and other details on your financial condition. These details would include your bank statements, salary statements, and other related documents. Then, the bank would need you to put up collateral in case you default. After all the necessary paperwork (tons of paperwork) and the due diligence, if the bank finds you worthy enough to get the loan, it would take at least a few days for the sanctioning and the disbursement.
Now, let us look at how the same process would flow when you use the potential of cryptocurrency and blockchain.
If you have some crypto in your crypto wallet, with the help of your smartphone and an internet connection, you can put up this crypto as collateral and borrow a loan from anywhere across the globe in just a few clicks. And the loan would get disbursed in a few seconds. This form of finance is called decentralized finance.
DeFi can make ‘lending and borrowing’ much easier based on collateral than conventional models. DeFi is beyond the hegemony of the traditional financial system and has the potential to truly revolutionize modern finance. The blockchain technology ensures that the identity of borrowers and lenders stays safe and secured through cryptographic digital signatures in an automated manner.
The financial service industry processes millions of transactions daily, where transparency, security, and cost-efficiency are the utmost priority. Nearly 45% of financial intermediaries, such as money transfer and stock exchange services, suffer from cyberattacks yearly. Blockchain technology has been gaining momentum due to its intrinsic strength of being secured and transparent. This technology can transform financial services such as the stock market, banking, asset management, and insurance.
One of the impactful use cases of DeFi and blockchain would be the insurance industry. When we look at the present-day insurance system, it suffers from complex paperwork,audit systems, and procedures. In such cases, using smart contracts that are run on blockchain technology could make the industry much more efficient. The increase in DeFi adoption has led to the growth of DeFi-based prediction platforms where users can also trade value by forecasting the outcome of future events fraud-free. And all the transactions performed on the blockchain are accessible to the public to verify and validate.
- How has your experience been working with Credix so far?
In contrast to the frequently impersonal DeFi investment processes, Mudrex has found the Credix team to be innovative and cooperative in all facets of the investment process. The team has been receptive to suggestions, having conversations about the risk-return profiles of potential pool borrowers and taking platform structuring into account.
With a fantastic team and a goal of facilitating synergies and enlarging the total space, Credix has been nothing short of a great venture. We are looking forward to constructing and advancing the future of finance with Thomas and Chaim and their Credix team.
- What’s your outlook for what’s to come?
All financial markets are cyclic in nature, filled with their fair share of crests and troughs. The crypto market is passing through a consolidation phase now. The silver lining in this is that this phase eliminates all the random noise from the market. The cryptocurrency projects that remain and shine now are the ones that are actually building something meaningful for the future. In turn, this enables investors to focus on value and then determine a fair price.
Following the COVID pandemic and most of 2021, we observed a high correlation between the equity and crypto markets. This correlation is now going down, as it should. It signals that cryptocurrency, as an asset class, is gradually maturing. The current phase allows developers and leaders to build scalable and sustainable cryptocurrency projects. We are truly bullish for the future.
About Credix:
Credix is a global platform that provides liquidity against novel, tech-enabled, tokenized assets. We provide on-chain asset-based financing to innovative non-bank lenders in Emerging Markets, focus Latin America.
The team at Credix has built deep expertise within specialty finance, financial technology, and decentralized finance. This has allowed us to create a unique platform for liquidity providers, underwriters, and borrowers. We have a standard offering for early-stage companies and offer more tailored solutions for growth and scale. Our end-to-end process is tech-driven leveraging the latest data and blockchain-based technologies.
On our platform we have provided credit against receivables to a tech-enabled SME lender, provided a multi-tranche facility for car loans, and liquidity against B2B SaaS recurring revenue streams. We’re moving the $800 billion private credit market into the digital era.
