Betoken, a new hedge fund DAO
Betoken is a hedge fund DAO. Investors deposit funds into a pool and managers take indirect control of funds to generate profit for investors. Launched in July 2019, there are currently 92 investors and over 140 fund managers using the Betoken Fund.
Betoken changes the way we think about DAO governance. Unlike traditional DAOs where funds are managed by voting members, the Betoken pool is governed by fund managers who are ranked by the ROI they achieve during investment cycles.
Managing Betoken Funds
To begin managing the Betoken pool, managers must initially purchase Kairo (KRO) — an ERC20 token that is a unit of reputation for managers. No more than 1% of the total KRO supply can be purchased to mitigate centralization of KRO that isn’t earned. When managers generate profit, they earn KRO.
Managers are then ranked by the amount of KRO they possess and the portion of the fund they manage is dictated by the amount of KRO they hold over the total supply. As a result, fund managers are motivated to maximize returns, as the better they perform, the more funds they’ll manage.
This creates “incentivized meritocracy” and ensures that invested funds are overseen by the best managers. This also disincentivizes sybil attacks, as managers would need to rebuild their reputation (achieve profits) to gain control of Betoken funds.
Managers can begin making trades by staking their KRO when they create a trade order on Betoken’s market. By staking their KRO they tell the BetokenFund contract what portion of the fund they are managing and the amount that should be traded.
Managers stake KRO at the rate of:
investmentAmount = totalFunds x decisionStake / totalKairoSupply
When managers sell assets during an investment cycle, the KRO they earn is calculated immediately after the sale and their wallet is credited or debited KRO, depending on the profitability of the sale at the rate of:
decisionStake x (1 + ROI)
Since KRO is staked with every order, if managers lose money in their trade, KRO is subtracted from their account thus decreasing the value they manage on future trades.
Betoken assets are held in DAI but managers can trade in 70 ERC-20 tokens and can hold margin positions in ETH, wrapped BTC, BAT, KNC, REP and ZRX, directly from the Betoken market.
The fund is built on top of Kyber, Compound, Fulcrum so orders are submitted to these platforms. Managers never take custody of funds, they are always held in the Betoken yFund or sent to other DeFi contracts.
Betoken has a 30-day investment cycle during which investors can view the fund’s activity from the portal in real-time. Managers invest funds over 27 days to generate ROI and the final 3 days are an intermission period where investors can withdraw their investment or deposit more funds.
In every cycle, managers earn commission in DAI. A management fee of 0.1% of the Betoken AUM is distributed to managers and 0.1% is set aside to support the Betoken development team. If the fund is profitable, 20% of profits are distributed to managers, proportional to their current KRO holdings over total KRO. Take a look at this simulator to better understand potential income for managers.
Depositing into Betoken
When investors deposit funds, Betoken shares (BTKS) are minted that are redeemable for their portion of total assets under management. BTKS can be purchased by depositing ETH or any of the 70 ERC-20s supported by the Betoken platform. BTKS are transferable and can also be purchased on the secondary market. The current price of BTKS is ~0.6 DAI.
Learn how to deposit funds or manage the Betoken pool today!
Betoken Subgraph
“The more users, the more data we pull from the blockchain. It was chaos before The Graph. Now Betoken works so much faster on mobile, so thank you!” — Guillaume Palayer, Co-founder Betoken
Subgraphs are a clean way for dapps to index and query data from the Ethereum blockchain. Each subgraph manifest defines which data sources to query and how to transform data that’s pulled by a Graph node.
The Betoken subgraph observes the BetokenFund, MiniMeToken and BetokenProxy contracts, as well as various contracts on other DeFi platforms that Betoken has integrated with, to pull data when managers are making trades (eg. Compound orders, Kyber liquidity).
Given the complexity of Betoken investments and multiple integrations, Betoken pulls a significant amount of Ethereum data. The subgraph makes interaction with data much cleaner, reduces server runtime and improves user experience.
Fund
This query gives us a view of the total assets under management (AUM) and total supply of KRO for each cycle. With this information, we’re able to calculate the exchange rate of the fund to KRO token — or how much a manager takes a hold of, per KRO token they possess.
In this query pulled on Sept 5th; total AUM is 21,667 DAI and there are 6,174 KRO minted, meaning a single KRO token represents management of ~3.5 DAI.
Information you can pull about the Betoken fund includes
- Total funds held at the start of a cycle, total funds held in DAI and total assets under management — this can allow you to analyze historic fund performance
- Price and supply of BTKS tokens (investor tokens) and KRO tokens (manager tokens) — this can enable a user to track token exchange rates with the Betoken Fund
- Orders made to Compound or Fulcrum by managers making trades, including the token amount and buy and sell prices
Collectively, this data can provide an interesting picture of the volume of orders per DeFi platform, the pairs that have historically generated the greatest profit, track share supply growth and overall fund performance.
Managers
Here’s an example query looking for information on the top ranked managers, ordered by their KRO balance. We can see the manager’s total KRO as well as the total commission they’ve received to date.
You can query the Betoken subgraph to learn more about managers’:
- Ranking
- ROI history
- KRO balances
- Commission earned
- Risk taken
- Ongoing orders
- Past votes
The subgraph makes it easy for Betoken to quickly pull data and display its leaderboard of managers in the web and mobile UIs. It can also allow other DeFi platforms to keep track of fund managers. This may be interesting to DeFi information portals (eg. DeFi pulse) or to help other hedge fund communities like those of Numerai and Melonport to identify high-performing crypto investors.
Use The Graph today!
If you’re looking to query Ethereum to create a UI that tracks DeFi or to conduct analysis on Ethereum data, query the subgraphs that are live today. Deployed subgraphs include Uniswap, Compound, Dharma, Synthetix, MakerDAO, MolochDAO and many more!
Or if you’d like to simplify your app’s data indexing, deploy your own subgraph. Check out The Graph docs to learn how you can run a graph node, deploy a subgraph and query other subgraphs.
You can also join the Discord channel to chat about deploying a subgraph and join The Graph community.
