AMA Highlights: Hodl Finance

By Daniel Dal Bello, Director.
November 5, 2021–10 min read.

On Thursday 4 November, we welcomed Nick Friedrich and Jess Muntenaar of Hodl Finance into the Hillrise Group Telegram chat for an AMA.

Hodl Finance is set out to merge centralized and decentralized finance to create a sustainable ecosystem to foster innovation in the crypto-space. It combines aspects of community governance and a transparent foundation.

Hodl Finance plays into their team’s previous experience in professional algorithmic trading through a public bot trading platform which will underpin a sustainable treasury for ecosystem development.

The team has recently introduced a novel browser game to encourage the fair distribution of their HF token.

We were curious to learn more about how to meaningfully merge CeFi and DeFi elements into a sustainable ecosystem that fosters innovation.

In this post, we have compiled key questions and answers from the event.

Rowan Zwiers
Hi Nick and Jesse! Would you please introduce yourselves to our community? Who are you, what is your background experience in crypto, and what are your ambitions for Hodl Finance?

Nick Friedrich
I’m Nick Friedrich, CEO of Hodl Finance. Nice to meet everyone here!

I started trading cryptocurrency in 2013 and have done many things within the ecosystem since then. I’ve been a community admin, advisor to different crypto-projects, and eventually I started my own company (Hodl.nl) in 2016.

I gave workshops and personal guidance to starting investors who wanted to get involved in cryptocurrency.

As soon as there was a regulatory framework for cryptocurrencies in the Netherlands in 2020 we evolved into a cryptocurrency investment fund (which by the way is this year’s best-performing crypto-fund in the Netherlands).

Besides that, we also launched our own trading bot platform as Whitelabel and that evolved again into Hodl.finance.

But we will get into that later.

Jess Muntenaar
My name is Jess Muntenaar and I am active in the space for almost 5 years now.

I started the crypto-journey, like a lot of us, myself but later joined the investment fund Nick referred to. First as an Analyst and later as the Head of Trading. Starting our own cryptocurrency project was always a huge ambition and since different technologies emerged the idea of Hodl Finance arose. Being the COO of Hodl Finance is a great job and since managing people and arranging everything in the right ways is my passion it suits me very well!

Rowan Zwiers
Let’s get into this. We are here for hodl.finance.

As we can read on your Medium you are “merging centralized and decentralized finance to create a sustainable ecosystem for constant innovation”.

What kind of innovation do you envision to be sparked from your foundation? Do you have a general vision of what Hodl Finance should help the crypto space develop?

Nick Friedrich
The first utility will be our trading bot platform where everyone can create their own trading bot with all known indicators and test it on historical data. Also, this will include many new features that we can’t spoil all just yet.

Besides that we’re working with many partners, we call them Proposal Partners, on great ideas that range from DeFi protocols, to NFTs, and also gaming. The most important thing for our ecosystem is adoption. For example, we have a great gaming studio as a Proposal Partner that will start creating proposals in 2022 already.

The vision is not that only we can create proposals, they should be open for everyone with great ideas and a way to realize them.

Rowan Zwiers
Community governance is a key element from the start, which reaches into both CeFi and DeFi elements of your ecosystem.

Can you tell us more about how the governance elements are implemented now, what elements are community governed, and how you plan to evolve your community governance (and involvement) in the future?

Jess Muntenaar
Community governance will be something that evolves during different stages in the growth of the ecosystem.

As the ecosystem starts the foundation, Stichting Hodl Labs will run trading algorithms to generate returns. These trading algorithms can be used for multiple trading pairs which will be voted on by the community.

At first, voting will be done through social media as we are building on-chain governance.

The second phase will include voting and proposals from the community. But since our ecosystem is made to be centralized/decentralized we also implemented a council. The council will filter and curate valid proposals to ensure it benefits the entire Hodl Finance ecosystem. So the council will be the filter and the community will have the final vote.

Nick Friedrich
The centralized part is really important, the crypto-space evolves fast, but regulation should always be followed. That’s why the combination of CeDeFi is really powerful.

You can’t just blindly invest in proposals without due diligence (KYC/AML) and have to follow the right regulatory framework. That’s why we created a non-profit foundation registered in the Netherlands called Stichting Hodl Labs. This will oversee the health of the ecosystem.

The centralized part is really important, the crypto-space evolves fast, but regulation should always be followed. That’s why the combination of CeDeFi is really powerful. That’s why we created a non-profit foundation registered in the Netherlands called Stichting Hodl Labs. This will oversee the health of the ecosystem.

Raymond Reijnders
As per your $HFT flowchart the Hodl Finance council is positioned directly under Hodl Labs (the CeFi element), how strong is this council’s influence over the DeFi governance, and how are the council members elected?

Nick Friedrich
Everyone can send a proposal to our foundation. As Jess explained the council is meant to filter the valid proposals. We want to make sure there are benefits for the entire Hodl Finance ecosystem. Besides that, we want to keep it as decentralized as possible without crossing any legal boundaries. The foundation and council are created to support the decentralized part and not own it.

That’s why the council is selected based on their expertise within the necessary sectors. Examples are legal, finance, venture capitalists, marketing, and business development. Besides that, they all need to have an affinity with cryptocurrency. Initially, the foundation will decide on the starting members of the council however in the future we will look at ways to decentralize this as well.

In conclusion, the council supports the decentralized part and the community will always have the final vote in our ecosystem.

Raymond Reijnders
Slowly moving CeDeFi to DeFi over time, where regulation and compliance allow, correct?

Nick Friedrich
That’s the big plan, but with uncertainty about regulation like the upcoming MiCA framework, we rather start safely and upgrade it based on regulation in the future. Decentralization is the end goal.

Rowan Zwiers
It is interesting to see how you’ve come to this hybrid between DAO and legacy governance. In order to make this happen, you’ve set up Stichting Hodl Labs, a Dutch foundation under Rotterdam’s jurisdiction.

Can you tell us more about the process of setting up this foundation, its necessity for the Hodl Finance ecosystem, and the requirements that come with running this foundation?

Jess Muntenaar
It was a difficult process. In the Netherlands directors of a foundation are personally responsible for whatever happens with the foundation. This means everything should be done following the law perfectly. Other than that, it was difficult to explain to our tax advisors and legal team what we are trying to do and accomplish. Imagine explaining PancakeSwap to a tax advisor who has never heard about cryptocurrency.

Other than that it is not easy to get a bank account for cryptocurrency-related foundations/companies. We arranged everything in such a way that we managed to get a bank account at a Dutch bank.

All in all, a tedious and time-consuming process but since our long-term goal is becoming a sustainable ecosystem it will all be worth it.

Raymond Reijnders
To move over to the platform itself, the cornerstone of the sustainable growth of Hodl Finance will be algorithmic trading, which builds on your personal experience with running a Netherlands-based investment firm.

What type of algorithmic trading bot strategy does your platform follow? Arbitrage, market making, grid strategies, or something else?

And on which exchanges are your bots deployed, do you run on CEX, DEX, or both?

Nick Friedrich
We run different strategies like grid-bots, arbitrage, and DCA algorithms, but we can create every possible bot. We don't run any market-making strategies because that is not our main specialty and goal. The end goal is to create a safely growing foundation balance that supports the Hodl Finance ecosystem and fills the treasury.

We are now connected to various trusted exchanges:

• Binance
• Coinbase
• Huobi
• KuCoin

But we are always developing new API connections. We also can add any DEX, but with the current fee on Ethereum, that’s not our priority.

We run different strategies like grid-bots, arbitrage and DCA algorithms, but we can create every possible bot. The end goal is to create a safely growing foundation balance that supports the Hodl Finance ecosystem and fills the treasury.

Rowan Zwiers
In your token model, you’ve implemented a reflection mechanism, which is uniquely combined with your platform and foundation.

How did you come to this unique approach for your ecosystem — and what are the benefits you foresee with this model?

Jess Muntenaar
The reflection mechanism is used by many meme coins but it actually originates from Reflection Protocol. We see reflection as an easy way to reward our hodlers for holding on to HFT. Normally people have to interact with smart contracts to stake, provide liquidity, or farm yield which takes experience and knowledge in the scene. As for Hodl Finance, people can hold on to HFT, be eligible to be reflected and thus earn rewards.

It is as simple as buying HFT and holding it in your wallet.

Also, holding HFT in your wallet gives you access to certain utilities within our ecosystem. For example, you need to have a certain amount of dollars in HFT in your wallet, which will be read out by Web3 integration, to be able to access the algorithmic trading bot platform! This creates our unique use-and-earn mechanism. Hold HFT in your wallet, be rewarded, and at the same time use the algorithmic trading bot platform.

Rowan Zwiers
Apart from 2% reflection, the other 8% comes back to the ecosystem, how does this mechanism support the ecosystem long term?

Jess Muntenaar
That’s right. 2% will be reflected to hodlers of HFT and 2% will be used for the liquidity pool. We looked at different protocols and their shortcomings. As we are analysts we noticed there was a weakness in the way the liquidity pool was handled by other projects. They just fill it up infinitely which creates a stablecoin. To prevent this we programmed a certain threshold to which the liquidity pool will be filled. After the threshold is met, the 2% will flow to a marketing treasury.

Since our ecosystem thrives by volume, marketing is very important to keep promoting our ecosystem and draw people into all the utilities possible in the Hodl Finance ecosystem.

Nick Friedrich
6% will go to the Hodl Labs foundation, this will be received in BNB from the smart contract. We will convert this to BTC and add it to our algorithms (this is 100% visible in our dashboard). The algorithms will start trading on various trading pairs starting with 4 pairs and we will add more and more every month (with community voting).

The trading algorithm will eventually generate a profit and with the profit, we will re-buy HFT from the market and lock it in the treasury for proposals — and then the proposal cycle starts.

We created 4 medium blogs to explain this in even more detail.

Rowan Zwiers
Your branding for Hodl Finance has an unique style with the robot logo/avatars, mild ‘memeifying’ of communications, and rainbow color palate.

What were your considerations in your style/tone of voice? Who are you trying to appeal to primarily as your target audience?

Also, given the bigger vision of an ecosystem — beyond the initial bot-platform, do you think your current branding will remain fitting in the long run?

Nick Friedrich
We are techies by heart, we decided on this pallet and logo with our team based on the DeFi trend. Dark theme and bright color pallet.

But as the ecosystem evolved a lot since then, we decided to go for a complete re-brand in February. This will be a different approach and we know for sure you will like it.

We are not doing this alone, but with 3 professional parties with a lot of experience in this field. So we as techies don’t have to worry.

This includes also the design, brand, and tone of voice as you mentioned.

Rowan Zwiers
You have an interesting launch of your token, amongst other things you have a launch event in which you’ve introduced the ‘Hodl to the Moon’ browser game on October 26th, where 10% of your total token supply will be distributed amongst participants, and which is still running live today.

How does this browser game (and its distribution) fit in your overall token community/token strategy? How has community participation in this browser game been and when will the event conclude?

Nick Friedrich
The game is a great success! Over 35,000 users (Twitter accounts) played the game and more are joining daily. The game will run until the 10th of November.

The characters and voices in the game are crypto-related and it’s worth a visit to the game. It’s a lot of fun beating Jess.

As you can see we are creating something serious, but crypto should always stay fun (the game).

Jess Muntenaar
At first we are — as can be read on Medium — distributing 50% of our total supply to participants in the #HodlToTheMoon game (10%) and through our different launchpad partners (40%). Since we are confident in the circular economy of our ecosystem we don’t actually mind people selling.

We have a nice balance between incentivizing people to hold on to HFT and maybe some people selling it for a quick buck, the combination between hodlers and sellers will be good for the economy. Hodlers will create less circulating supply and sellers will generate volume.

In the end, we will end up with stronger hodlers who are in our ecosystem for the long term.

Hillrise Group supports ambitious Web3 startups with early-stage venture capital and fundamental research.

Hodl Finance merges centralized and decentralized finance to create a sustainable ecosystem for constant innovation.

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