CRYPTO10 Hedged - Explained

In this article, I will be expanding upon our motivations and the salient design considerations in launching the C10 Hedged open-ended fund product.

You can go directly to the investor portal here.

C10 Hedged is not a ‘direct upgrade’ of the C20 product and is intended to exist alongside it as a fully differentiated offering. C20 is a closed-ended fund and the maximum token supply is fixed— existing investors often find it difficult to grow their stake in the fund as the number of participants willing to sell is limited.

As an open-ended fund C10 behaves quite differently:

• Purchases and redemptions occur directly through Invictus Capital’s investor portal or by direct interaction with the smart contract. Exchanges are no longer required for liquidity on the buy or sell side; C10 may be listed for convenience sake but we will not actively pursue listings. This protects investors from having to deal with unreliable exchanges and their listing and deposit/withdrawal fees.
• Purchases and redemptions will use the NAV price; premiums and discounts will be avoided.
• It is open-ended, there is no limit to how large the fund may grow but we reserve the right to limit the size of the fund should it start to face significant slippage concerns — for the top 10 assets this would only start to be a consideration when the fund has well over $100m in AUM.

C10 Hedged — Summary:

• We built on our experience through bull and bear markets to design the rule-based algorithm that sells out of, and buys into, crypto — preservation of capital is extremely important and this is an all-weather type product intended to manage downside risk for those who do not want to do it on their own.
• It contains a cash hedge and downside risk is mitigated by the fund. Many traders prefer to own a ‘naked’ fund like CRYPTO20 as they manage risk on their end — i.e. buying into and selling out of crypto on their own.
• The weekly rebalance period allows the fund to be nimble — it would have been able to retain the vast majority of the fund value at the peak of the bull market. See the Litepaper for more detailed statistical info.
• Margin lending is utilized to generate returns from idle assets, including the cash hedge. This is a common industry practice, particularly with index fund offerings. The aim is to exceed all fees with margin lending earnings and this is entirely possible based on the real-world tests we have conducted over the past few months. Earnings will be reported in the weekly rebalance updates.
• The top 10 assets were chosen to future-proof the fund design against liquidity concerns as it is open-ended. Another salient consideration is that asset custodians and custody software have better support for the top 10 versus the assets in rank 10–20.
• The fund is rebalanced weekly with a 15% cap per asset to prevent any single asset or source of risk to dominate the fund.

How Subscription Works:

• The initial fund capitalization phase is now open — you can use your existing C20/Hyperion Invictus account details to sign in.
• Tokens will be sold at NAV from day one.
• BTC/ETH/DASH will be accepted through the portal.
• The sale of tokens has begun. As an open-ended fund, the sale will remain open indefinitely.
• Tokens will be issued and redemption functionality enabled on May 1st.

All users who successfully complete identity verification will receive a complimentary access code to our Udemy course on cryptoasset investment. Those who have previously shown their support and purchased the course will receive complimentary access to our next offering. If you have completed identity verification for one of our other funds you will not need to go through the process again.

Please click here to access the investor portal, litepaper and fact sheet.

For any questions, please click here to join our Discord and speak directly to the team.

Thank you for your support and we look forward to furthering our relationship with you in 2019,

Kind regards,
Daniel and the Invictus Capital team