HFSP #20: Groupthink

Jul 13, 2022

In today’s edition:

🎙 An interview on group investing with Thibaud Souchal, founder of École Crypto

🪙 Aave is planning to launch its own collateral-backed stablecoin, GHO, pegged to USD. Now it’s also pegged to EUR!

🥊 The GameStop NFT marketplace beat Coinbase on its first day. The volume on the platform was around $2m at the time of writing.

🔥 Animoca Brands secured $75m from Liberty City, Kingsway and others at a $5.9bn valuation, a slight increase over its previous valuation of $5.4b in January.

🇺🇸 The Treasury Department has invited the public to comment on how digital assets should be regulated. Not you, Gary G.

🤑 MultiCoin Capital launched a $430m venture fund focused on Web3 companies from seed to late-stage, in the latest sign Web3 is still attracting capital (cf. Lightspeed).

You recently gave a talk on DeFi funds. What are those?

Group investing (which is more or less synonymous with DeFi funds) is heavily regulated and therefore, rare. However, tradfi disruption by Web3 technologies, decentralisation and technological innovation have all brought new use cases and new venues to rethink group investing. Open Finance is basically the child of tradfi and blockchain tech. OF is bringing more possibilities in terms of club investing, or group investing, in a decentralised and secure way. There are already a few ways of going about this.

Can you walk us through a few projects you have used and what makes them stand out?

enzyme.finance is an infrastructure provider for crypto asset managers on Ethereum. In a few words, the platform is designed to help seasoned investors raise funds from retail contributors and implement specific investment strategies. The interface is in no-code and makes it easy to create smart contracts to manage outside funds.

Main strengths include the great UI/UX that makes it accessible to anyone, and security. Rest assured, the fund manager cannot withdraw funds unilaterally. They also have a sort of carried interest feature.

The main thing that bothers me is the range of available strategies: fund managers can only invest in about 50 tokens and only a handful of DeFi strategies are available.

syndicate.io is another one I like. The platform is designed to help create investment DAOs. Here’s how it works: investors deposit capital in the DAO, and receive a token depending on the size of their investment. That token grants voting rights on everything ranging from investments to day-to-day management of the investment vehicle. This looks a lot like the very definition of group investing: liquid, transparent, and efficient.

However, on a legal standpoint, the SEC, FCA or AMF tend to heavily regulate these kinds of investments when they become industrialised. Stick to a family and friends approach and you should be fine.

Among syndicate’s biggest strengths is the freedom it allows in terms of fund movements, even permitting to withdraw funds in fiat or invest in real estate and equity. You can also easily get off-chain reports to follow performance.

A few other tools to properly manage your fund once it’s up and running: aragon.org will simplify DAO voting, veriff.com offers a simple KYC solution if the jurisdiction requires it, Cal.com/web3 makes it easy to connect with members of the DAO, prime.xyz allows DAOs to coinvest and the collab.land bot blocks the entrance of your Discord server to those who don’t hold the token.

This all sounds very Web3 and nerdy. Do you see this having value for your retail investor?

Of course! Thanks to these technologies, you can now create and manage tokenized investment portfolios with your peers to invest not only in crypto but in real estate, gold, equities… Open Finance is making finance more accessible and thus makes it simpler for founders to raise funds.

A few charts here to mark my words: