Overview
Instead of Managing an own fund the idea at PEAKDEFI is to manage one Global Fund with many other managers together in a decentralized way. This is a completely new and disruptive way for Asset Managing that also implies different managing approaches compared to traditional Hedgefunds and raises a couple of questions:
How can managers manage the capital of investors in a decentralized environment?
How does the Distribution of the Assets under Management (AUM) work?
Ho does the Handling of good and bad Managers work?
How can inactive Managers be treated, who block capital to grow?
Like investors, the managers connect their Ethereum-Wallet with the platform to interact with the smart contract. Managers can open and close trades, even margin trades, all in a decentralized way. To provide all these solutions the PEAKDEFI Platform interacts automatically with different decentralized protocols like 1inch Dex or Compound Finance.
To distribute the AUM between the managers automatically a so called Reputation Token has been implemented at the platform. This Token cannot be bought on external exchanges, nor can it be sold. Every Manager has to buy the same amount of Reputation Token at the platform which entitles a manager to manage a part of the whole fund. The amount of Reputation Token grows and decreases over time, depending on the success of the Manager.
The AUM for each manager fluctuates and depends on different aspects:
The AUM grows if more investors invest in the fund and therefore the fund grows
The AUM grows if the Amount of Reputation Token rises
The AUM of each individual Manager shrinks if the Amount of Reputation Token decreases
The AUM of each individual Manager shrinks if more Managers enter the Fund
If more Managers enter the fund it has to be shared between more Managers and therefore every Manager get's a smaller piece to manage. But more traders usually mean less volatility and therefore more stability for the fund.
The management over your Trades is also controlled by your Reputation Token. You can read more about how the Reputation Token influence your Trade Management here. How Reputation Token determine your Rewards and losses you can read here.
To ensure that Fund Managers have enough time to perform proper trading there are fixed Trading Cycles of 60 days where the funds are locked. While you can invest in the fund anytime you can sell your fund shares only within the intermission phase. This is a period of 3 days between every trading cycle where Managers are not allowed to trade and investors can sell their funds.
A full cycle is 60 days and is divided by a 57-day trading period and a 3 day intermission phase.
Your Commissions are directly linked to your reputation. If you are a good trader you automatically raise your Amount of Reputation Token and therefore your AUM which results in higher Commissions. You can earn up to 15% in Commission on the Profits of your Fund Shares.
You can start immediately as an Asset Manager and get a piece of the fund to manage. That's the beauty of a decentralized protocol, no boundaries. Of course there are mechanisms to avoid losses for the fund so bad traders lose fast their reputation and consequently less Fund Shares. But on the other hand good traders get automatically more Fund Shares, no search for clients anymore. And as it is all decentralized and all managers manage the whole fund there are also no customers which you have consult.
While opening a new (hedge) fund takes many hurdles to overcome you can just connect your wallet with the PEAKDEFI Platform, buy Reputation Token and stake a little portion of PEAK and you are ready to go! You don't have to consult Clients, you don't have to acquire new clients. You don't have to bother with regulations etc...You can fully concentrate on your Trades!