We are proud to announce the release of the litepaper for our new open-ended fund — the Invictus Margin Lending Fund.
The Invictus Margin Lending Fund offers investors the ability to take advantage of the volatile nature of the cryptocurrency market without risking direct exposure.
The fund aims to maximize interest income on USD and USD equivalents with zero anticipated drawdown risk. Fund returns have a low or negative correlation to the S&P500, VIX, GLD and TNX — making for an excellent portfolio diversification tool.
The fund will aim to provide investors with exposure to margin lending returns which have historically been in the region of 13–28% p/a net of fees on USD and various cryptocurrencies backed by, or pegged to the US dollar — such as TUSD (True USD). These are generally referred to as ‘stablecoins’. Average annualized daily rates for USD in this capacity on Bitfinex have been in excess of 16% for the past 12 months from time of publication, recently spiking as high as 40% in the month of July 2019.
Traders borrow these assets primarily for leverage trading via major cryptocurrency exchanges. Demand is strong and growing — several platforms have recently introduced margin trading functionality or increased the maximum leverage available to traders. Bitfinex, a single exchange, has over $300m utilized in USD and USD equivalent margin loans at any time. Interest on lending these assets is paid daily which leads to favourable compounding. The primary risk is counterparty risk which can be mitigated by diversifying across stablecoin assets and exchanges.
Market volatility is also an important factor as demand for USD, USDT and other stablecoin assets are driven higher by volatile crypto markets. In comparison to the mean (6.74%) and median (11.39%) returns of the S&P500 over the past 10 years — which include drawdown risk and exposure to black swan market events, the Margin Lending Fund offers an attractive, uncorrelated return profile.
Much like Crypto10 Hedged, the Margin Lending Fund has been designed to be open-ended. This comes with numerous advantages for investors. In an open-ended structure, there will always be liquidity for investors looking to enter and exit the fund as it is not required to trade via exchange. Initially, TUSD (and eventually other stablecoins) will be accepted via our investor portal. Redemptions will also be processed in TUSD.
A fiat onramp is now available via TUSD, the process is quick and easy and incurs no fees (apart from regular forex/wire charges):
1.) Registration with regulated stablecoin provider Trust Token (TUSD) — https://app.trusttoken.com/signup-or-signin
2.) They will provide wire instructions and ask you to whitelist an ETH address
3.) We will provide you with the ETH deposit address. Once you send the funds, we will receive the TUSD and issue the tokens.
The process is similar for going back to fiat.
Invictus has been running a fund with these parameters and targets internally for some time with significant success. Today we release the litepaper and officially open the fund, which will operate normally, via SAFTs. The smart contract and token launch will take place by October 2019. The minimum entry for the pre-token phase is $5 000; this restriction will be lifted during the token phase.
The Invictus Margin Lending Fund offers investors the […]