DeXe Investment Standard Fund: Security + Flexibility
As we previously mentioned, our Dexe Investment platform will have multiple fund types that rethink what funds can do and offer vast opportunities to both traders and investors. Let’s talk in more detail about the Standard Fund.
What is a Standard Fund?
Basically, a Standard Fund is any fund on the platform that focuses on investments within crypto. It has several built-in mechanisms to make it safe for investors and flexible for the traders to pursue various strategies for success.
To protect the investors, trading is normally done only with tokens whitelisted by the DeXe DAO (think USDC, DEXE, ETH, BNB, etc. — tokens with high liquidity to minimize the chance of manipulation since security is a priority for us). The whitelist applies to both the trading pairs the trader is allowed to work with and to the trader’s base asset for the fund.
When a new investor is coming into the fund, there is an option for his funds to be converted into “active portfolio trading” — meaning that his funds are divided proportionally among the current holdings of the fund. So if the fund happens to be 30% in ETH, 50% in BNB, and 20% in DEXE when an investor joins, he would get LP tokens of the fund that would represent that 30/50/20 split. As the fund keeps trading, the LP “adapts” — when the investor exits the fund, his profit is calculated based on the price changes in the underlying assets over that time period as well as based on any trading activity in the fund since the investor joined.
For whom is Standard Fund a good fit?
Most obviously, any trader or an existing fund would want to create a fund on DeXe Investment to take advantage of all the tools it offers and all the investment capital the platform attracts, not to mention the reputation-building power of this leading social trading marketplace. This is a great opportunity for existing funds to expand their horizons and gain both more audience and more assets strategies to their portfolio.
Crypto influencers from YouTube and TikTok could create a fund to show their audience that their signals are solid and they can put their money where their mouth is.
Big investors can use a standard fund to park some of their capital for passive income. And small investors without deep knowledge of trading can use the expertise of top traders to make money in any market.
What’s a “Risk proposal”?
If a trader wants to go beyond the whitelisted tokens, she can put together a risk proposal in her fun, which creates a sub-pool within the fund. The trader can set limits in terms of how long this sub-pool runs and how much can be invested.
To create a risk proposal, the trader must indicate which token she intends to buy and at which price. As soon as she buys this token with her own funds, the proposal is created. To protect investors, no investor can put in more funds into a risk proposal than is proportionate to the number of funds invested by the trader. Note that the trader has to buy into the risk proposal with his LP tokens from the main fund. Therefore, if the trader used let’s say 10% of his LP tokens to invest in the risk proposal, each investor can invest up to 10% of their LP tokens into it as well.
The trader can close the risk proposal at any time. As long as the risk proposal is open, the trader can add more LP to it. When entering this sub-pool, every investor will get an L2 token (represented by an EPC1155 format NFT). They can transfer this NFT like any other NFT to someone else. When an investor wants to cash out of the risk proposal, the L2 tokens are burned.
Standard funds allow traders to show off their crypto trading skills while protecting the investors from excessive risk. It’s flexible enough to allow a wide range of trading activity. Stay tuned for the imminent DeXe Investment release!