Funds: how they work on Dexe Investment

Pooling money together to buy that expensive Picasso or invest in a specific industry is nothing new. A fund is just such a pool of money (from one or several investors) with the goal of profiting from a certain investment strategy. With Dexe Investment, funds can do even more. And the mechanics are a work of art in how easy and secure it is for investors.

Not just a trader, but any group of people can create a fund on Dexe Investment. Even a startup or a DAO can create a fund. It’s easy. The settings on the platform are so flexible that you can bring together your group of fund creators and specify the kind of fund it will be (easily dividable into sub-fund pools, too, for specific investment/asset strategies).

The Dexe Investment platform has Investment and Standard funds (more on that in a future article). Each fund can be Public or Private to tailor to the fund creators’ preferences. Anyone can participate in a public fund to increase its investing power and benefit from the strategy. In contrast, a Private fund only allows only the previously whitelisted investors to participate. Which to choose depends on how tightly you want to guard your investment strategy and participant alignment.

Each fund is represented by LP tokens. It’s up to the fund creators to decide whether there is a limit on the fund’s mintable LP tokens.

Creating a fund

Remember the old ways of creating a fund in TradiFi? Many document and regulator approvals, a long long wait, only the rich qualifying… none of that anymore. Not with Dexe Investment.

It will take you just a few clicks to create a fund. Just choose its settings based on your strategy and preferences, then send one transaction to create the smart contract. Voila! Once that’s done, the trader needs to deposit his own funds* in the agreed-upon Base Asset to get his personalized LP tokens. And the fund is ready to trade.

*Requiring traders to deposit their own funds in the proportion of how much investor funds they want to trade with is a key component of security for investors built into Dexe Investment.

Base Asset and trader’s LP tokens

All of the fund’s trading and profit calculations are done in the Base Asset. BA is chosen before the smart contract of the fund is deployed and cannot be changed afterward. So think carefully, considering such factors as the token’s liquidity, volatility, association with the network you want to trade on, etc.

Dexe Investment has a whitelist of approved BA (again, to protect investors). Since DeXe is a DAO, new BAs can be added to the whitelist via DAO voting. This itself is an interesting topic we will discuss in a future article.

As we mentioned above, a trader must deposit his own funds to receive his LP tokens in a 1:1 ratio. Investors can subsequently buy or sell the trader/fund’s LP tokens at any time at their current market price. When LP tokens are bought, they are minted. When sold, they are burned.

The fund/trader fee

It’s up to the trader to set the fee anywhere from 20% to 70% of trading profits. Keep in mind that 30% of all trader fees will go to DeXe to be distributed as follows:

1\3 going to the Insurance Pool

1\3 going to the DeXe DAO Treasury

1\3 going to the DeXe Farming Rewards

To cash out his income earned from trader fees, a trader must close all of his positions. For additional investor security, a trader will have a “cooling down” period before he is able to withdraw the fee income earned. Its length depends on how high the trader sets his fee:

20–30% = 1 month cooldown

30–50% = 3 months

50–70% = 1 year.

Thus, the higher the fee, the more the trader will be locked into sticking around. This is an incentive to keep fees reasonable and to think long-term, as well as to reassure investors that their chosen trader has their interests in full focus. The fee will be paid out in BA.

Stats

Statistics are massively important since you will use them to find the fund/trader/strategy you can trust to deliver on your investment goals. You can use our trader statistics to see all the funds created by a trader as well as the analytics of the trader’s performance.

There are many parameters to evaluate, such as:

  • Fund volume of capital investment
  • Investing requirements
  • Type of fund
  • LP token price history chart
  • % of profitable trades
  • PnL of all the positions of the fund
  • Average profitability in the past 24 hours
  • And many more

Everything is designed for you to quickly find the strategy and the proven results that fit your goals. We believe that transparency is the best motivator: the best-performing funds and traders will naturally attract investment and will likely see their LP token’s value grow.

At the same time, investors may choose funds that focus on specific markets or investment goals. In the subsequent articles, we will dive deeper into the differences between Standard and Investment funds, including specific use cases. Don’t miss it! Understanding what’s possible is the real alpha.

Stay tuned!

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Dexe.Network

Dexe.Network

Dexe Network is an ecosystem of tools that bring professional trading to DeFi