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Mudrex introduces DeFi mutual fund model for private investors

10 min reading

Niche financial models encourage risk allocation for what are often viewed as volatile markets, allowing investors to bet on the value of an entire sector rather than the individual potential of an asset.


Cryptocurrency asset management company Mudrex has announced the launch of its new Coin Sets investment tool. This new offering allows investors to diversify their asset portfolios into a variety of highly efficient decentralized financial systems or DeFi as well as unmixed tokens or NFTs. Niche financial models encourage risk allocation for what are often viewed as volatile markets, allowing investors to bet on the value of an entire sector rather than the individual potential of an asset. The asset basket is also rebalanced monthly to recalculate risks and opportunities for investors.

Unlike a mutual fund of similar design and functionality, aimed exclusively at wealthy clients and institutional investors, this is the first time such a product has been brought to the retail market. Founded in January 2018 and based in San Francisco, the company is experiencing a moment of expansion, registering more than 40,000 users and more than $15 million in assets under management. In April 2020, the company launched a digital asset trading platform called Mudrex Invest, which is designed to offer automated trading services to individuals from experts.

On August 10, it was announced that the company had received an initial $2.5 million raise in funding hosted by Nexus Venture Partners, with additional participation from others such as Village Global and Kunal Shah. The latest fundraising, in addition to the introduction of additional products and services, is intended to help expand the company's operational workforce. In a conversation with Mudrex co-founder Edoul Patel, he commented on the target group identified for the new product launch:

The demand for simple investment products such as coin sets is so universal that we are in great demand by all walks of life. This product is especially attractive to newcomers to crypto, which is quickly becoming overloaded with information overload in the asset class. Additionally, Patel unveiled an innovative aspect of the Coin Set product that drives a self-made approach to portfolio building, and reports that one of India's largest portfolio management systems, MintingM, has used the model for its flagship product, xMINT. "One of the really interesting features we've enabled is that it allows professional traders/creators and influencers to create their own coin sets and distribute them to their own communities to unlock wealth creation for the theme."

Central banks and leaders are increasingly voicing concerns about rising inflation and fueling a worldwide spiral of distrust. Recently, US Treasury Secretary Janet Yellen urged Congress to raise or suspend the US debt ceiling and said the government would run out of money to pay its bills by October. What looks more like a horror movie about the future is now just the first news in the global financial media. Yellen said the prevailing consensus among economists and tax officials was that failure to raise the debt ceiling would result in a major economic catastrophe that "potentially leads to historic financial crises, stock sales and recessions, and causes severe instability".

The value of the US dollar will continue to decline in the future, and more than ever, people need simple tools rather than complex tools to protect themselves from financial risks and to diversify their portfolios. Risk events are also becoming more common in global finance, with margin and liquidation demands now affecting traditional finance and decentralized finance (DeFi) as they become increasingly interconnected. The ongoing property crisis in Evergrande is further proof that poor decision-making across multiple markets will affect markets we thought were unrelated, such as crypto.

Overall confidence in global finance is declining, and understanding of how money works has deteriorated over time. Historically, the bad track of politicians has left more than 31% of the world's adult population unbanked. However, as decentralized funds spread, more and more countries began to explore different currencies. Complex by nature, crypto is eventually moving on to its next iteration, seeing emerging tools and infrastructure, and helping startups manage the risks and uncertainties of evolving but emerging financial moves. It is up to the leaders in the field to help newcomers reduce their portfolio risk.

Unfortunately, cryptocurrencies are inherently unstable. Removing a hundred billion dollars from the market is still unusual as the market cap recently hit $2 trillion. Speculation, announcements, and other events can easily affect investor confidence or lack of confidence, as evidenced by the recent repression events by the SEC and El Salvador over the past few weeks. The SEC was forced to tell investors to be on the lookout for cryptocurrency volatility and fraud as regulators tighten controls on cryptocurrencies. Even Bitcoin (BTC), despite being relatively well-established as a cryptocurrency, has remained at the mercy of famous tweets like Elon Musk, whose Tesla and promotional tweet pushed the price down.

A relatively new market for mass adoption and investment of cryptocurrencies is focused on many whales. The actions of big players have a strong impact on cryptocurrency price movements, and new investors with smaller storage capacities are likely to be fooled by the complex nature of the DeFi and cryptocurrency markets. At this stage of vulnerability to whale action, understanding how the level of risk can be controlled to drive mass adoption is critical, especially for new investors with less capital.

Cryptocurrencies have democratized access to wealth: anyone can access financial assets 24 hours a day at the push of a button, with assets that generate higher returns than any fiat asset that traditional banks have. The reduction in bureaucracy and middlemen has created greater opportunities for wealth creation by providing understandable assets and tools. But right now, crypto only reflects the wealth differential in traditional finance because those who speak the crypto language know how to be strategic. Super-rich cryptocurrency holders have the option to pay for mutual funds and brokers have access to traditional assisted investment tools such as trading, depositing, and funding to ensure their investments are properly balanced against the market at all times.

Portfolio rebalancing is the process of rebalancing an asset portfolio that involves buying or selling assets on a regular basis to maintain a target level of asset allocation and risk. This can help investors manage downside risk when investing in most emerging markets. This process is essential in times of financial instability to help people reduce the risk of losing and depreciating their digital assets. Many investors, especially those under the age of 40, do not know how nor do they have the time to recognize and manage risk in their portfolios or to understand why realignment is so important for stability and wealth accumulation. Rebalancing not only prevents overexposure, but also helps install good trading habits by building client discipline to adhere to a long-term financial plan that allows investors - young, old, new and experienced - to regularly monitor all potential market movements that could cause loss.

Most accounting strategies are based on time periods (i.e. yearly, quarterly, monthly, etc.) but can also be reactionary - ie. based on the percentage of eligible assets, which is more economical. For example, if the initial target asset allocation is 50/50 between Assets A and B and Asset A goes well, then the portfolio weight can be added up to 70%. This means that an investor can sell Part A to buy more B to return to the initial 50/50 target allocation. Although division should not be done among assets, rebalancing is most effective with a good combination of both floating and volatile portfolio stocks as it protects investors from undue risk of unwanted risk.

In traditional finance, rebalancing is done manually by tracking investors via spreadsheets and buying/selling through exchanges/brokers, or investing in funds handled by portfolio managers. This process is inconvenient and off-budget for retail investors and should not be limited to those who have the time and money to buy it. Of course, there are new technological advances at TradFi through the use of apps that help track, analyze and automatically rebalance portfolios used by apps like Sigfig, Personal Capital or Motley Fool Advisor.

Rebalancing in DeFi can be more profitable for investors because the process can be automated and you don't have to monitor your portfolio and constantly compare the value of your assets to the stock market. People can work, sleep and rest as smart contracts automatically spread their profits across their assets while enabling portfolios to generate positive net returns. You expect your broker to do this for you when they start working from nine to five is now ancient.

As the value of our dollar continues to decline, more than ever, people need simple tools rather than complex tools to protect themselves from financial risks and to diversify their portfolios. Now is the perfect opportunity to showcase decentralized accounting tools to the masses that will give clients and investors access to the wealth of democratization in DeFi that is beyond the power of any centralized bank or government struggling with recession and their financial gains and Making security easier for the future.

Decentralized financing has great wealth potential. For thousands of years, cryptocurrencies have been used to buy homes worth millions of dollars, and it is claimed that cryptocurrencies are the secret of home ownership because of the reliance on traditional savings inclusion declines, especially for non-banks. But usually experts, programmers, salespeople, and professionals experience instability in the aftermarket. Ordinary consumers, newcomers, and those who are not privileged to understand the deep complexities of this space are losing the most money in these times of financial instability.

Twelve years after the first bitcoins were generated, you would think we would simplify the consumer experience of blockchain-based finance. We're getting there, but we still have a little time to go. DeFi is still too complex for beginners, which slows down the use of space. One does not need to take a course to understand how to develop a decentralized trading strategy or be forced to manually rebalance a portfolio of multiple tokens in seemingly endless steps and trade them separately on a decentralized exchange or DEX. Users should be able to decide with just a few clicks how to balance their portfolio. Ideally, these parameters can be freely adjusted by the user to his risk profile. The DeFi industry is growing rapidly and it's time to move forward with portfolio risk management.

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