HIGH LEVEL
Using Ex Hedge Fund Quants to generate average 6% per month in income for the DAO
This idea requires feedback on positives and negatives.
WHY
Given the slowdown is the Crypto market - looking for investments is becoming tough! Generating sustainable income and growing the treasury is difficult.
Its not our fault we are in this mess - central banker
HOW
Three Quants who have seen the light and are now taking their skills from working in Hedge Funds to create a Hedge Fund type of solution for normal Retail investors. Using their OWN TRICKS against their old institutions.
Normally, Hedge Funds dont allow Retail in - preventing access to consistent high returns. They keep it for their ‘Inner Circle’
SUGGESTION
Invest a small % of the treasury fund to provide an average of 6% per month in income for the DAO.
We know that 6% a month is not huge in crypto world. But given the slow down - this could be an option during the bear for income.
Simply doubling the investment in 12 months (about)
BTW - I have no idea that this would work for our DAO.
The question - is it a bad idea to explore?
Quant trading can be very risky and often certain models/algorithms only work in certain situations or for short periods of time. Also, it would likely require bypassing the multisig transaction process given many of the techniques of quant trading require an ability to move quickly/efficiently in/out of positions. Also, there’s a lot of slippage/fees in crypto working against quant trading. I’m not really a fan of this idea to be honest.
Personally, I’m open to these kinds of strategies especially in “winter” markets.
However, there are some logistical issues with this:
Multi-sig issues with treasury actions
And splitting into new addresses and some level of vetting of managers thereof.
Proves to be a challenge as a Quant strategy.
Generally, this would be quite interesting to allocate for example a Binance or FTX subaccount for trading purposes (as I bet this will be all API trading). But sadly, we don’t have such CEX accounts.
Possibly I can see some collaboration with other parties to package something up for financing for these kinds of strategies but WL due to its limitations may be a senior lender into the capital for example.
This doesn’t sound like you understand what quants do?
How do you get to 6% per month? Why not 12%? Or 1%? I vote we do 50% per month!
“Normally, Hedge Funds dont allow Retail in - preventing access to consistent high returns. They keep it for their ‘Inner Circle’”
This is bullshit. There is no such thing as “a hedge fund”, there’s lot’s and they all do different things.
Often they don’t beat simple ETF returns, what they do is they “hedge” risks. So your portfolio doesn’t go to 0 (or to 50%) in a downturn, or they short gamestop until a bunch of degens pump the price and force them to cover their loss. There are great hedge funds that yield great returns, but the same is true for mutual funds and the secret is knowing which ones to pick.
I mean, in principle I’m in favor of getting great traders on board and get some extra returns. And it’s certainly possible that there are quant traders who have the skills we’d want, but saying “let’s get some quants” has way too few details.
Analysis of quant trading strategies aren’t easy and requires (for at least Bastion Trading when we look to work with external quant teams) somewhat of a deep due diligence to the strategy.
This is even beyond the examination where - we have to look whether the strategy can work under the logistical limitations that currently are present here.