INVESTMENT
OBJECTIVE
We at Terafirma have confidence in the long-term investment potential and continued growth of the cryptocurrency market. Our strategies exploit and capitalize on opportunities ranging from networkability to foundational advocacy. Our tactical objectives guide our philosophy in constructing the best-in-class target composition.
LARGEST MARKET ALLOCATION
Allocating a portion of the portfolio to larger market capitalization cryptocurrency protocols, such as Bitcoin and Ethereum, provides several benefits. These protocols have established themselves as leaders in the crypto market, offering stability, liquidity, and a proven track record. They are often considered the backbone of the crypto ecosystem, and their price movements can influence the broader market. By investing in these protocols, we can benefit from their market influence and potential for long-term growth.
GROWTH ALLOCATION
Including a portion of the portfolio in mid-market cap tokens offers the opportunity for higher growth potential. These tokens represent projects that have demonstrated promising technology, strong development teams, and a growing user base. While they may carry higher volatility compared to larger market cap cryptocurrencies, they also offer the potential for significant returns. By carefully selecting mid-market cap tokens with solid fundamentals and growth prospects, we can capture opportunities for outsized gains in the evolving crypto landscape.
DOWN THE RISK CURVE
Allocating a portion of the portfolio to investments down the risk curve involves diversifying into smaller market cap cryptocurrencies and emerging projects. By conducting thorough research and due diligence, we can identify innovative projects with disruptive potential and invest in them at an early stage. Successful investments in this segment can provide significant returns and contribute to the overall portfolio performance. A percentage of the fund’s portfolio will be allocated accordingly. This will be based on analysis derived from criteria such as venture capital partnerships, developer activity, exchange listings, networkability, and utility.
STAKING & YIELD FARMING
Staking & Yield Farming are deployed strategically at times as a tactical percentage of the portfolio's allocation. Staking involves holding and actively participating in a proof-of-stake (PoS) blockchain network by locking up a certain amount of cryptocurrency as a collateral to support the network's operations. By doing so, staking contributes to network security and consensus, and in return, earn staking rewards, typically in the form of additional cryptocurrency tokens. Staking provides investors with a passive income stream, allowing them to earn regular rewards without actively trading or engaging in complex investment strategies.
Yield farming involves participating in decentralized finance (DeFi) protocols by lending or providing liquidity to earn rewards. Yield farmers typically lock up their cryptocurrency assets in smart contracts, allowing others to borrow or trade them while earning a share of the platform's transaction fees or newly minted tokens. Yield farming offers higher potential returns compared to traditional financial products and can provide an opportunity to earn interest rates that surpass traditional banking systems.
STABLECOINS
Lastly, a percentage of the portfolio will be allocated strategically to a stablecoins. The stablecoin is an important aspect of the cryptocurrency space as it is paired in and out of on every major digital crypto exchange in large. Including a portion of the portfolio in stablecoins provides stability and acts as a risk mitigation tool. Stablecoins are cryptocurrencies pegged to a stable asset, such as a fiat currency (USD), and aim to maintain a steady value. By holding stable coins, we can mitigate the volatility inherent in the crypto market and have a readily available asset for managing market downturns or taking advantage of investment opportunities. Stable coins also offer liquidity and facilitate efficient portfolio rebalancing.