November 15, 2021

Why Hedge Funds Need DeFi If They Want To Be Successful In The Future

A hedge fund is just an elaborate name for a pooled investment fund that trades in relatively liquid assets, considering portfolio construction and risk management techniques to improve performance.

So why are decentralised finances imperative to the hedge fund field?

Mark Ten Caten, innovative leader and CEO of NGS Group, “emerging hedge funds do not stand a chance of making substantial returns unless they are involved in the DeFi space.”

This is because the DeFi space is still relatively new and is considered to still be in the landgrab phase, so the chances of getting in early whilst the market is still growing, will give investors the best chance to take a piece of the current space and play on a relatively level playing field.

The Top 3 reasons why Hedge Funds need to get into DeFi.

 

1. Infrastructure

 

DeFi is a considerably new space, and has only really been developed over the last few years. DeFi has opened the financial space to include functions such as staking, yield farming, automated marker makers (AMM), lending and flash loans. The most important foundation though is vaults, which is the equivalent of a single fund or strategy that allows traditional hedge fund strategy builders to build an investment strategy on a smart contract that is 100% decentralised.

 

2. Exponential Growth

 

Growth within the space has grown to more than $80B in total assets under management, according to DeFi Pulse. Growth in adoption and investor focus are exponential with a clear upward trend from current industry research finding that future institutional adoption of digital assets is on the rise.

 

3. Opportunity

 

The current systems within the traditional finance sector are already rebuilding their systems to incorporate and heavily be involved within the DeFi space. DeFi has the potential to dethrone the role of traditional banks in a very disruptive manner that is nothing short of revolutionary.

 

What we are seeing is a similarity to the dot com boom. In 2017, we saw a major shift in people’s perception of the blockchain area, which has only helped people to see that they in fact do have power over the traditional banking system, something which we have never seen before, and the need for a third-party financial intermediary is no longer needed to develop trust.

 

Due to this, we are very much seeing a generational divide, the younger generations are already in tune with digital currencies, and it has already become the norm for them to do business in a decentralised system, rather than the traditional methods and systems older generations are used to in a centralised one.

 

In the very near future we can expect to see hedge funds entering into the DeFi space, probably with no other option unless they want to be left behind.

Formed in 2013, NGS is a financial technology (Fintech) company, designed to help members generate safe and consistent, high-returns on their investments; Helping them to build life-changing wealth.

Upon establishment, our goal was to give our members access to a new asset class in a way that was free from volatility, secure, yet still produced a high return. Essentially, we set out to create a product that could generate predictable, consistent returns – without risking our members initial capital through speculation or investing in assets and merely ‘hoping the market goes up’.

In essence, we wanted to create a product that offered our members the lowest amount or risk, with the highest possible returns – that could withstand any market or global financial collapses or recessions. After years of research & development globally, we began offering our products to consumers in Australia in August of 2017 after getting approval from both ASIC (Australian Securities & Investment Commission) and the ATO (Australian Taxation Office).
Simply put, as Digital Asset Miners, we help facilitate thousands of blockchain transactions around the world every single day. Every time someone wishes to make to make a transaction (ie to buy something or send money), miners like us help to facilitate this transaction and are paid a small ‘service fee’ to do so.

The common analogy we use here, is like that of a bank ATM. We buy, own and manage the machine, and every time someone uses our machines, we make a small fee from the transaction. Multiplying this analogy by thousands of machines, and millions of transactions, this is the simplest way to understand how we generate returns for our members.

As of 2021 NGS has helped over 950 members world-wide get involved in Digital Assets, with countless success stories of helping them to create life-changing wealth. With a proven track record of never paying out a member less than the minimum advertised return, 5 offices world-wide (including 2 in Australia), and 100 staff members internationally, NGS have established themselves as Australia’s leaders in Blockchain Mining.

Disclaimer: The content and views expressed in the articles are those of the original authors own. This article content and links to external third-parties is included for information and entertainment purposes. It is not financial advice. Please do your own research before participating.