Regardless of whether we’re headed toward the next dot-com bubble or not, there’s no denying the allure surrounding cryptocurrencies. There’s now more money in digital currencies and tokens than anyone could’ve predicted a few years ago.
A handful of blockchain startups have come up with solutions that make the cryptocurrency world and the wider blockchain landscape more readily available to the investor audience. Among them is French startup NaPoleonX, which touts itself as the first bot-based crypto asset management platform.
Platforms such as NaPoleonX abstract the complexities of cryptocurrency investment by providing tokenized funds. Instead of acquiring and managing various digital assets, investors can purchase the tokens of a fund that represents a diversified portfolio of various cryptocurrencies and tokens. Investors will share in the revenue of crypto-funds proportionate to the number of tokens they hold. This is a model that traditional investors are familiar and comfortable with.
These platforms also enable portfolio managers to create their own funds and make them available to investors on the blockchain. There’s no need for a broker to stand between investors and fund owners. However, NaPoleonX helps vet funds to provide investors with a level of assurance about the viability of the tokens that comprise the portfolio.
NaPoleonX isn’t the only company to provide cryptofunds and investment tools. Iconomi introduced the concept of Digital Asset Arrays, the crypto-equivalent of exchange-traded funds. Other companies enabled the tokenization of real-world assets. Examples include DigixDAO, which provides crypto-tokens for solid gold, and BitProperty, a blockchain platform for investing in real estate property.
However, what makes NaPoleonX’s solution unique is its Decentralized Autonomous Funds (DAFs). DAFs bring together algorithmic trading and smart contracts, two technologies that have caused great changes across the finance and investment industries.
Auditing trade decisions on the blockchain
Algorithmic trading (also called bot trading) involves the use of software and data points instead of human intuition to make trade decisions. In recent years, algorithmic trading has become more sophisticated and efficient thanks to the increased availability of data and advances in artificial intelligence.
Smart contracts are software running on top of the blockchain. They enable the automatic transfer of digital assets upon the completion of conditions. Smart contracts remove the need for centralized authorities in different applications such as ridesharing, the distribution of music and arts, and the gaming industry. In the investment industry, smart contracts can expedite the direct and automatic distribution of fund revenue to token holders.
DAFs are smart contracts that invest in financial markets through trading bots. Since algorithmic trading relies on quantitative information, it melds well with smart contracts. By storing everything on the blockchain, DAFs make it easy to audit trade decisions and prevent fraud.
DAFs will trade in crypto markets as well as traditional equities and commodities. Each DAF is collectively owned by its token holders, who get to vote on the trading algorithms to choose and the amount of leverage each algorithm will have.
NaPoleonX has initially launched with 10 DAFs, but plans to expand and allow other organizations to use the platform to create their own autonomous funds.
Bridging the gap between the crypto-world and traditional investing
The team behind NaPoleonX is strong in the financial market and computer science. Its CEO, Stéphane Ifrah, first started developing trading algorithms at BNP Paribas, where he worked for 15 years. Arnaud Dartois, the company’s COO, is a former equity investor who holds a PhD in computer science from France’s École Polytechnique and ENS. Other team members bring in experience and credit from well-known academic and financial institutions.
NaPoleonX launched its ICO on January 22, in which it plans to raise a maximum of €15 million (approx. $18.3 million) by selling its NPX tokens to investors and enthusiasts. NPX tokens will give their owners a share in the performance fees of NaPoleonX’s DAFs. Aside from that, NPX holders will also be able to access the signals from NapoleonX’s trading bots to apply to their own personal investments and will be able to vote in negotiations on new DAFs.
Ifrah, the company’s CEO, believes NaPoleon will play a key role in bridging the gap between the crypto-world and the traditional investment industry. “We believe that as blockchain technology will become mainstream in the future…the associated cryptocurrencies will too in order to operate them. This is just the start of this revolution,” he said in an interview with Forbes.