Apr 192017
 

TaaS Crypto Research

TaaS (Token-as-a-Service)is a new crypto-asset (crypto-token on Ethereum), which is a closed-end fund for the cryptocurrency industry broadly. This means there is a fund management team that invests in promising new crypto-assets, crypto-tokens, meta-tokens, app-coins, or protocol tokens (whatever you want to call them), and shares the profits with its token-holders. TaaS will invest in existing crypto-assets and also in new ICOs (Initial Coin Offerings). In fact, TaaS itself is currently undergoing its ICO to fund the initial capital.

TaaS of course is not the first project looking to invest into the emerging market of ICOs and crypto-assets. Many different projects are trying to do the same, from ICONOMI (which was an ICO like TaaS and raised over $10 million) to Blockchain Capital.

However, they all differ in their approach – either the fund structure, or the types of investments. For instance, ICONOMI does a buy-back to return money to shareholders and there is no fee structure disclosed, which means investors don’t know how much they’ll lose out on operating expenses of the fund. Blockchain Capital is a tradeable and investable token, but its investments are more venture capital based rather than crypto-asset based.

With these in mind, let’s look at where TaaS fits into the picture.

Existing Financial Industry Structure

If you look at the largest investment banks in the world today, like say Goldman Sachs, you’ll see they have a very active research division. If you look at the largest hedge-funds today, they have their internal research division that forms buy-side research at these firms. These sell-side and buy-side research is an integral and important part of the financial industry.

The ICO and crypto-asset industry is very nascent indeed. Bitcoin, the grandfather of all cryptos, isn’t even a decade old. However, the market is adding billions of dollars worth of capitalization in months. Today, the market stands at around $25 billion, with the dominance of Bitcoin on the wane (relative to the total market size). Research in this area is just getting started.

The problem with many of the funds in the industry is that they are flying blind. They do not have a solid analytical and data foundation on which to build the investment thesis. Without this foundation, unfortunately, investments look like speculation. Instead of targeted investing, funds are involved in spray-and-pray strategies that doesn’t help the ecosystem grow.

The Investment Decision Making Process

It goes without saying that crypto is a fairly recent and unique asset class, which means the strategies that work for equity investors will not work carbon-copy with crypto-assets. However, we can take lessons from the existing financial industry.

The minimum level of due-diligence that any fund manager in the crypto space needs to take is to read the whitepaper, understand the product, understand the team behind the project, and look at the token structure, i.e. what is the use of this token. This first step itself is a big deal of research for most investors.

However, one cannot stop there. There are many other research questions to answer. What’s the potential market size? What are the valuation assumptions? What are some past deals with similar ideas? What kinds of ratios are existing tokens in this industry selling for? What’s the crypto-market capitalization for this and related ideas? What are the risks being faced by the industry?

To answer the above questions, one needs data and human judgement. However, getting the data is the first step. Today, there are very few avenues for investors to get this data about the market they are investing in.

How TaaS is Different

Enter TaaS. Instead of being just another fund management platform, TaaS is building the ecosystem from ground up. Instead of first doing the picking of ICOs/crypto-assets, TaaS is asking the meta question – what kinds of questions do I need to answer to make a good investment decision? To this end, TaaS is building a crypto data and research platform, aka the Bloomberg of crypto, in the form of Kepler. I predict this will usher in an era of new products in the crypto-research space, which is at a cross-roads now and very much needs these products.

Kepler can be subscribed to by outside fund managers as well. In the absence of such a product in the marketplace, the TaaS team is building one for the industry – an ambitious step but a step in the right direction nonetheless. After all, investments and research should always go hand in hand.

The TaaS ICO is ongoing now. Check out the site and other details at http://taas.fund/

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Photo Credit: Leo Hidalgo

Mar 292017
 

Kepler by TaaS

TaaS (Token-as-a-service) is an emerging project in the crypto-asset management space with its ICO currently ongoing. There has been a rapid emergence of many different projects in the crypto asset management space. It is a nascent niche for sure, but as cryptocurrencies (including crypto-assets, protocol tokens, app-coins, altcoins, etc.) grow as an asset class, this is bound to increase in prominence. In fact, very recently, the market capitalization of all crypto other than Bitcoin has reached an all-time high, close to $5 billion. There’s serious money in this line of business, and companies are rushing into the space.

Industry Basics

Before we discuss TaaS or its offerings, lets take a look first at the industry in general. The goal of crypto asset management firms is to make it easy for investors to gain exposure to cryptocurrency as an asset class. At a high level, there are two ways to gain this exposure:

  • Passive investing (similar to an index fund, say the S&P500 index fund).
  • Active investing, which can entail many different strategies and fund structures.

Let’s take a quick look at the passive investing side. Today, there are no real crypto-indexes to speak of which are investable by the investors. There are a few indexes that you can see, such as the Smith+Crown crypto index, but it is poorly constructed with only 11 components, and isn’t kept up to date. Then there are indexes like ICONOMI index which is being used for ICNX, it’s flagship index fund product. These may be an option for investors in the future, if they agree with the index components and weightings. There is no widely available product yet.

The active industry part is where things start to get interesting, because there is a lot of discretion with strategies to follow, and fund structures to use.

Take the example of ICONOMI, which is probably going to be one of the closest competitors for TaaS. It has a flagship ‘hedge fund’ product which is traded as an Ethereum token, ICNP (not live yet). This is different from the index fund previously discussed, which is ICNX. The ICNX is an open fund structure, which means there is free conversion between the token ICNX and the underlying basket of cryptocurrencies that it holds. ICNP on the other hand is discretionary. TaaS is similarly a closed-end fund but with built-in audit features, so it can provide investor transparency on what is held by the fund.

Enter Kepler

Kepler is an invention by the TaaS team. It is a data and portfolio management tool. Kepler is to crypto-finance what the Bloomberg terminal is to traditional finance. In a nutshell, Kepler is purported to be a complete tool for traders and investors. Kepler starts at the very beginning – research stage, and goes through the very end – risk management for portfolios. In-between are included processes like order management and order routing to various exchanges. This is a powerful set of features, and if TaaS is able to deliver on the promise of Kepler, it is game changing in the crypto-asset management space. No other company today offers such a comprehensive tool-set.

The appeal of Kepler is that investors and traders can do everything from within the platform. They can do market research, qualitative analysis, fundamental analysis, technical analysis, price trends, and all other aspects of research before buying into a crypto-token. Then, they will be able to route orders to various exchanges that let you buy and sell these crypto assets. Then you can monitor and manage your portfolio based on parameters that you define. These are all the functions that the Bloomberg terminal is capable of doing (and much more of course) but not for cryptofinancial assets.

One big advantage for releasing Kepler to the market is TaaS can firstly pull ahead of competition with a real product to market that makes money. Then, it can use that data to help with future trading and investment, both for the TaaS fund and for others to use. There is an in-built network effect here – the more successful Kepler can be, the more traders it will attract, the better data it gets, which better helps the TaaS team make good decisions for investors.

The market today lacks a tool like Kepler. TaaS has a real advantage in the space, and if the team plays their cards right, they can create real value in the entire ecosystem, which should also help TaaS investors.

The ICO starts soon. Check out the site and other details at http://taas.fund/

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Photo Credit: Nicholas Erwin

Mar 112017
 

TaaS Fund Management
TaaS (Token As A Service) is a new crypto project that is filling the increasing demand for crypto fund management. There is a lot of investor appetite for easy access to crypto as an asset class. We are seeing this niche get crowded of late – ICONOMI, Melonport, etc. are all involved, in some way, to help investors gain exposure to the new crypto asset class, and satisfy their demand. TaaS is a promising new project that is aimed to allow investors to reap the gains from good cryptocurrency investments. TaaS is separating itself from the rest of the crowd in many different ways that we’ll discuss below. Also, the TaaS ICO will start soon, so keep an eye out.

TaaS ICO and Structure

TaaS will sell a maximum of 101 million TaaS tokens in its ICO (Initial Coin Offering) that will go on for a month. No additional TaaS tokens will ever be created in the future. Also, the token sale structure is set up in a way that the tokens have a fixed price (of $1) and any tokens not sold in the ICO will be burned. The ICO will start on March 27th 2017.

Interestingly, the team has refused to hold on to any TaaS tokens in the future, i.e. all the TaaS tokens that will ever be created will be sold to the general public. This is different from many other projects that usually hold on to a certain percentage of tokens sold in the ICO, so they can ride the price up if it pops after the ICO.

There are bonuses for the ICO, but the bonuses are not based on duration as many other ICOs do. Instead, the bonuses are based on how much has been raised already till that point. The following is the bonus structure.

TaaS ICO Bonus

How Does TaaS Work?

The details of how TaaS works is outlined in its official whitepaper. TaaS is an Ethereum-based token which is structured as a closed-end fund. A closed-end fund pools investments from investors, invests the funds in the market, and distributes the returns back to the original investors. In the case of TaaS, 50% of all the returns earned on the invested money is sent back to the original investors. 25% is invested back into the fund, thus raising its AUM (assets under management) and thus the NAV (net asset value) of the closed-end fund. The remaining 25% is distributed between operational expenses (15%) and a reserve fund (10%). The reserve fund is used to handle investor fund outflows during the life-cycle of the fund (remember it’s a closed-end fund).

Therefore investors in TaaS have two distinct sources of return –

  • Earnings distributed via earnings, to the tune of 50%.
  • Increase in NAV of the fund, which means each TaaS token represents a higher amount of money in the ‘pot’.

Of course, there are the usual elements of earnings growth and speculation that will also drive the market price of the TaaS token.

Fund Transparency

TaaS is handling the problem of transparency in two distinct ways –

  • For the payouts themselves, the team is building a smart-contract platform that will ensure fair payments to all investors, with a minimum of 50% of profits sent to the investors.
  • For the transparency of the fund and its holdings, the team is building a Cryptographic Audit (CA) technology. This technology will allow the investors in the fund to monitor and track the history of the closed-end fund and what types of cryptocurrencies (blockchain assets) the fund bought and sold over a period of time.

The transparency at the fund level is unprecedented in the world of closed-end funds, whether they invest in regular markets or blockchain assets/cryptocurrencies. The team wants to make this one of the distinguishing features from some of the other projects involved in crypto fund management.

How TaaS is Different

In addition to building a closed-end fund, the TaaS team is building a complete portfolio management tool that also combines an analytics platform. This is called Kepler. This is already in private beta and the current timeline for Kepler’s launch is end of 2017.

TaaS has some similarities to the ICONOMI.PERFORMANCE fund, in that it is run at management’s discretion (the management team makes the decision on what crypto-assets and ICOs to invest in). However, in the ICONOMI.PERFORMANCE fund, different investors buy ICP tokens (i.e. investors that want hedge-fund like exposure to crypto) and different investors get the fees from that fund, i.e. ICN investors. However, in the case of TaaS, the fund is owned by the token holders, and 50% of the total profits are sent to these token holders. Management uses a part of the funds to manage operating expenses. The structure of a closed-end fund is therefore simpler. This is more appealing to ICO investors. Finally, ICONOMI doesn’t have any tools for transparency. The team announces new investments on a blog post. However, neither the ICN investors nor the ICP investors know the timing of trades, or can audit the trades. This is in contrast to TaaS which wants to make transparency a cornerstone of its fund offering.

Melonport is also in the same asset-management niche, which aims to build a fully decentralized fund management platform with the help of Polkadot. However, the focus of Melonport is more towards providing the tools of fund management to any crypto hedge fund manager. Melonport doesn’t itself do any crypto investing on behalf of investors. On the other hand, TaaS has an actual management team in place that will do the research and analysis necessary to make intelligent investments.

The ICO starts soon. Check out the site and other details at http://taas.fund/

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