Protecting digital assets in a volatile market

If you’re in the startup space, it is very likely you will have heard the term ‘ICO (Initial Coin Offering)’ thrown around a fair few times, and perhaps even heard it described as an attractive alternative to traditional types of fundraising.

From bootstrapping and sourcing cash independently or through working profit to inviting investors to provide a quick injection of cash in return for a stake in the company’s equity, the new method of raising funds via an ICO certainly has an appeal for startup companies looking to grow.  

ICO boom to a bust?

Forbes: Anyone with an entrepreneurial idea could float a token and invite people to invest. The investment vehicle was not a broker or bank but a distributed platform that connects buyers and sellers. What they got in return was not a stock or share in the profits but the rising value of the token itself. It’s a highly liquid stake in a protocol.’

The growing excitement around what can be achieved with blockchain coupled with the ease of raising funds via digital tokens led to what was coined as the ‘ICO boom’ in the blockchain industry in 2017, as money raised through ICOs topped $6.2bn.

With the fall in the price of all cryptocurrencies in 2018 and a much more careful view of which projects deserve investment capital has resulted in a decrease in the amount of money available to finance new token projects, as according to Cointelegraph, ‘the Initial Coin Offerings (ICO) market is down 97% on a year-on-year basis making $40 million so far in 2019.’

Capitalising on the highs, minimising risk on the lows

With less money available for investment and investors taking a more considered approach to where they commit their capital has created competition amongst token founders to showcase their projects in the best possible light. How to do this? Not only have a viable project but also show evidence that they will be responsible in the management and expenditure of investment capital.

Gavin Smith, Founder and CEO of cryptocurrency exchange Panxora and sponsor of Blockercon, the Global Blockchain Conference in Bristol spoke to us about Panxora’s treasury management service which protects investment capital from the volatility of cryptocurrency which can hamstring a project before it has the best chance of success.

Smith explained that after a startup’s ICO offering is over, they need to focus their attention on ‘executing the token’s strategy’ - this is where Panxora comes in. Panxora uses deep learning modelling to actively manage the subscription capital, turning it into a renewing resource that can be used to dominate the respective startup’s market.

With such a volatile cryptocurrency landscape, Panxora offers a way for startups to protect their raised assets with a dual approach of dynamic hedge management and passive portfolio balancing.

Smith further explained that the deep learning models in Panxora’s Capital Management Services, “learn and adapt over time to keep in step with changes in the market - the goal to capitalise on price movement remains fixed. The models are also written to guard against any downturn. They are built to retain as much value as possible when the market drops or moves sideways.”