Skye Crypto's first public fund is an arbitrage fund that uses sophisticated trading strategies to target a steady annual return of 60% after fees, in USD terms.
Arbitrage is a highly profitable trading strategy where an asset is simultaneously bought and sold at favourable prices on different exchanges. This sophisticated investing technique minimises risk to the price volatility of the asset bought and sold.
Opportunities for arbitrage in traditional fiat markets are rare with very thin margins, and mostly confined to complex derivatives. However, in the cryptocurrency space, opportunities for successful arbitrage are larger and more persistent, since crypto markets are still very inefficient in their price discovery.
The Skye Crypto Arbitrage Fund exclusively targets these opportunities to deliver robust returns which do not suffer from fiat or crypto market volatility.
Skye Crypto's team of experienced quantitative analysts have built a proprietary algorithmically driven investment method to identify and trade the most profitable cryptocurrency arbitrage opportunities in real time.
In addition to the most basic form of arbitrage described to the left, the Fund's algorithms are able to identify arbitrage opportunities in cryptocurrency futures, options, swaps, and other derivatives. Our specialisation in crypto derivatives has yielded returns far in excess of what would be available in spot crypto arbitrage alone.
Contrary to most trading strategies, market turbulence greatly benefits the returns of the Fund, since arbitrage opportunities are largest in chaotic market conditions. Further, since the Fund's arbitrage strategy targets a zero net exposure to every trade, Fund returns could be described as anti-volatile: benefiting from market volatility without bearing its directional price risk.
Based on over half a year of live proprietary trading, we have have set the returns target of the first fund, Skye Crypto Private, to 60% annually in USD terms, after fees, Skye Crypto Bitcoin uses the same strategies and hence has the same profit targets, but in Bitcoin terms.
Ownership in the Skye Crypto Arbitrage Fund is represented as a token called SCP. The tokens follow the ERC20 standard and represent fractional ownership of the Fund's assets under management and profits after fees.
Profit Distribution and Token Liquidity
Profits from the Fund’s trading activities will be reinvested net of fees as follows:
- Net profits are reinvested into the Fund, growing the Fund's assets under management and hence the value of each SCP/SCB token.
- If the Fund determines that a larger Net Asset Value would be disadvantageous to future profitability, it may elect to buy back tokens at prices up to, but not exceeding, the current Intrinsic Value of SCP/SCB.
Tokens can be traded at EtherDelta, where the Fund itself makes a market in its token to guarantee a minimum amount of liquidity and maintain the token price near its Intrinsic Value. The Fund's market-making activities provide a fast and simple liquidation strategy for investors that desire it (see next section).
Redemption of investment
An investor can request the Fund to redeem his investment (in part or in full) at any time. The Fund guarntees that the request will be honoured within 30 days and will charge a 0.5% fee.
The Investor can also request immediate redemption by contacting the Fund by email or by placing a sell order on the secondary market. The Fund will redeem up to 5% of the total assets under management within 24 hours for a 3% fee, on a first-come, first-served basis.
An investor that wishes to redeem a larger amount in a short time may also contact the Fund directly, or place a sell order on the secondary market.
See also How to Invest.
The How to Invest page describes how to invest in the the Fund. It operates with the expectation that investors fit the following criteria:
- All investors must possess an ERC20-compatible wallet and an understanding of the process of sending cryptocurrency and receiving tokens.
- Understanding of the risks involved in the cryptocurrency space, particularly those not related to price action, since the Fund's strategy minimises that risk.
- Investors who hold U.S. citizenship or who are resident in the U.S. are not eligible.
Skye Crypto will provide daily Fund updates. They will include (in USD terms):
- Current Fund Net Asset Value
- Current SCP Tokens in Circulation
- Current SCP Intrinsic Value, net of all fees
- Current SCP high water mark
Skye Crypto will also provide a monthly Fund report on the first day of each month. The report will state (in USD terms):
- Past month Fund Performance net of fees
- Current Fund Net Asset Value
- Current Number of SCP Tokens in Circulation
- Fund Performance since inception
- Number of SCP in Circulation since inception
- Past SCP Intrinsic Value high water marks, new SCP Intrinsic Value high water marks, and fees assessed over the previous month.
- The amount, prices, and net accretive value of the Fund’s open market SCP transactions
- The division of Fund profits used to buy back SCP tokens and to grow fund capital
- The data in the past month's Daily Updates in spreadsheet form.
The same reporting will be done for SCB tokens, but then in BTC terms.
- A Performance Fee of 20% of realised profits will be assessed
- No management fee will be charged
- Fund profits and fees are calculated in USD terms for SCP, and in BTC terms for SCB.
- The SCP and SCB Intrinsic Value prices reported daily on the Skye Crypto website will be net of these fees.
- No other fees or expenses will be assessed.
Gustaf Kugelberg studied engineering physics at the Royal Institute of Technology in Stockholm, majoring in financial mathematics. Additionally, Mr. Kugelberg studied mathematics, Greek, Latin and Russian at the University of Stockholm. He began his career as a Management Consultant for a global top 5 firm focusing on financial services and later served as Chief Economist at the Swedish Venture Capital Association. In 2016 he co-founded and lead software development at KiteX, a wind energy startup. He serves at the board of Svenska Bergsbruk, a mineral prospecting company. Gustaf has been involved in the crypto currency sphere since 2013, leading work on an early crypto exchange, developing a prediction market that used bitcoins and helping launch a very early platform for cross exchange trading.
Christopher Jones divides his time between his two loves of mathematics and classical music. He studied maths four years ahead of his grade level, and achieved perfect scores in university maths courses while still in secondary school. He read music and maths at McGill University, and graduated with a Masters in Violin Performance at the Royal Northern College of Music in Manchester. Fascinated by financial markets, he applied his mathematical talents to successfully complete all three Chartered Financial Analyst exams on his first attempt, notably passing the first without a calculator.
As a quantitative analyst, he wrote the trading algorithm behind the Corkland Analytics Comprehensive Volatility Fund, which systematically captures the Volatility Risk Premium within S&P 500 options and VIX derivatives. Applying his research to cryptocurrency trading, he designed Skye Crypto's arbitrage algorithm, which has yielded >30% per month over its first 6 months of private trading.
As a violinist, Christopher leads the Gildas String Quartet, one of the UK's most exciting chamber music ensembles. They won the Audience Engagement First Prize at the 2018 Schubert und die Musik der Moderne International Competition in Graz, Austria, and are one of eight quartets to be invited to the Melbourne International Chamber Music Competition later this year. They regularly play in the leading concert halls of the UK and Europe, and will tour this year to China and Australia.
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