Strategy

A long term thematic approach that leverages the opportunities unique to this asset class.

Blockchain has facilitated the emergence of novel economically incentivised decentralised networks. With a growing lack of trust in centralised counterparties, be that governments, corporations or institutions, there is a burgeoning demand for alternatives that relieve requirements of trusted third parties. ID Theory’s investments are focused almost exclusively into these decentralised networks, as it is here that we believe the true value generated by blockchain technology will ultimately be realised.

We believe that the most effective way for an investor to achieve maximum upside to the growth in this ecosystem is by investing directly in the native tokens that power these decentralised networks, the cryptoassets themselves. Conversely, investing in equity results in perverse incentive alignment as a CEO is always obligated to serve their shareholders; for the equity to accrue value it needs to charge rent to the network, which will be shouldered by the network’s participants. We invite you to review our leading thought piece which illustrates our reasoning into why cryptoassets are the most important investments within the space:
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On the Origin of Blockchains


ID Theory view
incentive design as the most fundamental element of these blockchain protocols
. Without a finely calibrated mechanism for drawing in suppliers, users and investors of any given network, growth and sustainability of the network is impossible; they will never achieve a “network effect”. Bitcoin presented the first scalable incentive mechanism for decentralised networks that has stood the test of time. However, innovation and experimentation in the area of incentive design is prevalent, and we are excited to see how our future becomes powered by currently inconceivable mechanisms of coordination and cooperation. Truly understanding these designs in critical is assessing long term value accrual of the decentralised networks that emerge from blockchain protocols.

Three distinct pillars:

Due to the uniqueness of this asset class, both traditional and non-traditional techniques are required to deliver consistent risk adjusted returns. As such, ID Theory’s strategy draws upon each of the following elements:

INVESTMENT THEMES

Decentralisation opens up new and exciting business and enterprise, however it comes at a cost and is therefore not universally applicable or necessary. As such, we focus our investments into three specific areas where we recognise that decentralisation truly matters; cryptocurrencies, cryptocommodities and infrastructure.

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NETWORK PARTICIPATION

Capturing the maximum value from specific crypto assets is a unique process. Cryptoassets serve as a reward mechanism for contribution to a network that has a well calibrated incentive design. To realise the full value of a cryptoasset investment requires active network participation, which ID Theory have optimised for.

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TRADING AND RISK

As is the case of any emerging asset class, cryptoassets suffer from high volatility. Furthermore, there are fundamental drivers that cause this market to be extremely cyclical in nature. We have designed a trading and portfolio management strategy to protect our investors from, and respond to, this unique environment.

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