Thread by @MapleLeafCap

(0) This will be a thread about $DHT, what I deem the prime brokerage /custodian / managerial platform on top of $SNX. While you are at it, if you think you got the chops, make sure to apply to the $500k seed investment to kickstart your fund:

https://twitter.com/dHedgeOrg/status/1326027938215571457

(1) $DHT’s core function very similar to a combo of SS&C, Millennium pod platform, StanChar custodian, and JPM Prime Broker. All the back-end & admin details taken care of, so all a manager needs to do is to generate returns (algo or discretionary)

(2) For any aspiring traders, value-prop is simple – if one has so much alpha, why not leverage that know-how and earn some carry? Those that can, do; those who can’t would just larp / shitpost on youtube / twitter while selling newsletters (you know who you are).

(3) Fee structure / value-accrual eventually will be simple. X% commission, Y% performance fee, and 10% $DHT Platform cut. So if a manager makes 100 bucks on 200 bucks of asset, the fee pool is roughly (200+100)*x + 100*y, whereby manager gets 90% / DHT gets 10%

(4) Future additional complexity can be added to address high-watermarks (only accrue performance fee when performance above previous peak), lock-up tiers coupled w/ various fee structures, etc. There is one thing missing though –

(5) I think the @DhedgeOrg team should seriously consider prioritizing a cap-intro function, whereby manager can allow outside parties get a cut of the fees via referral links (if referred invest in fund, the referee of fund gets a cut of carry through duration of investment).

(6) Thanks to the instant liquidity provided by $SNX (and high fees + asset pool constraints), $DHT is most well-suited for discretionary, somewhat lower-frequency, directional degen traders who sling majors, or low-frequency algos.

(7) What’s really exciting is that as layer-2 + leveraged futures (and more derivatives / instruments) eventually come to $SNX, $DHT will naturally be the 1st beneficiary. $SNX should benefit w/ more fees from $DHT as well.

(8) At the meantime, this segment should embody somewhat low competition – The $YFI continue to focus on on-chain, algorithmic plays while @SetProtocol of the world go for rule-based baskets. Their world could eventually merge so best to place bets all across.

(9) There’s still a ton of work to be done on the $DHT side – UI/UX still needs a ton of work (compare $DHT’s v1 interface vs. the blue-chips, it’s below-average), the dormant collateral in $DHT should be yield-seeking, token economics still a WIP, etc

(10) …and the platform constraint at some point could flare up (SNX debt size limiting size of DHT AUM, trading fees + gas fee still too high, everything regulation related to running a fund and marketing, asset pool may never reach small-caps, etc)

(11) … but it doesn’t take away the fact that barrier of entry for anyone to monetize on one’s alpha (if one ever possesses any) had come down significantly to almost non-existent levels. If you consider yourself really good, you’d make way more here vs. selling newsletters.

(12) As for the token itself, valuation is straight forward re: AUC * blended manager take rate * 10%. To stay true to HF platform spirits, I could really see DHedge managers getting free / discounted access to data vendors (@glassnode, @skewdotcom, etc) as well as..

(13) …research platforms like @Delphi_Digital , @MessariCrypto, @RealVision, etc). Firms like Citadel and Millennium cut sweet deals w/ vendors and PMs have all the toys / tools in the world as well as entire back-offices to do their data-analysis / factor-analysis biddings.

(14) Risk of course includes whether the platform can scale, ban hammer from regulators, $SNX native platform risk (one do wonder what if a few managers are really good, $SNX stakers get hosed), etc. But then again ~45 mm USD FDV is really not a lot. Good luck to the team!

(15) Other features include but are not limited to free / paid-for content native on $DHT by managers (updates, trade ideas, live Q&A, etc), data analytics bundled and charged for a fee ("what are the smart guys doing?"), bidding / better sorting or filter for managers, etc.