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Key Talks: Interview with Evgeny Filichkin

Institutional interest in cryptocurrencies, market-neutral strategies and the integration of cryptocurrencies into traditional investments.

Mark Galkevich
October 23, 2023
Key Talks
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Managing Director at One More Fund Asset Management & Venture Capital.

With your extensive background as the Managing Director of OneMore Fund, have you observed a notable shift in the way institutions approach cryptocurrencies as an asset class? How has this influenced your perspective on the crypto industry's evolution?

The digitalization of the RWA (real-world assets) has been the primary trend recently. This points out that crypto has gained a niche in investors' minds as a lucrative investment opportunity. The tokenization of real estate, corporate bonds, shares, and even fossils proves that blockchain technology is becoming mainstream. Unsurprisingly, significant players in real-world financial services are beginning to compete to take their piece of the market in such a promising segment as crypto assets. We see many signs that Wall Street is about to move many traditional financial instruments into blockchain rails.The curious thing is that traditional banks would need to catch up with crypto infrastructure, for example, meta masks, DeFi, neo-banks, and stablecoins. In fact, someone could get ahead of the classic investment banks and provide a product in a completely new territory for the first time in history! The real question is only how the landscape will be shaped. In general, the issue is - how much TradeFi will be able to withstand and keep its share.

Could you share a specific experience or project where you contributed to shaping investment strategies in the cryptocurrency space? How did this experience align with your broader goals for the industry?

The main request I receive from institutional players in the crypto market is to create and operate reliable investment strategies to cover the rates on deposits and earn products. Since most of these products have a clear investment horizon and rate of return, I am obliged to return the principle and the yield within the fixed time frame.The yield the investment team generates must cover the deposit rate and operating expenses. For example, a neo-bank offers clients a USDT deposit for 12 months with an annual rate of 7%. Accordingly, the task of the investment team is to provide, with virtually no risk, an APY of no less than 11% on the received USDT liquidity. That is why my investment team specializes in market-neutral strategies not tied to fluctuations in the prices of crypto assets, seasonality, and other features of traditional investing. In particular, we work with liquidity farming strategies in DeFi and other market-neutral technologies in CeFi and DeFi.We actively advise many famous platforms, such as @ChoiseCom, and younger strat-ups and neo-banks, such as @keytomio.

Can you discuss an initiative you led or were a part of that had a significant impact on the evolution of liquidity provision in the cryptocurrency market? What were the key outcomes of this endeavor?

When classic FX traders began to show active interest in cryptocurrencies, many brokers faced the problem of a lack of liquidity providers for this class of instruments. So, in 2017, the idea arose to create a liquidity aggregator in the cryptocurrency market as a B2B service for brokers and institutional investors. This is how Fort Financial Crypto appeared. I led FortFC as a managing director, and our IT and product teams had to solve extremely complex problems that were new at those times. The main achievements were enormous experience and vision of how the market for liquidity providers, hedging instruments, and single entry points/access services would develop to split positions among several crypto exchanges at once. Looking back, I understand that we correctly foresaw the demand for these products, and now various providers widely represent all these technologies on the market.

How do you perceive the evolution of digital assets within institutional portfolios? Have there been specific instances in your career where you witnessed a growing integration of cryptocurrencies into traditional investment strategies?

Crypto has evolved from an outsider to a respected asset in investment portfolios, driven by the need to diversify risks and avoid central bank policy risks. Bitcoin is considered digital gold, while Ethereum, cheaper but more versatile, is seen as digital silver. The decreasing correlation between BTC and Ethereum emphasizes their distinct functionalities. With the rise of crypto ETFs and derivatives, we anticipate the development of advanced hedging algorithms and structured products in the crypto market, attracting more investment. Market makers are increasingly funding DeFi liquidity provision due to improved impermanent loss hedging. Similarly, neo-banks find overcollateralized loans in stablecoins against Bitcoin profitable, optimizing their investment strategies and reducing hedging costs.

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