This week, major brokerages including Fidelity and Charles Schwab experienced repeated outages, coinciding with Japan’s stock market suffering its worst trading day since 1987. This turbulence in traditional finance has provided a platform for proponents of decentralized finance (DeFi) to counter criticisms and showcase the stability of crypto markets.
Roundtable anchor Rob Nelson recently explored these developments with Adil Abdulali, Chief Investment Officer at Samara Asset Management. The discussion focused on the evolving landscape of crypto asset management and the growing influence of DeFi.
Abdulali explained that DeFi eliminates intermediaries, such as brokers, from financial transactions. Instead, automated computer programs handle processes like lending and borrowing. This can lead to higher profits by reducing intermediary fees, although it also introduces risks, such as potential coding errors.
Nelson noted Abdulali’s transition from traditional finance to crypto, with Abdulali expressing that traditional strategies in equity and credit had become uninteresting compared to the dynamic approaches available in the crypto sector.
Abdulali highlighted Samara Asset Management’s strategies, which include market making, options trading, and leveraging DeFi opportunities to provide liquidity to the crypto market. He pointed out that while crypto markets can offer substantial returns, they also come with significant volatility compared to traditional markets.
A notable innovation discussed was Samara’s bitcoin-denominated fund. This fund allows transactions, including subscriptions, redemptions, and fees, to be conducted exclusively in bitcoin. This structure aligns the fund’s performance fees with the generation of additional bitcoin, providing investors with both market upside and an incentive for performance.
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