The majority of Delta One will be focused on arbitrage trades, with some dry powder allocated to short-term longs and shorts.
Risk is subjective. Risk ratings should only be used to compare risk profiles between Lithium funds.
We take a fee for anything over 15%/month returned. For example, if the fund were to return 20% for a particular month, we would take 5%. If it returned 14%, we would not take a fee.
The core focus of the DeltaOne fund is to exploit one of the most attractive strategies from a risk:reward perspective within alternative markets stemming from a core characteristic of decentralized (DEFI) protocols. Within the cryptocurrency space, several mature blockchains offer holders of certain assets the opportunity to stake their tokens for corresponding rewards (APR). The fund aims to diversify cross-protocol, finding the highest yielding assets that have a corresponding hedging instrument, remove directional risks, and generate returns mainly via these staking rewards.
The nature of the strategy means the fund aims to outperform in bull, bear, and neutral markets, employing leverage carefully to maximise overall returns. In addition to core holdings in LP pools, the manager also employs short term trading strategies to take advantage of market volatility. These trades can be long or short depending on the overall market and act as an additional alpha generator - unlinked to the wider market performance. The core objective is to outperform both BTC and the FTX Alt perpetual future, on a risk adjusted basis, and the success of the fund will be benchmarked against these assets.
The main risks to fund performance are impermanent loss (mostly to the upside), liquidity being pulled from all pools at once, general liquidity risk as the fund AUM grows and the on-going USDT (tether) investigation. Whilst these risks can be hedged out and managed, they are prevalent as within any market and we try to mitigate these effectively.