Quantfury Trading Borrowing Request

Quantfury (the “Company”) (www.quantfury.com – outside of North America) offers traders, investors, and cryptocurrency holders, to trade traditional financial and cryptocurrency markets at existing global exchange spot prices with zero fees. The Company was founded in 2017 by Lev Mazur (the “Founder”), and since launching it’s native Android and iPhone app, in December 2018, has amassed hundreds of thousands of retail clients worldwide, in over 100 countries. Today, Quantfury has processed trailing 30-day volume over $11 billion dollars and this figure is growing rapidly as trailing 24-hour volume is $0.5 billion dollars (~15b monthly run rate / 182.5b annual run rate). The Company’s app store ratings, user satisfaction, and user retention are among the highest in the industry when compared to retail brokerages and cryptocurrency exchanges.

We are thrilled to participate in TrueFi, and are interested in borrowing 1,000,000 TUSD for 90 days at a rate of 11.5% p/a. If this loan is successful, we would plan accordingly to finance our future proprietary strategies using working capital loans, which will free up cashflow for reinvestment in the business. Given historical and anticipated returns being generated from proprietary strategies, borrowing against these strategies at a reasonable interest rate should result in safe risk-adjusted returns for TrueFi’s investors.

Business Model

The Company’s business model offers retail traders unmatched trading conditions, offering both entirely free trading (free of any trading fees, commissions, maker/taker fees, leverage fees, or setup fees) and offering real-time back to asset prices directly from global exchanges (including Binance spot exchange for cryptocurrencies). The Company is counterparty to its retail traders and as such needs to enter into significant proprietary trading strategies in order to both generate revenues and manage risk of its B-Book. These trading strategies are executed on both institutional cryptocurrency trading desks as well as other reputable global exchanges.

The Company employs significant resources focused on proprietary trading, data science, and artificial intelligence, and the Founder has over 25 years of trading experience and is widely recognized as a thought-leader in the cryptocurrency space.

Stakeholders

The Company is tightly held, with approximately 40% controlled indirectly by the Founder. Invictus Hyperion (www.invictuscapital.com) is also a 15% owner in Quantfury, having invested in the Company’s seed round. Mr. Ilya Yavorsky is a shareholder and the Company’s sole director, although the Company has a large advisory group surrounding it, including but not limited to, Daniel Schwartzkopff (from Invictus Capital) and Ali Pourdad (from Pourdad Capital – www.pourdad.com). Mr. Pourdad previously founded Progressa (www.progressa.com), a Canadian consumer financial technology lender, which was recognized globally by CB Insights in 2017, and was the 11th fastest growing company in Canada, by revenue, in 2018 in Profit500 magazine. Mr. Pourdad is day-to-day with the Company leadership team. In addition, Luke Brindle is the Company’s Head of Automated Trading Strategies, who is an industry veteran with over 15 years in quantitative trading and the hedge fund industry.

Financials

The Company remains privately held and as such does not disclose financial information. With this being said, we can share that the Company generates substantial cash-flow and historical profits and to date, it has paid shareholders over $18 million of dividends before Dec 31, 2020.

Purpose of Loan

The Company anticipates using de-fi loans in order to finance short term proprietary trading strategies. Initially it plans to allocate $1 million to its Automated Series A Trading Strategies , with details of this trading strategy outlined in Appendix A to this loan application, including historical returns.

We appreciate the community and TrueFi for reviewing this proposal. Please feel free to ask any questions, and we’ll do our best to answer them quickly and concisely.

Expected structure of loan proceeds

The Company’s plan is to take this loan in a method that protects the TrueFi investor community. As such, we have described the structure of our entities ( See Exhibit 1 ) below and how we intend to take the loan and segregate the proceeds from Quantfury’s normal brokerage business operations:

Exhibit 1 – Organizational Structure

Loan would be to Quantfury Trading (BVI) – an asset management business, with no prior operations and no assets or liabilities. Funds would be used for proprietary trading and flow back out to loan repayment, leaving trading profits to aggregate in the asset management company. Any shortfall, if applicable, due to trading losses would be covered by Quantfury TGE Limited (the parent holding company). All companies are under common control and management.

Appendix A – Automated Trading Strategy Series A

The following table shows total dollar returns by strategy for Series A. The Company employs four main strategies concurrently, as can be seen, historical dollar returns ranging from 139.52% to 481.03% per 13-month period, with maximum drawdown (on capital) ranging from 7.58% to 27.33%.

Automated Trading Strategies Series A
B
The following graph shows results of A1 through A4 with Total P&L results and drawdown of capital base:

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Hi @Quantfury Thanks for your post. Pretty established organization so I support it. However, the current loan terms you offer are below what is the current market rate for loans out there. Will you be willing to adjust loan rate to > 15% APR as most of the pending loans are in that range?

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Hey @spidey at the time we put the post in, we chose a rate comparable to the other requests. But i see now the range is higher. We would be OK with ~15% range APR for our first loan.

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At 15% APR i support this

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Love the details and seeing quality borrowers! @Quantfury, I think the totals in Appendix A may need to be calculated as the mean vs. summed? Thank you for being transparent and offering the community some visibility. It helps us all maintain the integrity of the system. :ok_hand:

hi @TeresaA no problem, thanks for the feedback. We are open to changing the information so that we are presenting consistent methodology. Just to address your point, let me describe how the numbers are being calculated and if a different way makes sense to you, we’re happy to consider.

The months horizontally are averaged (assuming an equal weighting per strategy).
The strategies vertically added together as we use simple dollar returns each month based off a fixed and consistent starting amount. We don’t add the profits to the prior month, so there is nothing compounding, and therefore we sum at the bottom to make up the total dollar return of the strategy.

Got it, thanks. You clearly explained in your text that it was ‘total dollars returned’. My bad for glazing over it and going straight to the pretty shiny visual chart. :wink:

Given the current over-utilization of the lending pool (we want some of it to remain liquid to support lender withdrawals) and the large number of requests coming in at 15%, I do not believe we should approve even 15% rates any longer. My vote would be to ask for 16.5%.

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Yep, I agree, given the overutilization 16.5% is competitive enough to borrow with a current utilization rate of 81%

In my humble (and obviously biased because we have a borrowing request) opinion, interest rate charged should be based off credit risk rather than utilization of the lending pool. There will always be demand for lending, the key should be to incentivize borrowers and have some some structure around how they can improve their rates over time.

I think as long as we can see a path to borrowing at lower(10-14%) rates, then initially borrowing at the rate you described makes sense. More importantly, I think approaching rates in a more structured way will benefit the long term viability of the defi lending platform.

Thanks everyone!

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It will be a lot more structured with credit-lines coming up in the immediate future. But for the moment, Credit pool utilization is the only metric to limit our lending pool risk while justifying the benefits of a loan. With credit limits, recurring users will be getting a better rate, but even then the smart contract will automatically dynamically adjust interest rate based on Utilization. Any lending platform, AAve, CREAM all function of this fundamental principle of adjusting interest rate based on lending pool utilization, otherwise the borrow requests can’t be filtered as Lending pool gets depleted. The key is the interest rate are still much lower as its an uncollateralized loan, and If I am not mistaked we are also discussing way for reducing interest rates by partial collateralization (if the lender can provide some % collateral) of loans too!

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Makes sense. Need to start somewhere!

I support the proposal at 15% APR.

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Interesting thank you :space_invader: