Invictus Hyperion is a pre-ICO investment fund, as is Etherical ZEA. We are investing in this as a hedge for our token holders. If Hyperion’s IHF outperforms ZEA, Etherical token holders are still exposed to that upside.
There are thousands of ICOs already underway in 2018 and our job is to pick winners out of those we evaluate. We cannot guarantee that we will find every good deal or that every token we buy will be successful or every trade at the best the price. There is always a chance that we miss out on a hit token that earns million % returns, like XVG did in 2017. Broadening our portfolio with Hyperion exposes ZEA holders to more opportunities for hyper-growth.
The team behind Hyperion are from South Africa, and have already had success with their Crypto20 fund – an index fund of the top 20 cryptocurrencies by market cap. The C20 token often trades at a premium to Net Asset Value and we are expecting that IHF and ZEA will be the same. The Hyperion fund is operating out of the Cayman Islands.
So far they have raised more than 10,000 ETH and 420 BTC, over US$11 million. They will now be embarking on a worldwide “summer scouting tour” looking for ICO investments.
The “Bodin burn” payout structure of Hyperion is different from ZEA. Instead of paying out directly to holders, they will spend 50% of profits every quarter to purchase tokens on the market then burn them. They see this as a way to deliver price stability and reduce potential tax issues with receiving payouts:
The team has made an important update to the structure of the Hyperion Fund. Rather than issuing dividends quarterly, 50% of profits realised in each quarter will be applied towards purchasing IHF on the open market, and burning those tokens. This effectively reduces the circulating supply – increasing the value of the remaining IHF tokens. This is simpler to manage from the fund’s perspective, when compared to dividends, and it should also assist with liquidity. This further addresses concerns raised by many speculators about potential taxation issues related to issuing dividends frequently. It also effectively places constraints on the size of the fund.
There is some controversy over this. The payouts will only begin once the fund has hit $30 million in assets under management – right now, an increase of 170%. Based on the performance of the Top 30 cryptocurrencies in 2017, they could achieve this just buy holding onto their ETH and BTC and not making investments. However 2018 has been a more difficult year for crypto so far. It will probably take several consistent quarters of growth for the fund to be fully invested and become large enough to make its first payout.
Hyperion are also not employing the traditional “2 and 20” fund management and performance fee model. Effectively 37.5% of profits get invested back into the fund, compared with 40% for Etherical. We believe our model of paying out an additional 40% directly back to ZEA holders whenever we successfully exit a position is superior to theirs of buying back tokens once a quarter to destroy them. This is a philosophical difference similar to listed companies paying a dividend or conducting a share buy-back – both approaches are valid. We are purchasing IHF with the expectation of token price growth more so than profiting from payouts, so as short-to-medium term investors this suits Etherical. Existing ZEA holders may prefer Etherical’s payout model which shares returns more directly.
Etherical has taken a different tack from Hyperion. They have chosen to hire a big team and do the marketing first, and then raise money and find deals; whereas we have started small and lean with the intention of having a solid portfolio and track record of payouts when we launch our public ICO. We will be watching closely to learn how the market responds to this token post-ICO, and will be improving our own marketing before our public launch.
The Hyperion Team:
The Etherical Team: