For investors who are interested in gaining exposure to a hedge fund, CPI Technologies says blockchain can deliver another compelling advantage. Such as the Decentral Hedge Fund format that the CPI team created, It allows them to create a fully decentralized fund.
Furthermore, irrespective of how much money they have to contribute, this format can ensure that the opportunities provided by these investment vehicles are open to all. With smart contracts ensuring that deposited capital cannot be withdrawn without permission, crucially, hedge funds never own the funds that are deposited. Investors decide to reclaim their deposits, or the hedge funds deduct a management/success fee that has been hardwired into the code, this is because withdrawals can only be processed once one of two conditions are met.
Blockchain-based decentralized funds also have the opportunity to offer modern alternatives to some of the systems that have been in place for decades. Whereas certificates are traditionally issued, this technology paves the way for new tokens to be created that represent the investment that someone has made. These assets can then be used to claim back a deposit and any profits that have been accrued — or they can be sold on to someone else, in a format that more resembles an exchange-traded fund.
CPI Technologies CEO Maximilian Schmidt says that there is a compelling opportunity to build a lasting bridge between classic hedge funds and a new decentralized world — giving established, licensed financial institutions an irresistible opportunity to futureproof themselves and provide access to an asset class that is subject to ever-growing demand from clients.
The company also stresses that hedge funds can continue to have the flexibility that they need, especially those that covet exclusivity. Fully decentralized smart contracts can be open to all who wish to invest, or just for those who have been selected and approved in advance. Every rule and process can be tweaked in development around a fund’s exacting requirement and customized to their needs.