Vitreo launches Brazil’s first DeFi fund, a type of cryptocurrency investment

RIO DE JANEIRO, BRAZIL – Investment house Vitreo started to count this Thursday (8) with a DeFi (decentralized finance) fund, announced as the first in Brazil. In its most simple form, decentralized finance is a concept where financial products are available on a public decentralized blockchain network making them open to anyone to use rather than going through a middleman like banks or brokerage.

Unlike a bank or brokerage account, a government-issued ID, social security number, or proof of address are not necessary to use DeFi. More specifically, DeFi refers to a system where software written on blockchains makes it possible for buyers and sellers and lenders and borrowers to interact peer to peer or with a strictly software-based middleman rather than a company or institution facilitating a transaction.

The product is aimed only at qualified investors, who have an invested amount equal to or greater than R$1 million. The minimum initial investment in the fund is R$5,000, the administration fee is 1.5% per year, and the performance fee is 20% over what exceeds the ICE US Treasury Short Bond Index TR plus 2%, in reais.

According to the brokerage house, the fund’s portfolio is inspired by the ideas in the “Exponential Stocks” report from the independent analysis house Empiricus.

The number of investors with money allocated to this type of asset is growing worldwide. The investment registered more than one million users in 2020, a 2,300% rise compared to the previous year, according to a survey by Binance Research. In addition, the volume of investments in the class’s platforms went from US$697 million at the end of 2019 to US$52 billion in 2020.

“DeFi is an investment class, among cryptocurrencies, also anchored in systems such as loans, insurance and payments. What differs from the traditional model is that all these transactions are done by cryptocurrencies distributed on blockchain platforms and are not tied to banks and insurance companies,” explains George Wachsmann, partner and head of management at Vitreo.

According to Wachsmann, without an institution intermediating these operations, the prospect of profit grows for the investor. But it is worth clarifying that the risk is also higher. “The sector that coordinates these transactions is worth trillions of dollars and the agents that profit most are the banks themselves,” he says.

Source: Valor Investe

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