Joining a Crypto Quant Fund

Joining an Algorithmic Crypto Quant Fund, This Week in Crypto, Latest Crypto Market Forecast, Key Stats, Weekly Fundraises & Podcasts, ETH Passes $3700

Issue summary: Coinstack founder Ryan Allis writes about his experience joining HeartRithm, a crypto quant fund, as their newest Managing Partner. We also recap the top weekly happenings in crypto including Ethereum’s massive weekly rise to over $3700 per ETH.

In This Week’s Issue:

  1. Joining a Crypto Quant Fund - by Ryan Allis

  2. Latest Crypto Market Forecast

  3. This Week in Crypto… 

    1. 🗞️ Top Weekly News 

    2. 💵 Weekly Fundraises

    3. 📊 Key Stats

    4. 📝 Report Highlights

    5. 📈 Top 10 Performers

    6. 🎧 Best Podcasts 

    7. 🚀 Coin Of The Week - AVAX Up 226% in 30 Days

  4. The Coinstack Alpha Fund - Up 41% in 30 Days

  5. Coinstack Podcast Episodes

  6. Top 30: A Good Long-Term Crypto Portfolio

  7. Wednesday Crypto Community Calls

  8. Join Our Telegram Group

  9. Who We’re Following Closely on Crypto Twitter

  10. How to Get Started in Crypto Learning

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Joining a Crypto Quant Fund

By Ryan Allis

Last week I joined the team at HeartRithm as a Managing Partner. HeartRithm is an algorithmic crypto quant fund, with assets under management in the top 10% of crypto funds. HeartRithm is a remote-first team, with team members in the USA and Europe and a hub in Boulder, Colorado.

I joined HeartRithm because of the quality of their team, their brilliant crypto trading algorithms, and their plan to direct 50% of their performance fees to social impact projects -- building a regenerative engine for social good.

What is HeartRithm?

HeartRithm is an algorithmic crypto quant fund. For three years now, their strategies have generated exceptional returns with no monthly drawdowns by using a combination of algorithmic trading methods, margin lending, DeFi yield farming, and hedged liquidity pools. 

Yep, their crypto trading strategies have never had a down month going back to Q1 2018 -- through both bear and bull markets. 

On the team they have a Cognitive Science Ph.D, world class engineers from Google, Airbnb, and Citadel, and an operations team from top venture funds. 

Their goal is to turn code into money -- and money into social good -- while earning investors exceptional returns. They call their community members BWCs (beautiful world creators) and host frequent events around the world to gather the community of investors, advisors, and grant recipients. 

HeartRithm is on track to direct half of their performance fees into a philanthropic fund that allocates money to organizations and people who are creating a better world. They expect to be allocating $25M+ per year to philanthropic organizations by 2025 -- all voted upon by the holders of the HEART token, which are distributed to all the members of the HeartRithm community. That’s pretty cool.

The BHAG is to become one of the largest global quant funds and the largest institutional provider of capital into social good.

How Did I Hear About HeartRithm?

I met HeartRithm founder Nick Sullivan in 2018 at our Burning Man camp, Camp Mystic. Nick previously was the CTO at Good Money, is the founder of Earning Together and ChangeTip (acquired by Airbnb) -- and has been in the Bitcoin community since 2013. 

In early 2021, I helped HeartRithm develop their momentum trading Unicorn Strategy.

And in July when I got back from Bali, Nick and I met up in Boulder, Colorado to see if there were ways to collaborate. Nick then invited me to attend their August team retreat in Silicon Valley. 

Yes, I was impressed by their algorithms and investment strategies but also by their hearts and how much passion and purpose they are putting in -- realizing that if they continue to succeed they will unlock billions of dollars for social good. 

And when I learned they’re on track to direct half of their own performance fee going to create a massive fund to make community-driven grants to nonprofits and individuals working on creating a more beautiful world and telling the new story of humanity -- I was really excited. 

So we decided we’d work together to grow HeartRithm into a leading global crypto quant fund and provider of philanthropic capital.

How Has HeartRithm Never Had a Down Month?

In crypto, there are a set of market neutral strategies that earn high annual yields without any market risk. Regardless of which direction the market goes -- the returns stay positive. 

You make money when the market goes up, down, or sideways. Many of these “delta neutral” strategies were developed in the 1990s at places like Goldman Sachs -- and are now being utilized in crypto -- the new frontier for open finance. 

Had I had access to HeartRithm's brilliant algorithms four months ago, I wouldn’t have lost money in May 2021 when the market temporarily crashed.

HeartRithm has built an internal indicator based on both price and volatility. This algorithm got them out of the markets when Bitcoin was at $52k on May 10, 2021 -- before it went down to $29k. That same algorithm got them back into the market when Bitcoin was in the 30s in July 2021.

Had I had access to their strategies and indicators back in April, I would have saved quite a bit from the notoriously volatile crypto markets. 

This was one of the many reasons I was impressed with HeartRithm. Not just great people and a great mission -- AND not a single down month in 3 years of running their strategies. 

In the finance world, and especially in the crypto world, this “no drawdown” is a big deal and was something that attracted me to the firm.

Using a Quantitative Engine To Invest in Crypto

HeartRithm uses a few long momentum-based strategies, however they only invest a maximum of what they are earning in returns for that particular period -- resulting in zero down months in 3+ years of using their strategies -- which means investor money keeps growing consistently over time. 

I’m a big fan of using data and math to trade in crypto markets -- and that’s exactly what they do. They’ve spent three years honing the algorithms to give very good returns with no drawdowns.

Nerd talk: You should see the visual outputs of their python scripts for DEX Liquidity provision!

I will be working with the team on fundraising and community building efforts -- building on the work I’ve done as Chairman of Hive.org, building a global community of heart-centered leaders. Building Hive will be a lifelong and continual effort for me, and in the future many of the social projects in our community will be able to receive a regenerative source of funding, which is exciting.

In terms of Coinstack, we will continue to publish the newsletter each week as we have since the beginning of January. This is issue #40, and we hope you’re enjoying it!

I’m already learning a lot at HeartRithm which is going to help us make the Coinstack newsletter and podcast even better each and every week. It’s a big win/win all around.

HeartRithm is Hiring… Join The Team

The HeartRithm team is actively hiring python engineers, smart contract developers as well as a COO/CFO with hedge fund experience. HeartRithm is a remote-first team, with team members in the USA and Europe and a hub in Boulder, Colorado -- and frequent team retreats. If you are interested in joining a heart-centered and top performing crypto quant fund, send an email with your CV to me at ryan@heartrithm.com

Want to Learn More About HeartRithm?

If you are interested in learning more about HeartRithm just email me at ryan@heartrithm.com and we can schedule a Zoom call to talk through it. You can also book a 30 minute Zoom call directly with me here to learn more.

I will continue to write about my journey with HeartRithm going forward and share what I can about what we’re learning, the strategies that are working, and what our signals are indicating. 

We have a big hairy audacious goal (BHAG) to become one of the top global crypto funds and one of the largest institutional donors toward social good projects. 

Thanks for reading!

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📈 Latest Crypto Market Forecast

Based on on-chain analytics and the amount of capital coming into the space from institutional investors, crypto markets appear headed toward a double market peak as we first predicted July 5. We expect to see new all-time high during Fall 2021 for both Bitcoin and Ethereum. While things could always change, we expect to see $80k+ BTC and $6k+ ETH by the end of 2021.


🗞️ Crypto News Recap: The Top 10 Stories

Welcome back to This Week in Crypto… everything you need to know in one scannable format. Here are the top 10 stories of the week...

  1. ​​😮 SEC Signs 1-Year Deal With Blockchain Surveillance Firm - The US Securities and Exchange Commission (SEC) has contracted Anchain.ai, a blockchain analytics firm, to help monitor and regulate the decentralized finance (DeFi) industry. Anchain.ai’s CEO Victor Fang said, “The SEC is very keen on understanding what is happening in the world of smart contract-based digital assets. So we are providing them with the technology to analyze and trace smart contract activity.” (Source)

  1. 💳 Biden’s Administration Pushes for ‘Last-Minute’ Crypto Additions in Infra Bill - The U.S. Treasury proposal would expand the information-reporting requirements to "beneficial owners" behind legal business structures set up by foreign account holders to buy and sell cryptocurrencies.  (Source)

  1. ⚡ Cuba To Formally Recognize and Regulate Crypto -  Cuba will now recognize cryptocurrencies such as bitcoin, in a move being billed as historic for the island nation. Resolution 215, published Thursday in the Official Gazette, says the central bank will set new rules for dealing with digital currencies. (Source)

  1. 💰 Topps Trading Cards To Move MLB NFT Cards to Avalanche Protocol - Previously hosted on WAX, Topps decision to switch protocols was a move to build a convenient centralized hub for fans. A company spokesperson told Decrypt, “We chose to partner with Ava Labs to develop ToppsNFTs.com due to their truly decentralized high-performing platform, compatibility with Ethereum, and commitment to lowering their environmental impact.” (Source)

  1. 🤑 Algorithmic Liquidity Protocol BENQI Surpasses $1 Billion in TVL Within Days of Avalanche Launch - Launched on the Avalanche Network on August 19th, decentralized non-custodial liquidity market protocol BENQI has set a new Defi milestone after exceeding $1 billion in total value locked (TVL) in under five days. For comparison, it took Aave (AAVE) about 8 months to hit $1 billion in TVL. (Source)

  1. 🏦 US Federal Reserve To Keep Quantitative Easing Loose - The market will continue to have more liquidity making it easier for investors to spend on riskier assets. Following the release of Fed Chair Jerome Powell’s remarks at 14:00 UTC, the price of bitcoin rose 0.8% to $47,680 and has continued to rise since then. (Source)

  1. ⚖️ MetaMask Hit 10M Monthly User in July -The number of monthly active users increased from 545,080 in July 2020 to 10.4 million this month, representing growth of over 1,800%, according to ConsenSys, the software company that owns MetaMask. (Source)

  1. 📈 IMF Releases Bitcoin (BTC) ‘Risk’ Warning… Again - IMF has been expressing its disapproval of El Salvador’s crypto legislation raising alarms about economic and legal risks threatening the country. (Source)

  1. 🎆 Jack Dorsey To Build a DEX for BTC Called TBD - Jack Dorsey is planning to build an open platform to create a decentralized exchange for bitcoin through TBD. TBD will be a unit of Square, the payments firm Dorsey founded and is the current CEO. (Source)

  1. 🏧 Defi Platform Cream Finance Hacked, $29 Million Lost - The attacker took advantage of a bug caused by the introduction of the amp token into the protocol. The exploit was repeated 17 times and allowed the hacker to get ahold of 418,311,571 amp (worth $25.1 million) and 1,308.09 Ethereum (worth $4.15 million). (Source)

💬 Tweet of the Week


💵 Weekly Crypto Fundraises & Deals

Here are all the crypto fundraises we heard about this week, ranked by size…

  1. Arbitrum, An Ethereum scaling solution, raises $120 million in a Series B lead by Lightspeed Ventures

  2. Parallel Finance, Polkadot-based DeFi protocol. raises $22 million in Series A funding lead by Polychain Capital

  3. Royal, an NFT Music Platform, raises $16M in Seed Funding

  4. Euler, DeFi Lender, raises $8M in a Series A from Paradigm

  5. Fractional, An NFT platform, completes $7.9 million in Seed Funding


📊 Key Stats of the Week

Here are the most important and interesting stats in crypto this week...

1. Avalanche’s TVL 6x’s Post $180M DeFi Incentive Program Announcement

2. Segwit Adoption Hits 80% of Daily Transactions Causing Fees To Stay Low on the BTC Network 

3. So Far Over 130K ETH Has Been Burnt Worth Over $400M

4. OpenSea Accounting for Over 95% of Total Volume and Recorded Sales of 1.5M NFTs in August

5. Avalanche Surpasses Solana’s Validator Count This Week Shortly After Their $180M DeFi Incentive Program Announcement 

6. TVL Has Reached a New ATH With $162.64B Inside DeFi Protocols

7. NFTs Currently Account for More Than One-Fifth of the ETH Gas Fees

8. More Than $300M Has Been Raised by South American Projects in 2021, Across 9 Deals, With July Contributing 75% of the Total Amount

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📝 Highlights from Crypto Reports

Here are the top highlights from the best crypto research reports this week…

1. Sideways Movement Despite ETH’s Total Fees Rising 

State of the Network, Aug 31, 2021

CoinMetrics, an on-chain data platform, releases a weekly report on the significant activity inside our favorite cryptocurrencies. This week, they look at the 5 major tokens trading on exchanges to explain the current market movement. 

“BTC and ETH mostly moved sideways over the past week after BTC surged back above $50K on August 22nd. Active addresses for both networks dropped week-over-week. BTC transaction count increased by 1%, while ETH’s decreased by 4%.

ETH transaction fees, however, continued to rise thanks to an ever-increasing number of new NFT drops. Total ETH fees increased by almost 100% week-over-week for an average of over $32M a day. BTC transaction fees averaged about $600K per day on the week.”

2. 80% of DeFi funding went to Ethereum in H1 2021

Crypto Fundraising Report H1 2021, Aug 31, 2021

Dove Metrics is the leading crypto fundraising database tracking over 2,000 active crypto investors (including funds, DAOs, and angels). Founders Regan Bozman and Pierre Chuzeville breakdown the deal activity in the space from Q1 and Q2. 

“Fundraising exploded across all categories in H1 2021. Despite growth in DeFi, centralized financial applications (CeFi) continue to dominate, with companies raising $4.6B. The NFT hype was not going away and surpassed DeFi in fundraising activity in March.

Ethereum continues to dominate DeFi, but investors are hedging their bets. Polkadot and Terra have had breakout years in terms of investor interest. Despite concerns about gas prices, more than 80% of DeFi funding went to Ethereum. 

Later stage deal-making shows the maturation of fundraising markets. Infrastructure companies raised $21M on average; more Series A + B raises. Mega rounds are back, with BlockFi, Solana, Ledger all raising $300M+.”

3. Apes as an Asset Class

Messari Pro Research, Aug 27, 2021

Matthias Funke from Messari takes a deep dive into the NFT project, Bored Apes. Given the explosion of NFT activity on the network and the rise of NFT prices, Funke examines whether Apes are worth the investment, given that investing in the “right” NFT could be the determining factor on whether your investment will moon or flunk.

“Clearly, the explosion of new and often similar projects for apes, penguins, goats, and other assorted animals are signs of a bubble. But, floor prices can be a useful metric when evaluating individual NFT collections and finding whether some NFTs are undervalued or overvalued compared to their collection.

Ultimately, NFT projects reflect long tails where a small percentage of NFTs become incredibly valuable while the majority fade away. The rising floor prices of certain collections can be an early sign for which projects are gaining steam and which ones are falling flat.

Choose wisely. Don’t ape into just anything, just because you are bored. Don’t be a bored ape. Or be one. It’s up to you.”


🎧 Top Crypto Podcasts of The Week

Here are the crypto podcasts that are worth listening to this week...

  1. Coinstack - Coinbase invests $500M in crypto, Visa buys its first CryptoPunk, and much more

  2. Bankless - Ethereum is the Greatest Trade | Raoul Pal, CEO of Real Vision

  3. The Defiant - Deep Dive into Avalanche by Ava Labs

  4. The Delphi Podcast - 150 Minutes of NFTs with Jake Brukhman

  5. The Breakdown w/ NLW - The Weaponization of the Banking System

  6. Benjamin Cowen - Comparison To Prior Cycles

  7. What Bitcoin Did - Bitcoin v the Banking Rails with Willy Woo


📈 Top 10 Performers This Week

Here are the top 10 performing digital assets this week, out of the top 100 by market cap. Some of our favorites like CELO, PERP, SOL, and LUNA had an especially great week.

And here are the top 15 performers in the last week from all tokens with a market cap of $20M+.

The Top Performers This Month from the Top 100: Arweave is a decentralised data storage app, Revain is a blockchain-based review platform, Avalanche and Fantom are L1 blockchains.

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🚀 Coin Of The Week

We write about a new token each week to help spread the word about new and upcoming projects. As always, investing in early-stage crypto projects is particularly risky with the opportunity for major gains and major losses.

Coin: Avalanche
Symbol: AVAX
Price: $43.01
Available On: Binance, Gate.io, OKEx
Fully Diluted Market Cap: $28B
Price Change Last 30 Days: +226%
Coin Ranking: #24 by Market Cap

Background:
Avalanche is a smart contracts platform that utilizes a direct acyclic graph (DAG) in its protocol for consensus. DAG allows Avalanche to reach an estimated 4,500 TPS with under 3-second transaction settlement. Avalanche aims to solve the blockchain trilemma by being extremely fast and highly scalable while maintaining decentralization and being highly secure. 

Tokenomics:
AVAX is a Proof-of-Stake with a fixed supply. Validators lock up AVAX to secure the network and earn staking rewards. Governance utility in that AVAX holders have the power to vote on proposals, including managing the inflation rate.

Growth & Longevity:
Although Avalanche doesn't have the longevity of other projects, it has some serious backers, including Galaxy Digital, Bitmain, Dragonfly Capital, etc. Avalanche was still quite a new project, having launched in August 2020, yet it's been expanding rapidly in terms of projects being built on the platform, with 227 projects in 9 months.

Why It’s Pumping:
On Aug 18, the Avalanche foundation announced “Avalanche Rush” a $180M liquidity mining incentive program to introduce more applications and assets to its growing DeFi ecosystem. Avalanche began the program by bringing the two most prominent DeFi protocols by total value locked, Aave and Curve, to launch on Avalanche. The first phase will provide AVAX liquidity mining incentives for Aave and Curve users over 3 months, with additional allocations planned for Phase 2 in the coming months. Since the announcement, the token has nearly doubled in price with an ATH of $59.94 earlier this week. 


🎧 Latest Episodes of The Coinstack Podcast

We have a new Coinstack podcast. So far we’re at 3,500 listens and growing!

You can listen to it on Anchor, Spotify, or Google Podcasts -- or add the RSS feed to Apple Podcasts.

Here are the episodes we’ve released so far...

You can listen and subscribe on:

  1. Anchor

  2. Spotify

  3. Google Podcasts

  4. Apple Podcasts (add RSS feed manually)

  5. Breaker

  6. Radio Public

  7. PocketCasts

We really appreciate you listening and sharing the link with your friends.


📈 Our Top 30: A Long-Term Crypto Portfolio

Each week we include our top 30 list. If we were creating a portfolio from scratch right now that we didn’t want to touch for 5-10 years, we would be sure to include our top 4: ETH, DOT, SOL, & NEXO. Here’s our current top 30 for a well-rounded long-term crypto portfolio…

To see which exchanges to buy these on, use Coinmarketcap or Coingecko. We recommend using dollar-cost averaging and holding for a 5-10 year time horizon for any crypto investor as prices can fluctuate a lot in the short term.


📈 The Coinstack Alpha Fund

In April 2021 we launched The Coinstack Alpha Fund, which is an on-chain fund on top of the Enzyme platform.

The fund is up 2.40% in the last week and 41% in the last month.

You can invest here in the Coinstack Alpha Fund. There is no minimum investment, although there is a gas fee you pay to Ethereum network to invest -- which has been around $500-$700 recently. Because of this, we recommend minimum investments of $10k.

We are now up to $295k from 32 depositors in the Coinstack Alpha Fund. Enzyme allows deposits with both USDT or ETH. We charge a 2% management fee annually plus 20% of profits. Withdrawals are allowed at any time, although we recommend a 5-10 year hold period for optimal returns. 

You can invest directly via your Metamask, Argent, TrustWallet, or any wallet that works with WalletConnect. We don’t hold your funds, Enzyme does. We simply invest them on your behalf. You can learn more about Enzyme here.

Our current portfolio allocation in our fund is:


📞 Join Our Wednesday Crypto Community Zoom Calls

Coinstack Founder and Publisher Ryan Allis does a live 30 minute Crypto Advice Zoom call at 12PM PT / 1PM MT / 3PM ET / 8pm GMT. All HeartRithm investors, all investors in our Coinstack Alpha Fund on Enzyme and all owners of Mrs. Bubble NFTs are invited to join and ask questions and share learnings with each other. After you invest or buy an NFT, just reach out to us on Telegram (or reply to this email) to get added to the weekly call invite.


💬 Join The Coinstack Telegram Community

Join our Telegram Channel here to chat with our community, ask questions, and learn more about the future of money as we move to a decentralized internet and the creation of a new open global monetary system that works for everyone. We now have over 1700 members on our Telegram.


💬 The People We’re Following Closely on Twitter

  1. Vitalik Buterin

  2. Justin Drake

  3. Hayden Adams

  4. Zhu Su

  5. Hasu

  6. Ryan Adams

  7. Vance Spencer

  8. Camila Russo

  9. Ryan Selkis

  10. Anthony Sassano

  11. Lyn Alden

  12. Gavin Wood

  13. Cathy Wood

  14. Beniamin Mincu

  15. Barry Silbert

  16. David Hoffman

  17. Preston Pysh

  18. Willy Woo

  19. Ultra Sound Money List

  20. Polkadot Ecosystem List


📚 How To Get Started With Crypto Learning

  1. Crypto: Explain It Like I’m 5 (Article)

  2. The Infinite Machine by Camila Russo (Book) 

  3. Crypto Theses for 2021 by Messari (PDF)

  4. Bankless - The DeFi community (Substack + Podcast + Discord)

  5. Understanding Polkadot - The Next Generation Blockchain Tech (Website)

  6. The Ethereum 2.0 Report from Messari (PDF)

  7. Blockgeeks Video Tutorials (Video)

  8. The Coinstack Website


📰 The Coinstack Newsletter:

Tracking the most important blockchain stories of the 2020s including a decentralized internet and the creation of a new open global monetary system that works for everyone. As always, published for informational purposes only. Please do your own research. Just our opinions. Not intended as financial advice as we are not financial advisors. We may be long on many of the digital assets we write about as we believe strongly in the sector. Please do your own research. Published and written weekly by Ryan Allis and Mike Gavela. 

The information above does not constitute an offer to sell securities or a solicitation of an offer to buy securities. Further, none of the information here is a recommendation to invest in any securities. Past performance is no guarantee of future results. Any historical returns, expected returns or probability projections may not reflect actual future performance. All investments involve risk and may result in loss.

Comments and thoughts welcome on our Telegram channel:

Please share with your friends and colleagues.