Fund Background
Archimed Capital: Thematic Research-Driven Crypto Investment firm
Launching New Fund To Target Outsized Returns in Digital Assets Value Recovery
Introduction
The advent of blockchain technology has sparked a revolution in digital assets and decentralized systems poised to profoundly transform finance and many other sectors. While still early, cryptocurrency networks and open-source protocols are laying the foundation for a more transparent, accessible and innovation-driven future. The core innovation is cryptographically-secure decentralized ledger technology which enables direct, peer-to-peer transactions without centralized intermediaries. Adoption of this disruptive technology means middlemen will be replaced by middleware. Such new digital pipes and plumbing is enabling a parallel financial infrastructure that is global, permissionless, censorship-resistant and open to composability between applications.
The initial use cases of cryptocurrencies as store of value , i.e. ‘digital gold’ (bitcoin), and a means of value transfer (stablecoins), has expanded into emergent Web3 ecosystems including smart contract computing (Ethereum and other ‘Layer-1’s’), decentralized finance (financial services to swap and collateralize crypto assets), decentralized infrastructure networks (video, storage, sensors), non-fungible tokens (digital identity and property rights), the metaverse (the digital commons built in game-like environments), and community governance constructs (decentralized autonomous organizations or DAOs). Crypto-assets now make new models possible for value storage, lending, trading, fundraising, governance, content creation, social coordination and more. While crypto has its critics, the core blockchain infrastructure is maturing rapidly. Scalability is improving, developer communities are growing, quality applications are launching, and institutional adoption is rising with increasing regulatory attention. Crypto-networks exhibit a classic Silicon Valley style adoption S-curve, with the steepest growth still ahead as these technologies transition from early adopters to mass market.
The long-term addressable market also appears vast, encompassing the hundreds of trillions of dollars worth of assets, transactions and economic activities that could benefit from decentralization. This leads many experts to forecast crypto market capitalization to reach over $10 Trillion this decade, a 10X gain from today. We are witnessing the emergence of the next major computing paradigm and economic epoch - the Internet of Value. Today we cannot fathom living without an online connection and nearly 70% of the global population (6.5 Billion people) carry a smartphone in their pocket on which they carry out essential everyday functions - that took two decades. Much like the rise of the Internet, and the smartphone revolution, crypto has the potential to reshape our financial, political and social systems for the better - the TCP/IP for Money. It's been 15 years since the Bitcoin whitepaper was originally published, and the pace of blockchain innovation sees little signs of slowing down for the teenage crypto industry.
For builders and investors with the foresight to participate early, crypto offers an unprecedented opportunity for generational wealth creation, aligned incentives and positive impact. Timing and selectivity remains critical to navigate the volatility and differentiate long-term winners from short-term fads. But the foundations are being built today for an open, empowered and cryptographically-powered future.
It is against this backdrop of immense potential that Archimed Capital has been founded to identify and invest in the most promising crypto assets and blockchain ventures globally. Archimed’s team is one of the earliest cryptonative investment teams that has been investing/ operating/ building in crypto space since 2014, co-founded the crypto investment firm Decentral Park Capital, and continues to be involved in related projects and investments, leveraging the accumulated industry network and expertise. The crypto winter of 2022-23 brought digital asset prices to multi-year lows, presenting compelling value investing opportunities for those with a longer-term perspective. Our mission is to capitalize on this opportunity through a rigorous, fundamental research-driven investment approach. Through our combined experience and track record, we have delivered superior returns and are well-positioned to continue to provide exceptional performance by focusing on our core skills of thematic research and asset selection, operating at the intersection of venture capital and hedge fund management.
Our Vision: Carving the Path in the Decentralized Digital Odyssey
From centralized control to decentralized empowerment
The early internet offered glimpses of universal connectivity and digital equality. But over time, centralized entities emerged to dominate the online landscape. While bringing immense utility, their closed centralized nature also concentrated power, value extraction and limited innovation to what benefited their platforms.
Blockchain promise a shift towards taking the internet back to its decentralized roots. By distributing control and participation across a global user base, aiming to disrupt legacy centralized power structures. The implementation extends beyond finance alone - these technologies could profoundly transform economic, social and political organizations. When governance and innovation become crowd-sourced worldwide instead of monopolized, the possibilities for progress multiply exponentially
Embedded Trust - the new paradigm
Intermediaries like banks, governments and media have long acted as gatekeepers of trust in transactions, information flow, identities and institutions. But their centralized nature concentrate knowledge and power in opaque ways, breeding bureaucracies, inefficiencies, biases and corruption at odds with their stated purpose.
Blockchain and decentralized consensus now offers a paradigm shift for trust within a digital environment. One where trust is not brokered by fallible third party intermediaries but rather encoded directly into transparent, immutable technology architecture and distributed consensus. Systems allowing digital transactions, records and flow of value to be made accountable, visible and resistant to manipulation from end-to-end. Smart contracts can automate trustworthy interactions. Records like supply chains and votes become verifiable. Truth itself becomes decentralized.
Removing fallible intermediaries lays the foundation for organizations, commerce and society based fundamentally on embedded trust and removing single point of control and obscurity. The scope of this transformation is difficult to overstate with implications likely to unfold over decades.
The advent of a true global community
Since ancient times, civilizations and economies have largely organized around local nodes, even while dreaming of slowly advancing towards more global connections.Now, novel economic rails in the form of cryptocurrencies and decentralized blockchain protocols offer the technical foundation for potentially realizing the vision of more borderless and fluid exchange of value and information across the world.
Imagine frictionlessly tradable digital currencies allowing seamless value to flow worldwide. Innovations incubated in one corner spreading virally across continents as code and data. Workers serving projects wherever most impactful. Aid directly reaching those in need. A truly global community could flourish and its possibilities for realizing a more cohesive global community seems closer.
Geographic and institutional boundaries will not vanish overnight. But crypto economic systems introduce the possibility of transcending these limitations of locality and division in many critical domains of human activity. As the world grows even more connected and interdependent, hailed notion of a ‘global village’ inches closer towards concrete realization.
Individual autonomy and the new digital rights
In today’s Web 2.0 paradigm, the most personal has become the most traded – data. In centralized silos and exploited by companies and platforms through surveillance capitalism often without users meaningful consent. This criticized model has largely disempowered individuals from controlling their own digital footprints and identities. Blockchain offers a radical shift from this narrative.
With decentralized identity solutions and tokenized assets, the future could see individuals holding unparalleled control over their digital personas. They could negotiate terms of data sharing, monetize their digital interactions, and ensure their privacy isn’t breached. It's about regaining agency, not just as passive consumers, but as active participants and stakeholders in the digital ecosystem
The role of pioneers in the new landscape
Every major historical shift - from the Renaissance to the Industrial Revolution - was driven by bold pioneers willing to chart unknown waters against the grain of their time. With blockchain and crypto, these trailblazers include the developers, enthusiasts, investors, and other visionaries who recognize the latent potential in these technologies early on and devote themselves to actively advancing the space.
Their contributory role goes far beyond armchair observation or speculation. They are the architects designing next-generation decentralized systems, the builders creating working proof-of-concept in the form of DApps, the educators promoting understanding, and the innovators pushing new technical and economic models like Web3 and DeFi. Their efforts are marked by exhilarating bursts of progress and demoralizing periods of setbacks and stagnation. Yet despite the uneven terrain, the momentum of decentralized technology pioneers continues accelerating ahead, laying the indispensable foundation for realizing a more participatory and decentralized digital future.
Crafting the blueprint for decentralization
The path ahead towards mainstream decentralized adoption remains fraught with challenges. There are prodigious technical barriers of scalability, security and usability improvements required. Uncharted legal gray areas abound as regulations evolve. Public skepticism and even fear persists due to lack of understanding. Yet within these very challenges lie catalytic opportunities.
As blockchain pioneers traverse this complex landscape, they collectively engage in charting the blueprint for the decentralized future. Tackling these trials is not just about solving immediate problems but about learning and blueprinting models for the benefit of wider adoption. From making core protocols and applications more accessible to fostering digital literacy and thoughtful regulation worldwide, the necessary tasks ahead are manifold. But it is a collaborative effort requiring diverse skills and perspectives to craft the new decentralized digital order, brick by brick and block by block.
In conclusion: A future defined by trust, autonomy, and collaboration
As the curtain rises on this decentralized era, a world of profound promise is revealed. A world where trust isn't brokered but inherent, where individuals command their digital destinies, and where collaboration is seamless and borderless. Blockchain and crypto are more than mere technologies; they are the harbingers of this new world. As we embark on this journey, we don’t just envision or dream; we create, contribute, and cultivate a digital realm of limitless potential.
Our Strategy: Maximizing Upside in Digital Assets Recovery While Balancing Risk Exposure
As a long-biased fund focused on liquid crypto assets, Archimed's core strategy for our first fund, Archimed Investments, is to capitalize on the oversold conditions across cryptocurrencies ranging from decentralized finance (DeFi), middleware, infrastructure to new emergent verticals and other blockchain-based assets. With valuations down 80-90% from all-time highs set in late 2021, we believe the risk/reward payoff for many leading crypto projects skews decidedly positive over a multi-year time horizon.
The firm constructs a diversified portfolio consisting primarily of liquid tokens, while allocating up to 15% to selected illiquid positions and early-stage ventures. The firm's liquid holdings will be actively managed based on proprietary, data-driven research into on-chain fundamentals, token valuation models, and overall crypto market conditions.
We take a macro perspective to assess market cycles and liquidity dynamics in order to inform our investment approach. This top-down view allows us to rotate between strategies as conditions change, increasing allocations when valuations are attractive and scaling back during speculative froth. We complement this with fundamental, bottom-up analysis to identify value and themes within the crypto ecosystem. Our research focuses on evaluating project fundamentals, on-chain data, tokenomics and growth trajectories. We analyze developer activity, community engagement, governance dynamics, catalysts and roadmaps. By combining macro and micro insights, we aim to navigate volatility and maximize upside across market environments
In addition to the long-biased book, the portfolio will also utilize yield-generating strategies including staking, lending, and liquidity mining to generate uncorrelated returns and keep capital fully utilized. These crypto-native cash management techniques exemplify Archimed's ethos of aligning with and participating in the growth of the blockchain ecosystems we analyze and invest in.
Research-Driven Asset Selection
Archimed's investment process begins with deep-dive fundamental research into blockchain protocols, token economics, on-chain activity, the team and developer communities, and overall ecosystem health. We synthesize both qualitative and quantitative data to arrive at a comprehensive view of a project's potential. Key areas of focus include:
Token valuation analysis - Estimating intrinsic value based on token utility, dividends/cash flows, network effects and growth projections. We build custom financial models in combination with comparables analysis, options pricing models and more based on the specific dynamics of the crypto asset.
On-chain analytics - Tracking on-chain metrics like active addresses, transaction volumes, exchange flows, mining data, staking participation, and concentration to gauge real user traction and ecosystem adoption.
Fundamentals research - Assessing developer activity commits and contributions, analyzing community engagement, evaluating token distribution schedules, gauging the effectiveness of governance processes, and understanding roadmaps and potential catalysts.
Macro environment - Forming a view on major crypto trends, cycles, regulatory developments, demographic tailwinds, and how they may impact various sub-sectors and assets. We synthesize both traditional financial analysis and crypto native perspectives.
The output of this exhaustive research is an investable universe of assets that offer compelling risk/reward profiles. Portfolio construction combines a mix of:
Core holdings - Allocations driven by views on relative value and where we are in the idiosyncratic and macroeconomic cycle.
Value opportunities - Depressed or overlooked assets with deep value potential. Concentrations reflect conviction level and target upside.
Tactical and thematic trades - More opportunistic positions to capture asymmetric upside from idiosyncratic events like launches, upgrades, themes etc.
Emerging bets - Smaller positions in early-stage protocols with breakout potential. Exposure is sized appropriately for higher risk.
Within each segment, we optimize for an appropriate balance of diversification, conviction weighting, and liquidity management. The end result is a portfolio deliberately constructed to outperform through the ups and downs of the crypto market cycle.
In addition to our core liquid investment strategies, Archimed utilizes a variety of yield generating techniques to keep capital fully productive. These crypto-native cash management strategies provide uncorrelated alpha and maximize returns on assets under management.
Key yield strategies we actively employ include staking, lending, liquidity mining, yield farming and network participation rewards. By keeping assets constantly generating yield through crypto-specific strategies, we create incremental uncorrelated returns for the fund. Through dynamic allocation across diverse yield opportunities, we aim to maximize capital efficiency and performance for investors. The end result is a portfolio deliberately constructed to outperform throughout the ups and downs of crypto market cycles.
Illiquid Bets for Outsized Potential
Alongside our liquid portfolio, Archimed Capital allocates up to 15% to selected early stage venture opportunities that may generate outsized returns. Exposure to early stage (illiquid assets) provides access to more asymmetric bets not available in public markets. The illiquidity premium also compensates for the additional risk associated with these tokens. We apply rigorous diligence when evaluating illiquid deals, assessing team quality, product-market fit, deal structure and potential. While higher risk, our selective illiquid bets create optionality for generating generational wealth akin to early-stage VC investments. Given the constraints of our portfolio bucket sizing and allocation limits, Archimed employs a sniper approach for early stage allocations - selectively targeting high-conviction opportunities in specific sectors. Taking an optimized aim, we partner with top-tier VCs to access the most promising emerging protocols.
Outsized returns from a few winners can tremendously boost overall fund performance.
The Archimed Edge: A Seasoned Crypto Investment Team
The Archimed team brings together seasoned investment professionals with deep experience across crypto, traditional finance, and technology. In addition to the core investment team, Archimed taps a broad network of expert crypto researchers, developers, technologists, data scientists and economists as advisors and collaborative partners in our research process.
This gives us a diversity of perspectives and specializations, while maintaining an agile team-oriented approach true to crypto's roots. We think this team's fusion of traditional finance and crypto native expertise provides a key edge in generating alpha.
The Future is Decentralized: Closing Perspectives
Despite crypto's recent downturn, our long-term thesis remains resolute - we are still only in the opening chapters of a decentralization revolution set to profoundly reshape finance and beyond.
The full scope of this transformation is just coming into focus. We envision a future where open blockchain protocols form the backbone of a more transparent, accessible and innovation-driven digital economy.
Cryptocurrencies and tokenized assets will allow individuals to control their financial livelihoods without centralized intermediaries. Decentralized apps will disrupt entrenched industries, shifting power and value back to users and creators. New decentralized autonomous organizations (DAOs) will enable large-scale coordination and governance not possible today.
At their core, Web3 technologies redistribute agency to users at the edges, not institutions at the centers. The possibilities for novel economic and social configurations are immense.
Crypto's transparent, decentralized architecture provides the trust layer for these advances - enabling aligned incentives, community ownership and participatory systems not achievable with legacy frameworks.
The path forward will have challenges, but we believe crypto's ethos of openness, autonomy and transparency will ultimately reform society's foundations for the better. As investors today, we have a duty to steward these technologies towards their highest potential.
Archimed Capital is here for the long haul, ready to deploy our expertise and capital to drive the next wave of innovation. Drawing inspiration from our namesake Archimedes, we seek to uplift humanity through challenges and growing pains using technological innovations. Our multifaceted team encompasses serial entrepreneurs, builders, mathematicians and polymatic thinkers across disciplines. The window of generational opportunity is open; join us on this journey, the time to act is now. The future of finance is decentralized.
Team Archimed