Hello Pynk Community
Following on from our recent posts Thesis Portfolio Thesis Focus: Ready Player One about individual assets within the Thesis Portfolio, today we’d like to talk about one of the more recent additions. ‘No Chain, No Gain’ is a Thesis close to our heart. Here at Pynk, we have long been advocates of Blockchain technology and recent developments have only fuelled the fire. Until recently, the challenge has been to bring exposure to these assets to the retail audience, providing the excitement and growth potential of Blockchain technology, yet minimising the potential downsides.
What Thesis Portfolio have created with the ‘No Chain, No Gain’ thesis seeks to do just that. But first, let’s talk a little bit about blockchain technology and its ongoing impact on traditional financial infrastructure.
Cryptocurrencies, which sit at the heart of blockchain technology, have taken the world by storm. We believe the potential of cryptocurrencies goes beyond the hype by fundamentally changing the way people perceive trust and exchange value. At first, it was Bitcoin that made it possible to transfer value without an intermediary overseeing transactions. Today, the back-bone of the burgeoning Web 3.0 infrastructure is taking shape, guided by nimble teams with a vision to disrupt antiquated financial infrastructure and re-shape traditional business models.
Complexity and a lack of understanding led regulators, institutions and everyday people to dismiss cryptocurrencies as scams, pure speculation and a medium of exchange for illegal activities. However, the reality is there is huge potential and utility in cryptocurrencies. Distributed decision-making, near-instant and frictionless transactions, full auditability, and negligible costs have the potential to reshape the way we exchange value, the same way that the internet changed the way we interact with each other. Răzvan Păun, Trainee Investment Manager, Thesis Portfolio.
The multitude of tokens, the variety of use cases and the versatility of the underlying economic models of tokens bring about real benefits to token holders. Taking the classic example of Bitcoin, the rewards that Bitcoin miners earn by securing the network halves every 4 years, continuously limiting the creation of new Bitcoins, leading to supply shocks that drive price appreciation. More recently, the emergence of Decentralised Finance (DeFi) applications made it possible for token holders to earn yield on their tokens by locking them to secure emerging blockchain infrastructures, lend and provide liquidity for traders, as well as use them as collateral to mint other assets.
Members of the Thesis Portfolio Investment Committee are long-term advocates of blockchain technology, bringing their expertise to identify attractive investment opportunities in this nascent industry. Adoption is happening at pace amongst individuals and institutions. According to a Crypto.com February 2021 report, there are more than 100 million people owning cryptocurrencies and using blockchain applications, and the Thesis Portfolio Investment Committee believes the pace of adoption will continue.
As with any nascent industry, extreme volatility is the status quo. Our exposure to the cryptocurrencies market is risk-adjusted and focused mainly on leading public companies with strong competitive positioning.
Counterintuitively, we believe the much feared regulatory review on the sector represents an overall positive catalyst for the development and growth of this industry, removing uncertainty and attracting further institutional investments. Pouneh Bligaard, Director, Head of Research, Thesis Portfolio.
All investments have the potential for profit and loss and your capital may be at risk. Past performance is not indicative of future results.
This material is not investment research in accordance with the legal requirements designed to promote investment research independence and is also not subject to any prohibition on dealing ahead of the dissemination of investment research; and as such is considered to be a marketing communication.