Discover more details about how our portfolio works! Part 2 – VC and reserves
We have already mentioned in detail the functioning of long-term investments in cryptocurrencies, which make up to 40% of our trading portfolio. Today we will share another 20% with you - it will be long-term positions again, though this time we will not be talking about traditional projects, but rather more about stablecoins and venture capital (VC) positions.
Fractal diversification of the Probinex portfolio
As we previously mentioned, Probinex applies the concept of fractal diversification to its portfolio. This means that investments are not divided according to the mere purpose or time period, but also in terms of the identity of the given project.
A good example is stable cryptocurrencies - called stablecoins. At first glance, they are very similar, so why do we keep several types in the reserves? This is because stable cryptocurrency projects generally have low credibility. If by chance one of the big providers collapses, it will not have such an impact on our portfolio.
Fractal diversification helps to minimize any risk. Even in cases that may seem unrealistic, we must consider all possibilities!
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Function and purpose of our fixed reserve
The reserve has a 15% allocation in our portfolio, in which you will find only stablecoins. The purpose is to be prepared for sudden and unexpected changes in the market structure. If the price of BTC falls by 40% overnight, it is indeed a reason to reach into the reserve and start buying the dip. We currently hold 4 of them - all pegged to the dollar.
Stablecoins are cryptocurrencies tied to certain state currency, also known as FIAT. Most often it is the US dollar, where 1 stablecoin = 1 USD. The largest providers include Tether (USDT), USD Coin (USDC), and Dai (DAI).
The key fact is that stablecoins don't just sit collecting dust in our portfolio. Instead, they constantly work in contracts that pay out interest for their use. It is yet another interesting resource for our portfolio.
In other segments of the portfolio, the aforementioned contracts are also diversified in order to minimize risk. It is a group of various DeFi, staking or farming applications. For example: Beefy Finance.
Venture capital and the opportunities it brings
VC is a term for investment flowing into small projects. Start-up initiatives carry a huge potential to achieve sometimes up to 1000% appreciation. However, at the same time, their total collapse is not unique either. Our allocation to this part of the portfolio is firm 5%.
Attractive areas change over the years. In mid-2022, it's GameFi (gamification of finance), NFT (Non-Fungible Tokens) and others. In addition to the industry trend, other factors are also evaluated and considered - most notably, the community plays a significant role. We thoroughly analyze the community’s activity, reach across networks, whitepaper and overall general interest in the project.
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