An Interview with DFG: Bringing Outstanding Projects to Asia
Founded in 2015, DFG (Digital Finance Group) focuses on providing ecological services and investment services in cryptocurrency, digital assets and blockchain technology. DFG has launched a global plan, with its projects including Matrix, a spot exchange licensed by the Abu Dhabi Global Market (ADGM); AToken, a decentralized wallet with more than 1 million users and a strong technical team; and other outstanding projects such as BIKA, which provides one-stop crypto market information services for investors.
In addition, DFG has invested in many well-known high-quality projects, including Circle, Brave and LedgerX, with an investment scale of more than $550 million in the primary and secondary markets.
Recently, in the Cointime Summit 2019 (Vietnam), hosted by Jinse Finance and CoinTime, co-hosted by the Blockchainer and BeeCast, Jinse Finance interviewed James Wo, founder of DFG, to discuss the investment logic of DFG in the current market environment.
Value Investment and Barriers Breaking
“At present, we mainly invest in some mainstream blockchain public chain projects.” said James Wo, founder of DFG. James believes that the investment logic of the blockchain industry is different from that of the traditional stock market.
“From the valuation point, the core logic of investment of tokens and public chains is the size of the ecosystem, not the amount of profits, so this has been subversive changes with the traditional stock market.”
“Generally, when evaluating projects, investment institutions in traditional industries may prefer more to project and company’s financial data, operation model, business model and so on. However, in the field of blockchain, investment of tokens and public chains are more inclined to STO concept.
James Wo said that STO is actually a blurred concept of equity and tokens. Similar to the logic of fiat, it needs to be over-issued according to market volume to adjust the ecosystem scale. Whether it is project’s hash power, DApp, tools or users, these are the embodiment of the ecosystem scale.
Therefore, when investing in projects related to blockchain, DFG will mainly refer to the above dimensions related to ecological scale; but the final investment goal is the same as the traditional one, and DFG still pays more attention to the value of the later stage of the project.
“At present, the best development logic and business model are still in Silicon Valley and the western part of United States. We are also negotiating with the companies in United States to let more Chinese investors and users better participate in good projects. Building bridges and bringing more expertise and mainstream outstanding projects to Asia is one of DFG’s next major strategies.
ETC Ecosystem and the Affirmation of the Value of Decentralization
Besides being the founder of DFG, James is also the chairman of ETC Labs.
James said, “The Ethereum Classic and the Ethereum are complementary to each other. When Ethereum moves to the PoS consensus mechanism, we will strive to ensure the integrity of the whole smart contract ecosystem so that developers can switch freely between Ethereum and Ethereum Classic.”
It is reported that the ETH 2.0 may arrive in the first half of next year, ETH will switch to the PoS consensus mechanism. Staking’s popularity this year has also made many people look up to and turn into the PoS. However, ETC will still maintain the PoW consensus mechanism.
James said that the PoW and POS consensus mechanisms have their own advantages, but compared with centralized and quasi-centralized blockchain projects, “I still prefer the value of decentralized projects.”
Maturing Primary Market and Disappearing Windfall Profits
Bitcoin has rebounded in recent months, but mainstream cryptocurrencies and altcoins did not perform well. For the next market trend, James believes that the future market will be a gradual accumulation of slow bull market, the profit of the primary market will be lower, and the phenomena of sudden profits and brilliance in the end of 2017 have disappeared.
“Looking back at the beginning when the traditional VC just entered China, they also made great profits. The industry was also in the early stage, but later facts proved that the profitability has been unreasonable and cannot be sustained.”
“Now we can see that the primary market of blockchain and cryptocurrency is maturing as more and more institutions pay attention to and enter the market.” This will gradually reduce the profits of the primary market.
Establishing New Fund and Continuously Expanding Industry Ecosystem
At present, DFG’s funds have about $300 million in the secondary market, which prefers liquidity; and $250 million in the primary market, which tends to be equity investment. Next, three new funds are planned to be established, namely:
1. Quantitative Hedge Fund: registered with SEC in the United States, operated by professional teams, and raised funds from large American institutions and family funds.
“At present, there is still a gap in quantitative hedging in the industry, and there is no mature quantitative competition pattern and system. DFG hopes to fill in and improve this gap.”
2. Regulated Equity Fund: DFG has obtained liquidity approval from the Abu Dhabi government.
“It can be said that many investors in the Middle East have missed the dividends and trends of Chinese Internet and American science and technology, and are now relatively late to enter the market. They hope to be directly involved in the fields of artificial intelligence and blockchain. DFG may also provide about 20% of its own funds to participate in the new fund, giving LP more confidence, letting them know that we are working conscientiously and regularly.”
3. Token Fund: Support and maintain the whole operating ecosystem.
“We hope that we can support and maintain the entire operating ecosystem through this Token Fund, which means that profitability is less important to us. The Token Fund will be developed together with our wallet AToken, market information platform BIKA and other projects, to promote and maintain ecological development.
Finally, James Wo suggests that after several market switching and the craziness of late 2017, people should probably look at the industry more rationally. The bubble will eventually burst, regulation and compliance will finally come. Cryptocurrency and blockchain will usher in a prosperous future.
Check website for more: www.dfg.group