Zero Exposure: DFG Withstood The Downfall of FTX

DFG Official
3 min readNov 24, 2022

It fell short of a mega-disaster: $8 billion loss in the market; 1,000,000 creditors involved; 134 affiliated companies tanked; decades of projects & institutions faced losses. The recent stunning collapse of FTX, one of the world’s largest cryptocurrency exchanges, has unleashed massive volatility in the highly speculative digital asset market.

Image Source: https://ftx.com/
(Source: https://ftx.com/)

FTX’s list of investors spans influential investment firms: Paradigm, Temasek, Sequoia Capital, SoftBank, and BlackRock who had to write off their stakes in FTX to zero. The outflows from the exchange have climbed by over $1 billion reported by new public data. In addition, many small and medium-sized traditional venture capital firms and emerging crypto funds are the most walloped in this ordeal.

It is believed that factors such as blind investment, lack of due diligence and risk scrutiny, human greed for short-term profits, and weak regulations are the main reasons behind most investors’ losses.

Why Can DFG Thrive?

In this catastrophic collapse, DFG still thrives with zero exposure to FTT and SOL as DFG founder and CEO James Wo stated, relying on our overall investment strategy.

We structure our portfolios as long-term investments and stick to them in volatile markets.

Besides, DFG has strict risk management. In the compound pool of DFG’s portfolios, good liquidity assets like stablecoins, BTC, and ETH account for a major part.

Moreover, DFG knows leverage and risky bets are dangerous, so we didn’t engage in leverage or lending. James said, “Nobody can buy your company if you don’t use leverage. Thus DFG has zero leverage, and Jsquare has zero leverage.”

Finally, but most importantly, we do more than just trend-following. We conduct comprehensive and independent research on every candidate project that we connect. The founders’ background, technology innovation, and product deliverability of the team are what DFG evaluates a project.

The Long-Term Deployment in Web3 Ecosystem

The failure of a non-compliant centralized exchange is not the end of the industry. FTX’s bankruptcy only shows even more that the industry needs greater transparency and regulation.

We should realize that Web3 is still in its early stages. Take a longer view and put more resources into technology development and business model innovation, such as the industry needs a more decentralized, secure, and transparent infrastructure and ecosystem.

In the long run, DFG is bullish on the development of multi-chain ecosystems such as Polkadot for its high security and interoperability. To this end, we have invested Astar in the Polkadot ecosystem, Acala in infrastructure, Big Time in GameFi, Bifrost in DeFi, Bit.Country in Metaverse, AFK DAO in DAO, etc.

DFG will also insist on supporting the development of other infrastructure ecosystems and focusing on crypto-native Web3 application investment.

(Source: https://polkadot.network/)

What Can Investors Learn From FTX’s Breakdown?

It’s sad to see how many investors have given up on the market because it’s been a bit of a challenging year. But the sooner we get over this, the sooner we have a fresh start.

We want to share our takeaways* from FTX’s meltdown:

- Stop blindly following the trend. DYOR.
- Review your portfolio regularly.
- Choose DeFi or regulated, insured and law compliant CeFi while investing.
- Focus on what you believe and stick to it.
- Do not put too many eggs in a single basket.
- Always remember, long-term builders and believers will be the eventual winners.

* Note: These are not financial advice.

In either the near or far future, DFG will spare no effort to start cooperation with all parties as a recovery and builder of the crypto industry.

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