Episode 64 of Season 4 of The Scoop was recorded remotely with The Block's Frank Chaparro and Adam Dell, founder and CEO of Domain Money.
As the industry continues to cope with fallout from the implosion of Three Arrows Capital, July has been a brutal month for crypto lenders, with both Voyager Digital and Celsius declaring bankruptcy, and other prominent lenders including Genesis, BlockFi and Blockchain.com incurring severe losses.
In the case of Celsius — which is now reporting a $1.2 billion hole in its balance sheet — retail investors have a long road to recovering any of the crypto they deposited in the platform.
In this episode of The Scoop, Domain Money founder and CEO Adam Dell walks through some of the fatal mistakes made by the recently collapsed crypto lenders and explains what a responsible approach to portfolio management looks like in the digital asset space.
In contrast to the way Celsius allegedly deployed users' funds into levered strategies, Dell says it is important that Domain Money remains market neutral:
"We don't take balance sheet risk. And so many of the entities you mentioned were using their clients' funds to basically take levered positions in the market."
Domain Money is also looking to differentiate itself through quality portfolio managers. Dell has brought in teams from Goldman Sachs and Bridgewater to help construct and manage portfolios in the hope that veterans from traditional finance will be able to use their experience to manage the volatility of the crypto market.
While the contagion stemming from Three Arrows Capital and rampant global inflation have caused crypto prices to plummet, Dell says this is healthy in the long-run:
"I'm a little bit conflicted in that I certainly want all of our investors to have positive returns in any timeframe, but I also think this is, in the long-term, a very good thing for this industry to go through to weed out the bad actors, to weed out the momentum and meme-focused investors, and have a set of investments thrive and grow over time that are solving real world problems."
During this episode, Chaparro and Dell also:
- Compare Robinhood, Marcus, and what makes a good retail investing app
- Discuss why forthcoming regulation will be beneficial for the crypto industry
- Examine the intersection of crypto and traditional finance
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