Crusher of the Month – Hedge Token – November 2017

In the Crusher of the Month series, we are going to write about a coin/token that we have the most conviction in each month. The time frame is going to be around 1 month, or until we publish the next Crusher of the Month. In November 2017, our Crusher of the Month is Hedge Token, ticker HDG.


What does the project do?

The Hedge Project creates crypto traded indices (CTIs) that anyone can invest in. It is different from other crypto investment platforms in that their CTIs are passively managed, following a set of rules and guidelines similar to how index funds work in the traditional finance space.

Unlike other crypto funds where the valuation shouldn’t deviate too much from book value, Hedge Project is a platform where they design the index for others to invest and collect the management fees. They don’t put any capital at risk and as such, the project is a lot more scalable than other crypto funds.

Hedge Project is run by Savo Lovsin, a finance veteran with over 10 years of experience in trading and asset management, including Head of Financial Advisory in Deloitte Slovenia.

Hedge Project currently has one CTI named BC30 Index. It tracks the price of 30 largest cryptocurrencies by market capitalization and accounts for over 90% of the value of all cryptocurrencies.

BC30 Index is launched on Thomson Reuters through Thomson Reuters Eikon, a set of software products to monitor and analyze financial information. Anyone with an Eikon account can look up the performance of BC30 Index.

Going forward, Hedge Project will launch many more crypto indices with different focuses and styles. Hedge Project is planning to launch CTIs in 2018 Q1. By that time, there should be over 15 CTIs for users to invest in.

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What are HDG tokens used for?

HDG tokens are used to pay for fees incurred on the Hedge Project platform. If users have HDG in a trading account, they will pay fees automatically with the tokens. If they don’t, there will be a function that will buy the tokens in the spot market with a market order.

20% of the profits generated from the Hedge platform will be used to buy back and burn HDG tokens. Therefore, HDG token supply will be deflationary.


Why we like it?

Hedge Project is under the radar and has not attracted a lot of attention. Its ICO was in September 2017 – during the time when there were quite a few high profile ICOs. As a result, Hedge Project didn’t attract a lot of contributions.

They only managed to raise around $2 million (soft cap was $1.5 million and hard cap was $15 million) and the unsold tokens were burned.

After a huge run up a few days after the tokens were distributed, the price of HDG tokens are now back to around the ICO price. 60% of total token supply went to ICO participants, so the current market cap using circulating supply is $2.3 million and using total supply is $3.8 million.

With the promising team and idea, we believe HDG has the potential to become a top 100 most valuable token (which is currently around $12 million) by the end of the year. At that time, the first batch of crypto indices should be close to roll out and beta testing of the platform will be underway.

Over the long term, we believe Hedge Project has the potential to become a $100 million project if it can successfully gain traction and gather a significant amount of asset under management.

There will be natural demand for HDG tokens coming from both users of the Hedge platform and also from the company itself (for burning the tokens). Comparing to the current valuation, we believe the reward to risk ratio is very compelling.


Risks

Hedge Project is one of the projects affected by the Parity multi-sig vulnerability where funds stored in their multi-sig wallets are locked. It looks like 4,524 Ether is in the frozen wallet. The team had previously sent around 1,700 Ether to Kraken, presumably to convert the funds into fiat.

The team has stated that the project is moving on as planned, and if necessary, they will secure temporary fiat financing.

We believe that this news is already priced in, as HDG price dropped by 20% after the announcement. This development does make the project riskier, but at the same time, the potential upside is also greater because of the lower valuation.


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