Margin Lending

For the first month, initially 100% of the fund (less the development reserve mentioned above), then thereafter, a minimum of 50% and up to 80% of the fund will be converted to crypto currencies and placed across a number of exchanges for the purpose of lending those currencies to traders on the exchanges to earn margin lending interest. Margin lending interest differs depending upon the currency and according to supply/demand disparity. They range from .02% per day to 5% per day.

The Cycoin team will open funding wallets on major exchanges providing margin lending facilities to traders, such as Poloniex, Bitfinex and BitMEX. On each exchange, we will assess the market of lending rates offered for differing currencies and place our funds for loan at rates that will ensure relatively quick investment. For short term loans, within 2-3 hours and for longer term loans, within the day.

Longer term rates often exceed shorter term rates. We will seek generally to place our funds on loan for 15 – 30 day periods. All rate versus term markets will be monitored across each currency offered with each investment decision made to ensure maximised yield.

We will convert all margin interest earned to Bitcoin and Ether and distribute this to Cycoin Wallets proportional to the amount of Cycoin held monthly.

Opportunistic Arbitrage

Up to 30% of the fund will be dedicated to talking arbitrage profit. Because cryptocurrency exchanges are not interlinked, at times the price of the same asset may be different on two different exchanges. We will asses these differences and if attractive, take the opportunity to buy the asset at a lower price on one exchange and sell it at a higher price on the other.

We will utilise our Arbitrage App to collate price information of all currency pairs for all exchanges globally that have price and volume API data available. Our App will indentify and calculate instances where there are two of the same currency pairs on different exchanges which differ in price. The App will provide a signal to identify an arbitrage opportunity is available.

The Cycoin team will check and verify each currency pair opportunity signal, assess the probability of securing the arbitrage profit against price gap, volume traded, currency pair network speeds, exchange transaction costs, exchange transaction speed, currency network fee and if attractive, the decision will be taken to buy the low price and sell the high price on each exchange.

Our analysts have identified meaningful arbitrage opportunities with good depth of market displaying consistent net profit achievable of 2% per trade.

The price difference is called arbitrage profit and does not involve trying to predict the future updward or downward movement of a currency, as you would if you are trading the asset.

Arbitrage profit will be distributed monthly.

Pre-ICO and ICO investments

Up to 50% of the fund will invest in good Pre-ICO and ICO opporunities. We will employ a range of external professional services to deliver up pre-vetted, curated opportunities. The team will select which of these looks to carry well founded and logical business goals, displays real world or digital application, are more likely to be widely adopted and the business goals appear to be achievable relatively quickly and can be liquidated easily. Profit will be converted to Bitcoin and Ether and distributed quarterly.

The Cycoin team access a number of processional ICO assessment networks such as CoinList, ICOBench and Smih&Crown analysis services, as well as angel investor networks, to source pre-vetted ICO opportunities. We also monitor the ICO market generally across a wide range of ICO listing sites as Coinrating, ICO drops and ICO hot list in order to identify ICO opportunities which have merit for assessment.

We will gather our own research on each identified opportunity and collate this monthly for short-listing, where those opportunities fit within the criteria mentioned above. Short-listed opportunities will be tabled for assessment by the directors of Cycoin and a decision to invest or not will be finalised and acted upon each month.

Fund Income Reinvestment

10% of the income derived from Pre-ICO and ICO investments will be retained from distribution and reinvested along with the general fund to increase the amount of crypto currencies held. This will serve to compound the earning capacity of the fund and increase the asset backing of the coin for the benefit of Cycoin holders.