What is Venture Capital and how does it work?
Venture Capital (VC) is a form of private equity financing that is provided to startups, early-stage and emerging companies with demonstrated high growth or high potential for growth. These investments are often made in exchange for equity or partial ownership of the company, resulting in potential high profits for investors. It’s also common that investors offer continued mentorship or advice to businesses along with funds.
Due to the nature of the companies applying for this type of financing (usually high-tech companies), VC is seen as a high-risk, high-reward endeavour. VC is one of the fastest-growing industries in the world.
Is it risky to invest in blockchain/DLT projects?
Investing in emerging technologies is always risky, due to the lack of regulations, the intrinsic slowness of the regulating process, and lack of precedents that help ensure their success, among other things. In addition to this, fraudulent schemes are not unheard of in the cryptocurrency and blockchain world.
The DLT/blockchain industries have grown precisely due to the trust and drive of investors, some of which have made meaningful returns over time. Institutional investors are now shifting their gazes towards blockchain and DLT because the technology and companies driving this space have made it clear that there is a significant potential of profiting in it. Just like Venture Capital, these types of investments are not risk-free but can offer rewards for those that can tolerate the risk.
Are these projects regulated to protect investors?
With new industries, regulation always seems to come too late and too slowly. Some rules govern some aspects of cryptocurrency and blockchain investing, in particular crowdfunding and token sales, but they are, still, far from satisfying every question in every investor’s book.
There are too many points of view about regulation in the crypto-sphere to cover in this FAQ, but, certainly, true decentralisation can never be fully regulated. Or at least, it is infinitely complex to enforce the regulation of decentralised currencies. This could mean that, regardless of opinion, Decentralised Ledger Technologies and digital money are here to stay.
Whichever way regulations surrounding these industries are set up, it’s safe to assume that they will be created in a way that protects investors, both institutional and retailers. Institutional investors, then, have an incentive to wait for regulations to settle, but can also profit from investing before a massive amount of their peers flock towards this space.
Investors should also perform their due diligence when researching projects to make sure that they understand the regulatory frames within which they are launched. As a part of our research process, we look into the legal team behind any project, which also includes looking into their compliance practices and jurisdiction, and we strongly encourage you to do the same. Regulations might be unclear in some jurisdictions and countries. Still, a team and a project that intends to comply with them and plan according to the diverse regulatory scenarios will always be preferable to those that seem to be hoping for the best possible scenario.
The leading DeFi applications are, in order, Maker, Compound, and Synthetix. Estimates indicate that Maker currently holds over 60% market dominance. Of the total $1.18 Billion in value locked in DeFi, around 90% is locked in lending apps. DeFi is still subject to the crypto market’s volatility.
How is D-Core beneficial for an investor?
D-Core was created to benefit serious and institutional investors.
The blockchain and DLT space is extremely complex and changes very fast, and, with unclear and insufficient regulations in place, it’s essential to perform extensive research before investing in projects. This research, apart from being time-consuming, can be extremely diverse. Those trying to assess a project’s viability and future may need to, for example, be marketing and social media savvy, well-read on cryptocurrency regulation, familiar with a diverse range of industries, and have a rather broad set of skills and knowledge.
Blockchain and DLT projects, as happens with all emerging industries, can make for extremely profitable investments. The above problem, however, makes the prospect of joining the space intimidating for institutional investors and those coming from “traditional finance”. At D-Core, we intend to bridge this gap, providing investors with sufficient information and recommendations that familiarise them with worthwhile projects that deserve their attention. Our unique decentralised system acts as a filter for our own biases, and as a wide net to capture as much information as possible in short periods, to then present succinctly. We aim to create a worthwhile subscription system that offers investors valuable, easy to consume information with relatively high frequency and effectiveness.
Does investing in blockchain/DLT projects equal to purchasing stock in a company?
Not necessarily. Some projects do offer the option to purchase shares of their company through/as cryptocurrency, but this is not the norm, and there is an important distinction to be drawn between those and the rest.