SMARTER THAN CRYPTO

SMARTER THAN CRYPTO – CRIX Index Outperformance Token

Why Smarter Than Crypto?

Cryptocurrencies have grown exponentially since their creation in 2009, with the total cryptocurrency market capitalization currently standing at over $650 billion. While growth has been strong, the market capitilization of cryptocurrencies as a whole is still only a fraction of that of Gold or US Equities – which is itself only a fraction of the global stock investment market. There is still room for considerable growth.

There are now thousands of cryptocurrencies to choose from, with more appearing each day. Choice paralyzes – choice adds cost, complexity and the need for advice. High risk, extreme volatility and practical difficulty compound to render buying and safely storing an effective and diverse portfolio of coins (cryptocurrencies) a complex problem.

SMARTER THAN CRYPTO (“STC”) is the world’s first cryptocurrency-only SMARTER THAN BETA tokenized portfolio, and aims to provide a solution to this problem. The portfolio will autonomously maintain a diverse portfolio of up to the top 20 cryptocurrencies by market capitalization. The SMARTER THAN BETA strategy can outperform any index in any asset class by 40% more return and 40% less risk. In order to continue to have an efficient portfolio in regards to return and risk over time, SMARTER THAN CRYPTO’s asset portfolio is adjusted regularly in a process called rebalancing. SMARTER THAN CRYPTO is not a platform nor is it a fund, it is a fully functioning product in the form of a Comingled Managed Account (“CMA”).

SMARTER THAN CRYPTO cuts out the middleman and is thus able to offer the lowest fees in the industry.

Salus Alpha’s SMARTER THAN BETA strategy has consistently outperformed indexes and their passive index trackers. For the last ten years investors poured significant amounts into index tracker funds, while actively managed funds experienced outflows during the same period. One reason why index funds outperform actively managed funds is due to their low annual fees. SMARTER THAN CRYPTO has an annual fee of only 0% whereas competing crypto offerings have fees of 3% per year. All crypto offerings built on one of the many recently launched fund platforms will apply their fees over and above those of the platform. SMARTER THAN CRYPTO can offer such low fees because it is independent and automated. Index strategies are a set of rules that an algorithm can act on with no human intervention required.

SMARTER THAN CRYPTO is a utility token that is representative of a portion of the total value of the Crix -Crypto index. The initial tokens can only be acquired during the token offering process which is a one off, closed cap offering.

The tokens provided will represent a participant’s share of the portfolio. 100% of the total amount contributed during the offering will go directly towards buying the underlying cryptocurrencies. SMARTER THAN CRYPTO is an ERC20 token based upon the Ethereum blockchain. Operating on the blockchain allows for global accessibility, 24/7 trading, transparency, public verification of SMARTER THAN CRYPTO’s holdings and no expensive legacy banking fees. The tokens value is linked directly to the underlying cryptocurrency assets of up to 20 top coins by market capitalization held by SMARTER THAN CRYPTO via the innovative price floor mechanism implemented in our smart contract. The smart contract allows participants to cash out for their share of the underlying assets at any time. This means that SMARTER THAN CRYPTO’s value on exchange will be protected – it will be irrational to sell at a price lower than the tokens share of the underlying assets if a higher price is offered via the smart contract. Token holders are free to sell or exchange their tokens at any time and pay no exit fees, broker fees or advice fees.

The only opportunity for future participants to buy these tokens post-ICO will be from ICO participants on exchange – no further tokens will be sold or minted. 100% of the ICO funds will go towards purchasing the underlying assets. A full breakdown of funds utilization and token distribution is available in the respective sections.

The optimal parameters for the portfolio and rebalancing methodology were carefully determined via a structured data science approach. A trading strategy was put in place to mitigate the risk of front-running and a viability study was conducted to confirm that a portfolio at the maximum raise size would be able to effectively acquire sufficient coins without paying a large premium. The minimum effective portfolio size is $2m and if this is not achieved eighty seven percent of all investor funds will be returned. A maximum component weight of 20% was selected to prevent any single asset from dominating the index.

Security is extremely important and the smart contract code was audited by an independent third party. Expert advisors were consulted, best practices implemented and strong identity verification procedures put in place to prevent Sybil attacks and bad actors from compromising SMARTER THAN CRYPTO. SMARTER THAN CRYPTO’s holdings will be audited and the audit report made public post-ICO. A full list of the team and advisors is available on the SMARTER THAN CRYPTO website and in the appendix.

A public ICO will be held from the 13th of May to the 10th of June 2018. SMARTER THAN CRYPTO will use the ICO contributions to acquire assets and test rebalancing as the coin is expected to be listed on exchange in July 2018.

The SMARTER THAN BETA strategy is intellectual property of the fully regulated and licensed investment manager Salus Alpha Capital. The SMARTER THAN BETA portfolio optimization technology is in production since 14 years on hedge fund strategies and will be used for disrupting the ETF market. The SMARTER THAN BETA portfolio optimization technology is able to outperform any index in any asset class by delivering 40% more return with 40% less risk. We call this products “SMARTER THAN BETA” whereby we are not referring to SMART BETA products which are simply a linear scaling of returns and risk proportionally by doing factor extraction.

Salus Alpha Capital has stored all relevant cryptocurrency data since mid 2013. After approximately six months of trading this deep dataset will be utilized to optimize rebalancing and produce trading strategies for future SMARTER THEN BETA token issuance. SMARTER THAN CRYPTO ICO participants will have priority access to other SMARTER THAN BETA products and the SMARTER THAN CRYPTO token will be convertible.

In conclusion, SMARTER THAN CRYPTO is a closed-cap, tokenized cryptocurrency portfolio that autonomously tracks up to the top 20 cryptocurrencies with weekly rebalancing to a maximum component weight of 20%.

Instantly owning a diverse cryptocurrency portfolio is now as easy as holding a single token.

INTRODUCTION

The benefits are simple and many: convenience, no broker fees, no exit fees, full transparency, full control and a lower price bound. There is no need to keep your SMARTER THAN CRYPTO tokens on a centralized platform and you are free to sell or exchange your tokens without restriction. Automation allows SMARTER THAN CRYPTO to operate with fees of 0% management fee p.a. as opposed to the market average of 3% p.a.

No trust is required in the ability of human fund administrators/traders – an autonomous strategy does not require any discretion or judgment, just adherence to a method determined via quantitative research. The number of tokens, rebalancing frequency and asset weightings were carefully determined and our approach is detailed in this White Paper.

The ICO funds will be used to buy the underlying assets. Tokens can be liquidated through the SMARTER THAN CRYPTO smart contract for their share of the porfolio’s net asset value (NAV). This protects the token price as it would not be rational to sell at a lower value on exchange when tokens can be directly liquidated for a higher value.

Funds with stellar performance attract substantial amounts of new money. Closedend structures will therefore be traded with a premium to intrinsic value (NAV) on exchanges and the ICO participant will profit from this. This is the motivation for issuing no further tokens post-ICO.

The total global volume in ETFs is approximately 36 trillion while the entire combined cryptocurrency market capitalization is only a fraction (approximately 1.8%) of this. There is thus still significant potential to introduce retail investors into the crypto market.

Exposure to crypto returns with a broad, limited risk profile offers a compelling case to both crypto and fiat investors. SMARTER THAN CRYPTO’s value proposition (diversification by holding a single token) will be heavily promoted via marketing and investor outreach. The only opportunity to purchase these tokens post-ICO will be on exchange from ICO participants – highlighting the real demand for reduced risk crypto investments whilst simultaneously creating value for participants.

SMARTER THAN CRYPTO will be of benefit to the community as a whole – market transparency and liquidity will increase as a result of our trading activity. As a professional investment manager we will bring fresh support, funding, and understanding to the community. Conventional Investors who were uncertain about investing in a single technology or system will now have an option to support the emerging cryptocurrency market through SMARTER THAN CRYPTO.