The right way for investors to go from traditional investment to DeFi in the crypto market

Berkshire Hathaway is a giant, and retail investors are far behind

The Birth of Berkshire

In 1956, at the age of 26, Warren Buffett formed an investment partnership to acquire small and medium-sized businesses and take stakes in large companies. In 1965, the partnership gained control of Berkshire Hathaway Inc., then a publicly traded textile manufacturer. Buffett's partnership was quickly dissolved, and Berkshire's equity was distributed to the partners. Berkshire has since begun acquiring a variety of businesses, dabbling in insurance, manufacturing, finance, and media. As of 2015, its investment returns have greatly exceeded market benchmarks such as the Dow Jones Industrial Average or the S&P 500. From 1965 to 2015, the Dow Jones Index rose 18 times, while Berkshire grew 12,000 times, a compound annual growth rate of 21%, twice that of the S&P.

Despite the transformation from a partnership to a limited liability company, Buffett has always maintained a partnership consciousness within Berkshire. These spiritual legacies are reflected in the first of the 15 principles stated in Berkshire's "Shareholder Handbook": "Although our form is a limited liability company, our attitude is that of a partnership." This giant whale centered on Buffett and Munger swept the capital market. Although a large number of investors tried to imitate Buffett's investment philosophy, few people followed Berkshire's corporate practices. Berkshire has repeatedly become stronger with the support of many institutional investors.

The beautiful curve of value investment

Berkshire's investment practice is full of initiative. It takes the initiative to attack with its sensitive business sense and always maintains its professional quality of discovering valuable targets. This allows it to always be one step ahead of others in the investment process and encounter good companies, including those we are familiar with, such as Coca-Cola, Apple, Bank of America, etc. And it has finally obtained quite generous returns through "value" investment.

The move of holding Coca-Cola alone is enough to shock general investment institutions. In 1988, Buffett bought $593 million of Coca-Cola shares. In 1989, he increased his holdings to $1.024 billion. In 1994, he continued to increase his holdings, with a total investment of $1.299 billion. He has held the shares since then, and there has been no change in all these years. This kind of big investment is amazing. Of course, every investment made by Berkshire is in line with the long-term growth trend.

Retail investors’ anxiety

Berkshire's performance or Buffett's charm makes people want to exchange all the chips in their hands for more chips, and people want to earn more. But from a personal standpoint, we have to admit that such a threshold will inevitably block us out. Even if Berkshire has a higher return on investment, it will go into the pockets of institutional investors and has nothing to do with retail investors! So how can individual investors choose a good investment method?

Grayscale Fund’s New Wine in Old Bottles

One foot on Wall Street, one foot on cryptocurrencies

Before we start introducing Grayscale, we first need to know about Digital Currency Group (hereinafter referred to as DCG), a crypto whale whose founder calls himself the Berkshire Hathaway of the crypto world. Its scale has already exceeded 10 billion US dollars, and there are many traditional capital giants behind it, including Mastercard, Bain Capital, Canadian Imperial Bank of Commerce and New York Life Insurance. DCG has successively achieved outstanding results in the crypto industry, investing in Coinbase, the world's largest trading platform, Decentraland, the leader of the metaverse concept, etc. Its Grayscale Investments (Grayscale), CoinDesk and Genesis are particularly famous. Let's not talk about the latter two today.

Only in and no out, unilateral rise

From the perspective of operation mode, we can understand Grayscale's trust fund as an ETF, but it was investigated by the SEC in 2014, so since then Grayscale has deliberately stopped the "redemption" function on the grounds that the SEC would not approve it, and never strived for it again. This has led to this ETF becoming a multi-currency encrypted fund pool with multiple cryptocurrencies led by Bitcoin, which can only enter but not exit. Investors have no channels to withdraw the digital currencies they rushed into, and can only cash out in the OTC market with the trust given by Grayscale, so the amount of currency held by Grayscale Fund will only rise unilaterally. This is why the price of Grayscale Trust has always been at a premium.

Retail investors still have no way out

Grayscale Trust currently holds 13 currencies, which are the leading projects in the sub-sectors such as BTC, ETH, LINK, FIL, and MANA. Although it saves investors from the worry of zero risk, it still lacks diversity in the power of choice. Although Grayscale is a cryptocurrency trust, its overly centralized management is the same as Buffett's Berkshire. At the same time, the door of Grayscale Fund is not open to individual investors. Just like Berkshire, it is a hotbed for institutional investors, which still makes some individual investors stay away. This method of putting new wine in old bottles has not been improved at all, so Grayscale Fund does not seem to have given a better answer to the way of personal investment!

Entering the market with DEIFI, TokeMak is not ideal

Create a new way to enter

Looking back at the crypto market, DeFi can be said to be a trigger point for this bull market, and the Yearn platform has replayed the story of BTC. Today, people may like to use digital terms such as DeFi1.0, DeFi2.0 or DeFi3.0 to define the development of DeFi, but this is not the most important thing. What is important is that DeFi has been developing, and now it has become one of the hot development directions combined with the DAO governance solution.

TokeMak, an asset reserve pool that iterates liquidity mining, first proposed and applied the DAO TO DAO governance model. TokeMak's operating model creates a reactor (asset pool) for each single liquidity asset. The reactor is mainly composed of two roles, liquidity providers and liquidity guides.

Take an example

For example, here is a reactor created by TokeMak and AAVE:

On the left are liquidity providers (LPs): depositing a single asset into the Token Reactor to obtain the corresponding tassets voucher to ensure that the deposited asset can be exchanged 1:1 when exiting. During the liquidity provision period, the non-TOKEToken income obtained by the reactor assets from providing liquidity to the outside will be directly deposited into the Tokemak protocol and managed by the Tokemak DAO (composed of Toke holders). Liquidity providers only receive Toke rewards.

On the right are Liquidity Directors (LD): They use the pledged TOKE to control the destination of the liquid assets in the designated reactor. They pledge their TOKE to a given reactor and use the pledge as a voting right to direct liquidity to the Dex of their choice.

Currently, the decentralized trading platforms that this reactor can guide include Uniswap, Sushiswap, Banlancer, and Deversifi. Liquidity guides will also receive Toke rewards. In this way, TokeMak has greatly given investors the highest authority in terms of entry methods and optionality. At the same time, in terms of income methods, it has also transformed the previous active income into passive income. This step has indeed given individual investors some hope in addition to institutional investors.

Lack of support

If we look carefully at the entire "investment" process of TokeMak, whether it is the liquidity provider or the liquidity guide, the final income all comes from the TokeMak platform token. At this time, we have doubts. Assuming that the TokeMak platform token is worthless and a large number of users (including institutional and individual users) are lost, TokeMak will only be eliminated. If the assumption comes true, where will the investors go?

BlackHoleDAO takes the best of all

Superior protocol mechanism

BlackHoleDAO has built a new standardized model based on DeFi3.0. The destruction mechanism of BlackHole DAO borrows the principle of splitting and merging in the traditional stock market to solve the imbalance between high inflation and deflation in the market. In addition, the new mechanism introduces a credit lending service for DAOs. It can be simply understood as an asset management company service agreement, which includes splitting and merging functions, and provides unsecured credit loan services based on the agreement itself. We can regard it as a lending business similar to that of a bank.

No inflation risk

BlackHoleDAO also cleverly applied the stake and bond principles in Olympus and upgraded them. In order to solve the original high inflation problem of Olympus, BlackHoleDAO enabled the deflation mechanism on the premise of determining the total amount of tokens, which solved the original inflation problem while generating passive income.

Asset Management DAOs

The BlackHoleDAO Protocol is supported by the national treasury, in which the smart contract connects the VC Pool and the Donation Pool. The VC Pool supports multiple currencies for investment, part of which is used to destroy the BHO (BlackHole DAO token) in the liquidity pool, and the other part is used for credit loans after the successful investment of DAOs. The Donation Pool accepts direct investment in BUSD from investment institutions, DAOs teams, and individuals, and ultimately returns at 2 times BUSD. In turn, the Transaction Fee Pool provides operational guarantees for the Donation Pool, DAOs community, and Black Hole Reactor.

The most noteworthy VC pool of BlackHoleDAO can be understood as another way to buy Bond, but the VC pool only accepts valuable certificates such as non-Stablecoin, NFT, and liquidity LP. The tokens, NFTs, and liquidity LPs launched in the VC pool are voted on through the currencies proposed by the DAOs community, and they can be launched if they are passed.

Stocks that Strengthen Support (BHO)

Among them, after the VC pool reaches a certain amount of assets, the liquidity LP will take out a certain proportion of different tokens to form LP, and then provide liquidity and LP lending services to leading products such as Curve, Compound, Aave, etc. The profits obtained will all enter the VC pool to support the circulation value of the stock (BHO).

Tokens that can be selected into the VC pool must be strictly reviewed and screened by the DAOs community before they can pass. This can prevent malicious behavior from causing a long-tail loss effect on potential assets, thereby avoiding the shrinkage and inflation of stocks (BHO). It seems that there is a sense of decentralized Grayscale Fund here, and it is more friendly to individual investors. There is no doubt that excellent sediment assets will inevitably support the BlackHoleDAO Protocol's stocks (BHO) to take a steady and beautiful upward curve. At this point, we seem to have clearly seen a solution that can satisfy a variety of investment users.

Summarize

BlackHoleDAO is more like a decentralized Berkshire Hathaway company. All users invest digital assets in exchange for BHO (similar to stocks), and rely on asset appreciation to provide value support for BHO. The development trend of digital assets is high-speed upward. BHO brings together almost all categories of digital assets and passively manages these assets.

Take a look at the differences between the above 4:

Compared with the above investment paradigms, the investment evolution from Buffett's Berkshire to Grayscale Fund and then to DeFi can be said to have undergone major changes. One point that cannot be ignored in this process is that the compatibility methods for investment users are becoming more and more inclusive.

The development of investment methods allows us to provide various users with investment plans that suit them, and the initial active income has gradually turned into passive income. If someone needs me to recommend an investment method that suits them today, I think BlackHole DAO can give you what you want.