Head of Quantitative Research
Security and equal wealth
“A big part of our lives revolves around seeking financial security. The existing mainstream financial industry has done a lot to bring about financial well-being to many. One of the main concerns is that access to financial services that work really well are highly restricted and not available to most people. Hence, the essence of Formation Fi is about creating Equal Wealth Generation Opportunities for everyone,” explains Ravi Kashyap.
Ravi has a background in traditional financial industries, he has held a number of roles including growing multi-million dollar products. Uncertainty and unintended consequence is the topic of his dissertation, from City University of Hong Kong. He researches in this area, particularly focusing on optimisation and decision making. He also holds an MBA and engineering degrees from NYU and the National Institute of Technology Calicut.
His words echo the intention of Formation Fi; to make investing and finding financial well-being an option for all, not simply confined to the elites that previous, traditional models might have usually facilitated. Instead, our new ways of working make it much easier for individuals to access financial services and find ways to bring financial stability to themselves. So how do we go about this?
Investing in a decentralised network can be a tricky business; multiple networks will demand different ways of investing- there are gas fees, network settings, the need to monitor different platforms and parameters- but Formation Fi offers a way to streamline this. As Ravi tells us, risk parity- as we perform it at Formation Fi- helps these particular issues:
“Risk Parity is the holy grail that we originally set out to bring to the decentralised investment world. To obtain parity, the amount of money allocated to the individual assets in a portfolio has to be proportional to the extent of risk encountered from investing in that specific asset. As the risk characteristics of an asset fluctuate, the weight assigned to that asset has to be correspondingly modified.”
He goes on to discuss how the structure of portfolios can help with this risk:
“Our Recipe for Returns involves three funds (Alpha, Beta and Gamma). A subtle aspect of our portfolio construction and weight calculation methodology is that parity is already accomplished in each of our individual funds Alpha, Beta and Gamma. While this is still a huge innovation to bring to the blockchain environment, we wish to proceed further and bring parity also on a conceptual level. We create portfolios that perform satisfactorily where mathematics can fall short of completely combating market uncertainty.”
Streamlining decentralised investment
Ravi’s work aims to make decentralised investment more accessible, which is very much ingrained with the work of Formation Fi, where up to 50% of the trading profits generated are set aside for long-term investors, making this a truly community based initiative. This money in turn is used to promote and recruit new voices, develop the organization and push the status of the platform as the preeminent wealth management vehicle for the masses.
He details to us his particular excitement regarding DAO investment:
“The topic of the DAO can be a very, very, very long discussion. The core philosophy we espouse regarding this topic is that we need to have similar principles, and the same group of people in the organization, for all human touch points and to handle the policies for both the team and the Community. Having such a structure would be a huge first step towards the establishment of a DAO. To the best of our knowledge every organization thus far, both within the crypto terrain and outside, has viewed employees and clients, including external stakeholders, as two separate entities.”
But instead, Formation Fi hopes to bring these two groups together, with little differentiation between the team and the community, and view them simply as different subunits or divisions within the organization.
Hurdles, possibilities and the DAO
Ravi sees the potential of the DAO and the work of Formation Fi as hugely exciting. And as it moves forward, there is no doubt that it will have the power to transform the lives of investors and community members alike. As he finally remarks:
“We believe that a DAO is not just an organization but a way of life. Such a tenet is necessary to ensure that we can make the most of the fascinating capabilities of the decentralised realm. Blockchain technology is creating a fascinating landscape where any-one can participate from any-where and at any-time to fulfill almost any desire.”
Where to Find Us?