(Image via Prophecy DeFi Inc.)
One of the fastest growing segments in both the tech and finance markets is decentralized finance (DeFi), which has a total
value locked (TVL) at over $250 billion (USD), according to estimates from renowned data aggregator DeFi Llama.
It was just one year ago, when the total value locked in DeFi protocols was only around $10 billion (USD).
If you look at the overall cryptocurrency space there is around $2.5 trillion (USD) of capitalization, which would represent about one half of 1% of total world assets.
A Canadian-based company operating in a very unique niche within these markets is forecasting the amount of value within the macro crypto space will increase from one half of 1% to maybe 1% or 2% or even 5% over time, which given the figures and current growth trajectory equals something every investor can understand - promising growth, promising returns.
Prophecy DeFi Inc. (CSE: PDFI, Forum) aims to bring together technology start-ups, fund innovation, promote industry research, and create new business opportunities within the blockchain and DeFi sectors.
DeFi Explained:
DeFi, or Decentralized Finance, encompasses a set of projects, companies, and protocols that run on Blockchain networks to create a global financial ecosystem that eliminates the need for traditional intermediaries, like banks and brokerage firms.
Fintech solutions can help make financial systems more user-friendly and quicker on the front-end, but these solutions sit atop the same sluggish systems and processes that effectively pre-date the internet. So, to truly advance our financial systems, we need a tool that can disrupt centralized financial systems from the ground up, remodelling them completely.
This is where blockchain technology enters the scene. Now, for the first time in human history, two or more parties anywhere in the world can transact and do business peer-to-peer. Trust is established, not by powerful intermediaries, but rather through collaboration, cryptography and clever code. Blockchain technology proved to be a runaway success for Bitcoin, so people began expanding it into other asset classes where "middlemen" were traditionally involved. And that is how the concept of DeFi, or Decentralized Finance, was born.
Today, it is the fastest growing sector of crypto assets, largely powered by Layer Two solutions on the blockchain that increase efficiency and scalability and help make the sector as a whole more accessible to everyone around the world.
To watch an explanatory video, click
here.
As for how this company’s business thrives on DeFi, in an interview with Stockhouse Editorial, Prophecy’s Chief Executive Officer, John McMahon, explained that his team identifies interesting opportunities in the cryptocurrency space and provides liquidity to these exchanges. In return, the company is rewarded with the crypto itself, which is how Prophecy DeFi generates returns.
He summarized the business’ operations under three core pillars:
- People
- Partnerships
- Profits
Having been profitable since day one, the company’s assets have realized an annualized rate of return of 492.5% in just 90 days, making Prophecy one of the fastest growing businesses in the crypto space. As CEO McMahon explained to Stockhouse Editorial, anyone can buy a portfolio of cryptocurrencies, be it Bitcoin, Ethereum, or any of the thousands upon thousands of exchanges across the spectrum. However, Prophecy is particularly skilled at identifying interesting opportunities for the deployment of capital through providing liquidity and are rewarded with crypto for doing so. This process creates significant barriers to entry due to the technical expertise and industry connections required to be involved in the best projects. It is for this reason that Prophecy DeFi is so unique, as it allows the everyday investor exposure to these exciting opportunities.
“The beauty of our model is that we have a team that is readily skilled at identifying products, projects, or protocols that they believe in and trust. The team goes through a deep evaluation process of reviewing white papers, talking to the people that created the protocols, and negotiating a position for the function that we perform in. So, there is a huge human element of this. In a short period of time, a 90-day window, in the 11 trades that we've taken on, every single one of them has produced a positive return.”
This is a critical element to the story, CEO McMahon added that Prophecy DeFi is not simply a company that is in the business of buying a portfolio of cryptocurrency and “seeing what happens”.
“We are a company that is actively seeking out projects that we truly believe in that we understand that we feel have great utility that have tremendous opportunity to generate outsized returns. We are not getting just a 12% return; we are getting a 495% return. That sounds crazy, but in the crypto world, if you had put just one thousand dollars into the ICO of Ethereum, that thousand dollars today would be worth over $10 million. The crypto world is a very different world than what we are used to functioning in. The value creation can be in incredibly intense, and that's what we are trying to capitalize on.”
Prophecy DeFi is proving that this model can be very successful – all the money the company has made deploying capital is re-invested back into its existing positions, or into new opportunities.
From an investor point of view, what can be expected in the upcoming weeks, months, and years is the repatriation of this capital to create even greater returns for investors.
Layer2 Blockchain:
In late October 2021, Prophecy DeFi announced that its wholly owned subsidiary,
Layer2 Blockchain had generated yield and capital gains of $2.01M over a 90-day period beginning on July 17th.
Layer2 purchased a total of $3.65M in digital assets and has deployed these assets across eleven positions to generate an annualized rate of return of 492.5%.
CEO McMahon sat down with Caroline Egan to discuss Layer2’s performance and Prophecy DeFi’s success. Click the video below to play:
In Canada, there are just a few publicly traded DeFi companies. One of which is a company that Canadian mogul Kevin O’Leary is involved with called
WonderFi (NEO: WNDR), a pre-commercial outfit focusing on aggregating DeFi services that is also pre-revenue, likely won’t turn a profit until 2023 (by its own admission). The other is
DeFi Technologies (NEO: DEFI) a $750 million market cap company that manages assets on behalf of other parties.
For investors who want to take advantage of decentralized finance, the playing field is sparse. If you want exposure to DeFi, PDFI stock is a must own.
Meet the Team:
Management
CEO McMahon knows what he is talking about. His path to Chairman and Chief Executive Officer of Prophecy DeFi, started through a number of senior banking roles within the investment industry. He is currently a Managing Partner of Thought Launch Capital & Advisory. Prior to this role, he served as Vice Chairman and Head of Investment Banking for Mackie Research Capital Corporation and subsequently, Managing Director of Investment Banking for Industrial Alliance Securities.
Joining him is Roland Nimmo, Prophecy DeFi’s Chief Financial Officer. He has over 35 years of experience in both public and private companies in Canada and throughout the globe. He has provided financial leadership to some of Canada's most successful Manufacturing and Real Estate organizations including Magna International and was a Partner with Arthur Andersen and Deloitte. He is a Chartered Accountant (CPA) with a BA Hons in Economics from Queen's University at Kingston.
Mr. Cameron Day is Vice President of Prophecy DeFi. He is involved in all aspects of the Firm’s activities, including analyzing potential investment opportunities, executing transactions, and working with portfolio companies to develop and implement value-enhancing initiatives. Cameron was raised in Toronto. He graduated with a Bachelor of Arts (Honours) in Economics and a Master of Finance from Queen’s University and is a CFA level 2 candidate.
Advisory Committee
Prophecy DeFi has a world class Advisory Committee, led by Alex Tapscott and consist of some of the most respected professionals in DeFi, who are truly industry pioneers.
Alex Tapscott, Chairman: Mr. Tapscott is Chairman of Prophecy DeFi’s Advisory Committee and Managing Director of Ninepoint Partners’ Digital Asset Group. In addition, Mr. Tapscott is an entrepreneur, author and seasoned capital markets professional focused on the impact of Bitcoin, blockchain and other digital assets on business and financial markets. Mr. Tapscott is the co-author of the critically acclaimed non-fiction best-seller,
Blockchain Revolution, which has been translated into more than 15 languages and has sold more than 500,000 copies worldwide. He is also the Editor and Co-author of Financial Services Revolution.
Mr. Tapscott is sought after world-wide for his expertise by business and government audiences. He has delivered over 200 lectures and executive briefings for global corporations and financial services firms.
His TedX talk, “Blockchain is Eating Wall Street” has been viewed over 750,000 times. Mr. Tapscott has also written for The New York Times, Harvard Business Review, The Globe and Mail, National Post and many other publications. In 2017, Mr. Tapscott co-founded the Blockchain Research Institute (BRI), a global think-tank investigating blockchain strategies, opportunities and use-cases. Mr. Tapscott is also a CFA Charterholder.
Sandeep Nailwal, Advisor: Sandeep Nailwal is an Indian entrepreneur, software developer, and co-Founder of Polygon. Polygon has quickly become a top twenty ranked protocol in the sector worldwide with a fully diluted valuation of over US$19 billion. Polygon was founded in 2017 to solve the problem of high fees and slow transaction speeds on Ethereum, the world's second-largest cryptocurrency.
Polygon is a Layer Two blockchain on Ethereum, allowing users to build applications on Polygon at a far lower cost than Ethereum. The valuation of Polygon’s native token, Matic, has risen from a market capitalization of less than US$26 million at inception in 2019, to over US$19 billion today. Mr. Nailwal is also the Founder of India’s Crypto Covid Relief Fund, which has raised an incredible US$1 Billion in less than 12 months.
"I am really excited to be working with the Prophecy DeFi team and help them in their mission to become a leader in the Decentralized Finance sector and allow the everyday investor exposure to this new and incredibly exciting space," said Sandeep Nailwal.
Galia Benartzi, Advisor: Ms. Galia Benartzi is the co-founder of Bancor, the world's first open-source protocol ensuring on-chain liquidity between any blockchain-based asset, and the inventor of the Automated Market Maker, now a building block of Decentralized Finance (DeFi). More than $2 billion in token conversions have been processed via Bancor, as the protocol impacts organizations and people across the globe, from blockchain teams to real-world communities issuing local currencies. Galia was recognized by Forbes and Glamour Magazine as a leading woman in crypto; she has been featured on BloombergTV and CNBC, and has spoken at the United Nations, TEDx and the Oslo Freedom Forum on monetary theory and innovation. Galia previously co-founded Mytopia, the first social gaming company for smartphones (acquired by 888 in 2010), and Particle Code, a cross-platform development technology for mobile applications (acquired by Appcelerator in 2012). She was a Venture Partner at Peter Thiel's Founder's Fund, a founding member of Summit Powder Mountain, and the organizer of Bretton Woods 75, a commemoration event evaluating the historic monetary accords.
"I am very excited to join Prophecy DeFi's Advisory Committee alongside industry leaders," said Galia Benartzi. "I believe in bringing the benefits of decentralized finance to more stakeholders in every part of our financial system. Only by working together can we achieve the promise of accessible innovation for all, and I'm excited to work with Prophecy DeFi's team to bring these important technologies to more people."
Peng Zhong, Advisor: Peng Zhong, CEO of Tendermint, leads a world-class team that builds applications to improve the usability, accessibility, and safety of blockchain for developers and end-users. Tendermint is a core contributor to the Cosmos ecosystem, which houses more than 250 blockchain projects and secures over $100B in digital assets. Projects on the Cosmos ecosystem include Binance Chain, Terra, Crypto.com, ThorChain, Osmosis, Kava, Fetch.ai, Injective Protocol, Persistence, Akash, Regen, and many more.
“I am excited to join Prophecy DeFi’s Advisory Committee,” said Peng Zhong. “Prophecy’s team is poised to bridge this young but rapidly growing DeFi sector to mainstream investors. This team is extremely talented and equipped to accomplish great things.”
CEO McMahon also Chairman of the company’s Board of Directors, which boasts people deeply experienced in digital assets, asset management, real estate, merchant banking, finance, and venture investing on a managerial and entrepreneurial level.
Looking Ahead:
This is a brave new world. Layer2 blockchain will continue to be the core of Prophecy DeFi’s business. While the management team performs the duties required of a public company, the Layer2 team handles the operational side. It is a solid symbiotic relationship between players who know how to perform, and any move one side makes is critical to the performance on the other side, even if it involves the acquisition of another company.
The whole business strategy driving Layer2 is generating its outsized returns. As McMahon stated, the company has only just started with its initial capital and the returns that have been made have been repatriated and reinvested.
“Any future acquisition will be strategic and central to the Layer2 business. In six months, 12 months, 18 months … I am hugely confident that when the market starts to appreciate the business model that we have, where we are so successful in infusing liquidity into these exchanges, realizing these outside returns as that capital base builds, we are going to go from our current $6 million in deployed capital to $10 million, then to $15M, and continuing to grow from there.”
This is very scalable, there are so many projects and such a need for liquidity within these projects that the company could deploy tens of millions but getting to scale takes time.
“We were only 90 days into this, we had to prove to the market that we could do this, and you can execute this way. You can infuse capital; you can get these returns and then you have to convince the market. Yes, it is scalable. We can deploy more capital and more capital, and that's how you'll build a billion-dollar business.”
Investment Summary:
Decentralization is the future, but for Prophecy DeFi, it is here and now. Taking stock of the people serving on both the board of directors and its advisory board, the talent and experience is deep.
Prophecy DeFi’s main corporate partner, Ninepoint Partners, constitutes an asset management firm with $8 billion under management. This firm chose to partner with an upcoming start-up enterprise and put their top individual in the digital asset group as head of Prophecy’s advisory committee.
People, Partners and Profits are the key checkpoints that drive the company and prove its worth in the DeFi space. This isn’t an outfit trying to gather money, waiting to develop something, or hoping a market is coming, Prophecy DeFi is producing meaningful results.
“And we have, from the day we started, and they are only growing.”
To find out more about this company, visit
prophecydefi.com.
FULL DISCLOSURE: This is a paid article produced by Stockhouse Publishing.