Fintech & DeFi

> Shaping the Future of Finance

DESSMI IFI - 1st Semester 2023/24

Course designed by Benoît Courtois

 Introduction
“The time to buy is when there's
blood in the streets.”

- Baron Rothschild

Course designed by Benoît Courtois

 Course Modules
01 Intro & Fintech 04 Blockchain & DeFi

02 Blockchain Basics 05 Crypto AM

03 Blockchain Apps 06 Risks & Regulations

Teaching Style:
Face to face
Online
Online Async
Course designed by Benoît Courtois
 Course Modules
07 Crypto Valuation 10 Future of Finance

08 Fintech & DeFi

09 Blockchain in A&A*
Teaching Style:
Face to face
(*): This module may vary based on the instructor's expertise. Online
Online Async
Course designed by Benoît Courtois
 Learning Culture
Rules:
● There are no stupid questions. Ask your questions.
● Dare to take risks. “No risk no return”.
● Respect is key. We are all playing in the same team.
● No one will be left behind. We are all supportive.
● Please be careful about plagiarism and deadlines.
“A person who never made a mistake never tried anything new.”
- Albert Einstein

“Only those who dare to fail greatly can ever achieve greatly.”
- Robert F. Kennedy

Course designed by Benoît Courtois

 05
Crypto & Asset
Management
> By Benoît Courtois

IFI – Fintech & DeFi – Week 5

Course designed by Benoît Courtois

 What is Asset Management?
Investopedia: “Asset Management (AM) is the practice
of increasing total wealth over time by acquiring,
maintaining, and trading investments that have the
potential to grow in value.

Based on the course readings and your experience,

work in teams to answer the following questions:

● What are the biggest asset managers?

● What are the main investments strategies?

You have 10 minutes.

Course designed by Benoît Courtois
 Asset Manager Types
Asset managers differ in asset specialization and
service depth. It’s important to know their role to
understand how asset management works.

Main types of asset managers:

● Registered investment manager (RIA)
● Investment broker
● Financial advisor
● Robo-advisor
Let’s discuss their roles and differences.

Course designed by Benoît Courtois

 How Does AM Work?
Asset managers generate revenue by charging clients
fees based on assets under management (AUM),
performance, or transactions. These fees compensate
for their expertise in selecting, managing, and
reallocating investments to maximize returns:

Main fees:
● Management fee
● Performance fee
● Front-/back-end load
● Transaction fee
● Custody fee
● Exit fee, etc.
Course designed by Benoît Courtois
 AM Strategies
Asset managers have access to a wide range of
investment strategies to meet their clients’ expectations
regarding the Risk/Reward (“R/R”) ratio management:

Main strategies:
● Active vs Passive management
● Growth vs Value investing
● Income
● Balanced/Hybrid
● Alternative
● Socially responsible
● Tactical vs Strategic

Course designed by Benoît Courtois

Source: HSBC
 Diversification Strategies
Asset managers diversify their portfolio to manage the
level of risk linked to each asset class. All investments
have an expected R/R ratio.

Main diversification strategies:

● Determine correlation
● Diversify across assets classes (e.g. stocks, bonds)
● Diversify within assets classes (e.g. sectors)
● Diversify by location
● Alternative investments (e.g. RE, PE, crypto)
● Rebalance portfolio
● Consider your risk tolerance

Course designed by Benoît Courtois

Source: Mutual Fund
 Types of Funds
To implement the different strategies, asset managers
create dedicated vehicles/investment funds:

● Monetary funds
● Fixed income funds
● Equity funds
● Mixed funds
● Alternative investments funds (AIFs)
● Exchange traded funds (ETFs/Tracker), etc.

Let’s talk about their goals and related R/R.

Course designed by Benoît Courtois

 Example of AM Structure
Asset management structures include various actors
that can be located in different jurisdictions/countries:

● Asset manager
● Fund
● Management company
● Fund administrator
● Custody
● Distributor, etc.

Course designed by Benoît Courtois

Source: KPMG Lux
 Pros and Cons?
Work in teams to answer the following question:

● What are the pros and cons of asset management?

You have 5 minutes.

Course designed by Benoît Courtois

 Asset Management
Pros:
● Expertise and knowledge
● Time saving
● Diversification and strategies
● Risk management
Cons:
● Cost/Fees
● Performance is not guaranteed
● Potential conflicts of interest (e.g. products)
● Limited control/distance from investments

Course designed by Benoît Courtois

 Did You Say Crypto AM?
…yes I mean the asset class of tomorrow.

Investopedia: “Crypto asset management is the practice

of purchasing and selling digital assets to be used as
investments while managing a portfolio to experience
an overall growth in value.”

Work in teams to answer the following questions:

● What are the main investment categories in crypto?

● How would you manage* these assets for your client?

You have 15 minutes.

Course designed by Benoît Courtois
(*): use the “Example of AM Structure” slide
 Refresher: Crypto Assets
Crypto assets classes:
1. Cryptocurrencies
2. Protocol tokens
3. Utility tokens
4. Security tokens
5. Stable coins
6. Crypto collectibles/NFTs
7. Natural assets tokens

Course designed by Benoît Courtois

Source: Les echos
 Crypto AM Strategies
Diverse crypto investment strategies address varying
risk appetites and objectives, shaping how investors
navigate the dynamic digital asset landscape:

● Hodling (“HODL”)
● Trading
● Staking
● Initial Coin Offering (ICO)
● Dollar Cost Average (DCA)
● Yield farming, etc.

Let’s talk about their goals and related R/R.

Course designed by Benoît Courtois

Source: Redbubble.com
 Let’s Buy Some Crypto
… Wait a minute, how do we buy crypto?

Investors and AM have 3 main options to buy/sell crypto

assets:

1. Centralized Exchanges (CEX)

2. Decentralized Exchanges (DEX)
3. Over The Counter (OTC)

What are the main CEXs and DEXs and related pros and
cons? You have 5 minutes.

Course designed by Benoît Courtois

 Exchanges Overview
Main CEXs:
● Binance
● Coinbase
● Kraken
● Crypto.com
● Huobi, etc.
Main DEXs:
● Uniswap
● PancakeSwap
● 1inch, etc.

Course designed by Benoît Courtois

 CEX vs DEX

Criteria CEX DEX

Custody Third party Self-custody

Liquidity High Low*

KYC Mandatory Not necessary yet**
Fees High Low
Tokens variety Low/Medium High
User-friendly Yes No

Course designed by Benoît Courtois

 Access to CEX and DEX
Centralized Exchanges:
● Online registration (app or webpage)
● KYC checks (ID and selfie)
● Final approval
● Ready to buy and sell crypto
Decentralized Exchanges:
● Connect your Web3 wallet
● Ready to swap crypto

Course designed by Benoît Courtois

 NFT Marketplaces
An NFT Marketplace is an online platform that allows
users to create, sell, and trade NFTs. Utilizing blockchain
technology, these platforms support a wide range of
NFTs, enabling artists to earn from their digital creations.

CEXs and DEXs (incl. NFTs):

● Binance, Coinbase, Pancakeswap, etc.
NFT Marketplaces:
● OpenSea
● Rarible
● Magic Eden, etc.

Course designed by Benoît Courtois

 Web3 Wallets?
… The “must have” to use DeFi platforms

Investopedia: “A cryptocurrency/web3 wallet is a digital

wallet that allows you to store the unique digital codes
needed to send and receive crypto assets, such as
Bitcoin or Ethereum.”

Main Web3 wallets:

● MetaMask
● Trust Wallet
● Ledger Live (with Ledger hardware wallet)
● Trezor (with Trezor hardware wallet), etc.

Course designed by Benoît Courtois

 Let’s use Metamask
Main steps to create and use the wallet:
1. Download the App or Google extension
2. Create a wallet
3. Write down the recovery phrase and keep it safe*
4. Start using your wallet
5. Choose the network (ETH, BNB, Polygon, etc.)
6. Connect your wallet and explore Web3 (incl. DeFi
platforms)

>> Let’s open MetaMask.

(*): never share your private key

Course designed by Benoît Courtois

 Hot vs Cold Wallets

Criteria Hot Cold

Internet Connected Not connected

Access to funds Easy Difficult*

Services Range Only storage
Attacks/hacks Easier Very difficult
Main use Beginners and Store large amount of
regular traders crypto (long term)

Course designed by Benoît Courtois

 DEX Exploration
Decentralized Exchanges offer a myriad of products
and services:

● Spot/Leverage trading
● Liquidity pools (farming)
● Staking
● Initial DEX Offering (IDO)
● On-/Off-ramp solutions, etc.

Let’s take a look at Pancakeswap >>

Course designed by Benoît Courtois

 Asset Tokenization
Chainlink: “Asset tokenization involves representing the
ownership rights of real-world assets as digital tokens on a
blockchain.”

2 categories:
● Real-world asset tokenization:
Equity, currencies, bonds, credit, RE,
art, commodities, etc.
● Digital asset tokenization: Only
digital, NFTs, DAO rights, metaverse,
gaming skins, etc.

Course designed by Benoît Courtois

Source: mirror.xyz
 Tokenization Benefits
The tokenization process transforms assets into fractional,
tradable units represented as digital tokens that can be
purchased, sold, or exchanged on the blockchain.

Main benefits:
● Increased liquidity
● Enhanced accessibility
● Transparency and security
● Cost efficiency
● Speed

Course designed by Benoît Courtois

 Market Size
Asset tokenization is a trillion $ market. The total size of
tokenized illiquid assets, including real estate and natural
resources could reach $16.1 trillion by 2030, according to the
Boston Consulting Group (BCG).

Course designed by Benoît Courtois

 Portfolio Management
Crypto portfolio management is evolving
rapidly in response to market sentiment and
increasing mainstream adoption.

Let’s discuss the following:

● Bitcoin halving
● Bull vs Bear
● Investments and level of adoption
● Macro: Inflation, rates hikes, geopolitics,
QE/QT, risk-off/on assets arbitrage etc.

Course designed by Benoît Courtois

 Market Sentiment
The crypto market is more volatile than traditional markets
and follows the same psychological patterns:
● Optimism
● Thrill
● Euphoria
● Complacency
● Anxiety, denial
● Panic, anger, depression, etc.

Where are we now?

Course designed by Benoît Courtois

 Wyckoff Market Cycle
As per the legendary technical analyst Richard Wyckoff the
4 phases of a market cycle are accumulation, markup,
distribution, and markdown.

Let’s take a look >>>

Where are we now?

Course designed by Benoît Courtois

Source: Investing.com
 Risk Management
Asset managers that are offering exposure to crypto assets
must closely monitor and anticipate the following risks:

● Volatility risk
● Regulatory risk
● Security risk
● Liquidity risk
● Custodial risk
● Market sentiment risk

Let’s talk about these risks and related mitigations.

Course designed by Benoît Courtois

Source: journalducoin
 2023 Market Trends
Based on the course readings work in teams to answer the
following questions:

● What is the level of crypto adoption within the fund industry?

● What would be your investment strategy as AM for clients
willing to get crypto exposure? Why?
● What are the main challenges?

You have 10 minutes.

Course designed by Benoît Courtois

 Course Opening
The DeFi revolution will radically transform the financial sector:
● Banking
● Asset Management
● Insurance
● Audit and Accounting
● Trading
● Laws and Regulations
● Real Estate, etc.

"The true sign of intelligence is not knowledge but imagination.”

- Albert Einstein

Course designed by Benoît Courtois

 Course Wrap Up

● Course summary: Recap of the main concepts covered

● Questions & Answers
● Reflections and feedback
● Mandatory readings to prepare the next module

Time: 10min

Course designed by Benoît Courtois

 Thank you!

Course designed by Benoît Courtois