At the highly anticipated Bitcoin 2024 conference this past July, Boreal, a market-neutral decentralized finance (DeFi) hedge fund, emerged victorious in the Bitcoin Alpha Competition. This recognition, accorded by notable entities in finance, includes Samara Alpha Management and Bitcoin Magazine Pro, comes with a substantial prize of $1 million in seed capital.
With this funding, Boreal gains access to Samara’s institutional-grade infrastructure, enabling it to effectively manage its fund. The fund’s innovative trading strategy leverages various DeFi protocols to produce yield on investments such as US dollars, Bitcoin, and Ether.
“Even in bearish conditions, there’s potential for generating returns in DeFi,” stated Boreal founder Evan Morris, whose extensive background in both traditional finance and the crypto space positions him uniquely for tackling today’s financial challenges. He began his journey in cryptocurrency four years prior, managing investments with colleagues before transitioning to a larger firm where he operated DeFi strategies.
Adil Abdulali, the Chief Investment Officer at Samara, expressed enthusiasm about collaborating with Boreal, stating, “Evan has a proven track record and embodies the right risk framework for our strategy. His maturity in trading is invaluable, especially in the evolving crypto landscape.” Samara plans to offer Boreal comprehensive support, including infrastructure for administration, auditing, and financial management.
Morris envisions a significant evolution in the DeFi space, particularly concerning Bitcoin. “As Bitcoin integrates into DeFi, we can replicate the functions of stablecoins while innovating beyond traditional use cases,” he explained. According to both Morris and Abdulali, the future of DeFi will rely heavily on wrapped Bitcoin and Bitcoin derivatives, moving away from the USDC- and Tether-centric DeFi of the past.
Abdulali shared insights about Bitcoin’s unique position in the investment ecosystem, declaring, “Bitcoin is superior collateral; it’s fundamentally distinct from other cryptocurrencies. Our bitcoin-denominated fund operates with a similar strategy as our dollar-denominated counterpart but exclusively utilizes Bitcoin for transactions.” He emphasized the potential of utilizing Bitcoin in new DeFi protocols, such as Babylon, through innovative market-making strategies.
Morris highlighted notable advancements in DeFi over the past four years. “New tools for API alerts on smart contracts and enhanced evaluation metrics for smart contract security have emerged,” he noted. Improved cybersecurity measures and wallet technology have made way for institutional-grade DeFi products, a transition that Abdulali is keen to exploit before the influx of institutional investors.
“It could take time before institutional capital embraces DeFi fully; they have only begun to dip their toes into Bitcoin,” stated Abdulali. This lag in institutional adoption means that opportunities for significant returns exist for early adopters like Boreal. “For those willing to engage in the DeFi space now, the prospects for attractive yields are promising,” he concluded.
