We thank everyone who participated in the AMA for the thoughtful questions and the enthusiasm to our vision, approach to crypto and the FF Token. Below, we would like to share some of the top questions that stood out with the rest of our community!
1. What is the FF Token, its features and advantages?The FF Token replicates the private equity approach of staged, de-risked financing in a token format. The FF Token model can be applied to any sector, representing a well-diversified basket of public and private sector projects.
Its first iteration (the FF1) will be invested in the blockchain sector and will demonstrate how a cryptocurrency — backed by assets — can generate demand and velocity with rapid fund formation. Specifically, the funds raised through the sale of the FF1 goes directly to the Open Source Foundation, which Two Prime manages, with the investments going to public and private sector crypto assets such as cryptocurrencies, debt, and equity instruments.
The FF1 token is a hedged and diversified way to invest in the blockchain industry. Unlike Bitcoin — which investors are HODL-ing and speculating that its value will eventually rise — the FF1 token is backed by a basket of real assets managed by our investment team. Similar to an index token, FF1 is simply a token that represents a diverse range of crypto-assets and real world projects in the blockchain space, providing token holders with exposure to a managed cross-section of the industry. For the long term, if the CTO function is proven, there should be a smoother curve of return in the token price itself.
2.Two Prime’s first FF Token — FF1 — will initially be traded on Japan-based crypto exchange Liquid on 25th February. Why start with Japan? When should I expect to see FF1 traded on exchanges in other regions of the world?
Liquid has a great global reputation amongst its peers, with a strong commitment to compliance and transparency. At the end of the day, our vision is to professionalize the industry and we felt that Liquid would be a great partner for us to launch the inaugural CTO. Particularly, the exchange’s rapid success — — despite the stringent regulatory landscape in Japan — is a testament that the industry can be compliant and bring trust and professionalism to the field.
While we are launching exclusively on Liquid, you can still purchase FF1 as a non-Japanese so long as you go through Liquid’s KYC/AML process. We plan on listing the FF1 to other crypto exchanges later this year. Stay tuned to our Telegram channel and Twitter for more details!
3. Two Prime is a financial company, and financial activities are subject to strict regulation. Have you undergone licensing and regulatory checks? How do you mitigate the potential challenges from financial regulators?
Crypto is at a crossroads and is in need of professionalization in order to move the industry forward. Clear KYC/AML regulations, and compliance from major players, will help greatly improve the industry’s reputation and attract institutional investors to the space.
As such, Two Prime is committed to complying with the regulatory guidelines in all the markets it operates in. To this, we have received two different legal opinions that the FF Token are not considered securities in Hong Kong and Singapore. This is compliant with the Liquid requirements, as well as business operation requirements as a financial management company headquartered in Hong Kong.
Within the United States, Two Prime has registered a Reg D (Rule 506c) vehicle, whose sole role is to purchase the token. The FF1 is considered a security in the U.S.
4. What is your target market and user base? How do you plan to attract users/investors towards Two Prime?
All successful tokens depend on a large community of traders and investors — whether it be retail or institutional token buyers. To start, we are first targeting retail crypto traders, especially in the Asian region, in order to build momentum and demand for the FF1 token.
Since the launch of Two Prime and the FF Token during the Crypto Finance Conference in St. Moritz, we have been fortunate to receive positive feedback and interest, both from inside and outside the crypto industry. When speaking with traditional finance players, we spend a lot of effort and time discussing the potential of crypto and what makes the FF1 unique. At the end of the day, FF1 is a proxy to a managed basket of crypto assets, so it’s a structure that institutional investors are familiar with.
In terms of retail investors, we are only targeting non-U.S. investors. And through the FF1, retail investors will have access to a professionally managed portfolio of diversified assets in the blockchain space. Retail investors will no longer have to pick individual tokens and take on a high level of risk.
5. Rome wasn’t built in one day. What is the biggest challenge for Two Prime? How will your team overcome these challenges and become a successful project?
The biggest challenge is communicating this opportunity to people who are not familiar with it. There is so much noise in the blockchain space, and many investors have been burned by crypto during the last ICO crash. As a result, we may come up against a lot of industry fatigue or negative industry reputation. For Two Prime, the strength of our team and the unique structure of our product has made all the difference. Because we are doing something new, it will take time to orient people to a new approach. We place a lot of emphasis in communicating clearly with our audiences, creating great products, and acting in compliance with regulations.
As with most tokens on cryptocurrency exchanges, there are also volatility and liquidity challenges. We tackle this challenge in two ways. Firstly, unlike the typical ICO/IEO, the CTO model does not release all of the tokens into circulation at once. The CTO continuously releases additional tokens into circulation based on demand, thereby controlling the supply. In addition, our market makers act as intermediaries to smooth out the volatility as much as we can.
6. Who is responsible for funds allocation once the capital is raised?Two Prime’s core investment team manages the FF portfolio as an active investor to enhance our risk-adjusted returns for the long term, targeting a 1.55 Sharpe Ratio and a Beta of 0.75 or less compared to Bitcoin. The investment team — consisting of Two Prime co-founders Marc Fleury and Alex Blum, and quant and portfolio management expert Thejas Nalval — is comprised of seasoned specialists in traditional finance, merging tech, and crypto.
You may already be familiar with Two Prime’s co-founders: Dr. Marc Fleury is Two Prime’s CEO and a seasoned investor in deep technology and an open source pioneer. Alexander S. Blum is Two Prime’s COO and blockchain expert. Alex has led blockchain hedge funds and startups for over seven years.
Thejas Nalval, Director of Finance, has more than 15 years of portfolio management and advisory expertise. His experience prior to digital assets was rooted in traditional markets, having spent the bulk of his career as an equity trader with Goldman Sachs. Thejas is a portfolio manager in the digital asset space, where he most recently was managing a relative value strategy for an actively managed quantitative fund. Thejas holds a BA from Rutgers University and an MBA from the Stern School of Business at NYU.
7. What is Two Prime Partner Program? Can every project apply to this program, which projects will you fund at the end of the process?
We are looking for great projects to allocate funds from the sale of our token to. If you have a blockchain investment fund or an income producing financial product (like lending on BTC with interest or crypto mining operations), we are looking forward to hearing from you. Applications are open on twoprime.io/partner.
Our official partners so far include NGC Ventures and Babel Finance. More partners will be announced in the near future