Lithuania’s first Decentralized Finance (DeFi) Investment Fund – MEV Capital Stablecoin Enhanced Yield Fund – will invest in cryptoassets

  • 2022-02-22

Lighthouse Asset Management has launched Lithuania’s first Decentralized Finance (DeFi) Investment Fund – the MEV Capital Stablecoin Enhanced Yield Fund. The Fund, whose units are available only to professional investors, has a target size of USD 50 million.

The new fund focuses on the blockchain technology-based decentralized finance market, and the stablecoins used in that market have been chosen as one of the fund’s main investment vehicles.

“The creation of this fund is a noteworthy event, reflecting changes in the traditional financial and the crypto markets, which are gradually finding more points of convergence. Decentralized Finance is a kind of fusion of those two worlds, taking advantage of the benefits of both: DeFi protocols use stablecoins and traditional financial and investment management techniques are applied, but transactions are immutable and settled in a permissionless way because there are no financial intermediaries involved. This Fund clearly stands out in our portfolio of funds both for its investment strategy and its management approach,” says Šarūnas Butkus, the Chairman of the Board at Lighthouse Asset Management.

The tools needed to monitor and analyse the Decentralized Finance market have been provided to the fund management company by the DeFi & Web3 research and development firm MEV Capital.

“Decentralized Finance combines the experience of the traditional financial system with digital innovations, so it’s no wonder that in just a few years DeFi’s Total Value Locked (TVL) has reached USD 200 billion. We are the only company in Lithuania developing analytics tools for the decentralized finance market. Blockchain technology enables investors to track many indicators in real-time, meaning that huge amounts of data must be processed every second. Our company helps analyse and organise that information, so all that our clients have to do is make decisions. We hope that partnership with Lighthouse Asset Management will enable us to understand investors’ needs even better and expand our basket of products,” says MEV Capital Investment Manager Laurent Bourquin.

In managing investments, the MEV Capital Stablecoin Enhanced Yield Fund uses techniques of liquidity provision, price arbitrage, carry trading (where a low-interest-rate currency is converted into a currency with a higher return), and on-chain loan liquidations.

The Fund plans by 2024 to fully form its portfolio, with a value of USD 50 million. 

The Fund formally began operations in September, when its rules were approved by the Bank of Lithuania’s Financial Services and Market Supervision Department. Legal and technological arrangements for the Fund took several months.

In addition to this Fund, Lighthouse Asset Management manages two others whose strategies focus on real estate, digital innovations, high-tech projects and start-ups.

The potential of Decentralized Finance

The term Decentralized Finance (DeFi) refers to financing programmes carried out by means of smart contracts on a blockchain. DeFi allows borrowing and lending operations and trading in financial derivatives, insurance, and assets. It differs from the traditional financial market in that all operations are performed by the two parties to the transaction, without the involvement of any intermediary (bank or other financial or credit institution).

While DeFi protocols use a variety of cryptocurrencies, a large part of which is settled in stablecoins – cryptocurrencies which are pegged to some other currency, such as the US dollar.

As stablecoins are directly tied to another currency, in the long run their value is less volatile. The total size of the stablecoin market is currently more than USD 100 billion.

The MEV Capital Stablecoin Enhanced Yield Fund in brief:

- Intended only for professional investors

- Invests in stablecoins: BUSD, DAI, ALUSD, LUSD, TUSD, USDC, USDN, USDP, USDT, YUSD, etc.

- Has a 2% annual management fee and a 20% performance fee

- Targets an internal rate of return of 20%

- Managed by Lighthouse Asset Management

- Audited by Moore Mackonis, UAB

About Lighthouse Asset Management

Lighthouse Asset Management is the first licenced investment management company in Western Lithuania. The main investment directions of the funds it manages are real estate, digital innovations, high-tech projects and start-ups, and other businesses that create real value for the environment, society and the economy. Its funds’ operations are audited annually and are licenced and supervised by the Bank of Lithuania.

About MEV Capital

MEV Capital is the first Decentralized Finance market research and development company in Lithuania. It develops tools for real-time DeFi market data analysis and intelligence, web3 integrations and proprietary trading algorithms for operations in both centralized and decentralized crypto trading exchanges. The company’s own financial and blockchain analysts continually monitor the development of Decentralized Finance services and apply that know-how to enhance MEV Capital’s investment strategies.