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  • Writer's pictureMichael Schwartz

In the Arena | April 1, 2024



Arena Digital Capital Management was founded in January 2022 by three experienced traditional finance hedge fund professionals who have been deploying personal capital in the digital asset ecosystem since 2018. The team has managed billions of dollars of capital for high net worth individuals, family offices, and institutions ranging from pension plans and endowments to sovereign wealth funds. We have worked closely with institutional consultants, RIAs, and other advisors in serving their clients.


In May 2022 we launched Arena Digital Capital Partners, with the goal of providing a multi-strategy investment vehicle to access the digital asset ecosystem. Our mandate is to offer broad exposure across the growing digital asset and blockchain sector with an appropriate level of diversification, professional oversight, and manager selection. Our collection of skill sets and our history in the business allows us to understand, assess, and engage with the practitioners of this nascent asset class with a level of diligence required to be responsible stewards of capital. We are happy to periodically share our observations with you.

 

BlackRock launches tokenized fund on Ethereum blockchain – Larry Fink already following through on promise of “technological revolution” tokenizing every financial asset

BlackRock announced that it is working with Securitize to launch its first tokenized money market fund on the Ethereum blockchain. The fund will offer a stable value of $1 per token and pay daily accrued dividends directly to investors' wallets as new tokens each month. Investors will be able to manage funds on chain 24/7/365. Importantly, the BlackRock USD Institutional Digital Liquidity Fund (Ltd) will be hosted on a public blockchain, in contrast to the permissioned or private blockchains used by other financial institutions. The technological revolution is happening – traditional financial products are being

made more accessible and usable through digitization.


London Stock Exchange to list Bitcoin and Ethereum ETNs and Hong Kong to permit in-kind BTC redemptions for ETFs – growing global adoption of exchange traded digital assets

The London Stock Exchange expects to start trading Bitcoin and Ethereum exchange traded notes (ETNs) by late May. Like ETFs, the ETNs are traded on a stock exchange and provide an easily accessible and regulated way for investors to gain exposure to digital assets. The ETNs are unsecured debt securities that represent interests in the underlying digital asset backed by the credit of the issuer. The Hong Kong Securities and Futures Commission is expected to allow in-kind creations and redemptions for spot BTC

ETFs later this quarter. In-kind redemptions, in contrast to cash-settled BTC ETFs in the US, are preferred by investors for cost, tax and liquidity reasons because the underlying asset does not need to be sold on redemption. The more favorable in-kind ETFs are expected to attract additional Asian-based capital into the asset. We call your attention to the continued global adoption of exchange traded access to Bitcoin and other digital assets.


Global mapping network uses crypto-incentives to create and curate “real time” map of the world – token rewards facilitate the buildout of critical physical infrastructure

Decentralized Physical Infrastructure Networks (DePin) refers to the use of crypto-incentives (network tokens) to coordinate the buildout and operation of critical physical infrastructure. We call your attention to one interesting project. Hivemapper is a global mapping network in which the contributors send data from automobile dashboard mounted cameras that results in a curated “real time” map of the world. Contributors receive HONEY tokens ($0.157) and share in the commercial deployment of the resulting map when revenues are used to buy back (burn) tokens. In less than a year of existence, the network has mapped over 10% of the world’s roads with over 30,000 individual contributors. We highlight a novel digital asset use case in which crypto rewards facilitate the build out of critical infrastructure that is less reliant on central authorities and optimizes the use of excess resources. Messari has identified at least six categories of DePIN, each looking to disrupt a $1T+ industry – Compute, Wireless, Energy, AI, Services, and Sensors.


Chart of the Month


BTC as hedge against USD Debasement



Arena Digital Capital Partners is a liquid evergreen fund open to monthly subscriptions. We are always happy to discuss further with you or investors you think may have an interest in the sector. Please reach out to Bill Cline at williamc@arenadigital.capital.


Sincerely,


The Arena Digital Capital Management Team

Michael Schwartz, Michael Prober & William Cline

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