In a recent thread shared by Prithvir, CEO of wallet aggregator Loch Chain, a meticulous analysis was conducted on Abraxas Capital Management, a digital asset hedge fund based in London, revealing some intriguing insights into their trading strategies, performance, and current holdings in the cryptocurrency space.
Abraxas, not just a mere player but a titan, has realized a staggering $5 billion in profits since its inception just three years ago. The hedge fund has not only demonstrated a robust trading strategy but also showcased the potential and efficacy of decentralized finance (DeFi) in generating substantial gains.
What you'll learn 👉
Trading Strategy: A Blend of Market-Neutral and DeFi Approaches
- Market-Neutral Strategies: Abraxas has adeptly employed market-neutral strategies, providing directional exposure while seeking to outperform Ethereum (ETH).
- DeFi Protocols: A significant portion of gains were derived from credit and debt strategies involving prominent DeFi protocols such as @LidoFinance, @AaveAave, @StargateFinance, and @compoundfinance.
- ETH Conversions: The fund converted $5.32 billion of ETH into a whopping $8.84 billion.
- Stablecoins and Derivatives: Trading predominantly revolved around stablecoins and ETH/BTC derivatives, steering clear of altcoins.
- Trade Volume: Over the past two years, Abraxas executed more than 10,000 trades, averaging 13 trades per day.
Current Holdings: A Closer Look
- Spot Positions ($36m):
- wBTC: Cost basis of $36.1m, with a current value of $36.3m, marking a 0.71% gain.
- DeFi Balance Sheet ($86.38m):
- Credit Positions: $104m
- Debt Positions: $18.57m
Historic Performance: Striking Numbers and Efficiency
- Peak Spot Positions: In 2021, spot positions reached their zenith at $12 billion.
- Transaction Volume: Abraxas transacted over $100 billion of volume on Ethereum, spending a mere $100,000 in gas fees, which is less than 0.00015%. This underscores the unparalleled efficiency of on-chain settlement, a feat unattainable via traditional financial channels.
- Primary Counterparties: Notable counterparties include @circle ($4.44b), @binance ($3.4b), @bitfinex ($2.15b), @LidoFinance ($1.9b), @compound ($1.67b), @coinbase ($467m), and @optimism gateway ($64m).
Key Takeaways: Gleaning Insights from Abraxas’ Strategy
- Substantial Gains with ETH Derivatives: Large asset managers, like Abraxas, can realize substantial gains trading derivatives of ETH on-chain.
- Opportunities in DeFi: A myriad of opportunities exists in decentralized finance, spanning across lending, staking, and liquidity pools.
- Altcoins Not a Necessity: One doesn’t need to delve into the long tail of altcoins to achieve outsized returns.
- Minimized Transaction Fees: Handling transactions worth hundreds of billions of dollars on-chain while incurring de minimus transaction fees is not only feasible but has been effectively demonstrated.
This analysis by Loch Chain provides a fascinating glimpse into the strategies and performance of Abraxas Capital Management, highlighting the potent possibilities within the crypto and DeFi spaces when navigated with astute strategies and a keen understanding of the market dynamics.
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