Above all, there are questions such as: Which project is promising, which problems are being solved and where are possible weak points. In addition, the development of projects should also be monitored. This is a considerable amount of work and not feasible for every potential investor. Investments are blocked, especially for small, private investors.
A similar problem also exists in the financial market, where not everyone can and does not want to find out about individual companies and markets, work through their annual reports and weigh up how much growth potential lies in this project or an entire industry.
This problem has been solved very elegantly with investment funds. An investment fund bundles the investors’ money and then invests it in several investment areas (equities, bonds, real estate, etc.). The risk is thus spread and minimized. If a company goes bankrupt, the entire investment is not necessarily lost. In return for the lower risk, yields are of course also lower.
There are various forms of investment funds. Very specialised funds (e. g. equity funds that only invest in technology groups) or funds with very low risk (e. g. bond funds). In addition, there are funds that are actively managed by a manager or passively follow a certain index (e. g. DAX).
For the cryptoworld there is no such thing yet. You cannot invest in a bank in a fund that specializes in cryptocurrencies/projects. This is where ICONOMI comes in.
What is the concept of ICONOMI?
The idea behind ICONOMI is to provide a platform where you can easily invest in passive or active crypto funds. In order to build up this platform, ICONOMI conducted an ICO itself in October 2016, earning about USD 10 million. In return, 85 million ICNs (ERC-20 tokens) were distributed.
The funds are exclusively specialized in tokens/currencies from the cryptoworld. ICONOMI calls the cryptocurrencies “digital assets”. This term covers all common tokens from Bitcoin to Ethereum, Lisk to Golem. These digital assets are pooled in funds.
This is either provided by ICONOMI itself or by external’ DAA’ managers (Digital Asset Arrray Manager). The DAA manager can use the platform to describe the composition of his or her fund and explain his or her investment philosophy and objectives. If you are convinced of the fund as a potential investor, you can then invest in it via the platform.
Since 29.09.2017 a total of 12′ foreign’ DAAs have been admitted. These can be viewed here. More are to follow next year.
The BLX and CCP from ICONOMI
ICONOMI itself offers two separate funds for the entry. The BLX (Columbus Capital Blockchain Index) and the CCP (Columbus Capital Pinta).
The BLX is a passively managed index fund. This fund is designed to cover the entire crypto economy. Therefore, the tokens must meet certain criteria. One such criterion is, for example, that the market capitalization of all tokens taken up corresponds to more than 70% of the total market capitalization in the crypto market. Also, all tokens must be based on blockchain technology.
ICONOMI has defined the exact requirements for the BLX here (link: https://medium.com/iconominet/iconomi-icnx-daa-rules-update-5a59dd2761c). The composition of the fund is changed every month according to the criteria and market situation and can be viewed here at any time.
The CCP is an actively managed fund. A team of experts leads the CCP and has a higher return target than the BLX. Investments are also being made in start-ups and lucrative ICOs. Columbus Capital manages this fund. Investing in the CCP is only indirect. The capital used consists of the unused ICO assets. If you buy or hold ICONOMI’s ICN tokens, you are automatically invested in the CCP fund.
How does it work
After registering and signing up on the ICONOMI platform, you can transfer a total of 5 different currencies. Bitcoin, Ether, CFI, ICN and BLX tokens are accepted. The ICONOMI team is working on the idea that USD and Euro can also be deposited.
On the platform you can then invest in the different DAAs. Currently, only the BLX fund offered by ICONOMI itself is available.
What happens if you invest in the BLX fund?
Let’s assume that ethers worth 1000€ will be deposited and invested in the BLX index. You buy the corresponding amount of BLX tokens, the token acts like a share certificate in the fund. The price of the BLX Index is made up of the current prices of the cryptocurrencies.
For example, the BLX index is currently composed of 15% bitcoin and 15% ether, 13% dash and monero, 10% lisk and many more around 5% (Golem, Steem, Waves, etc.). If € 1000 is invested in the fund, these will be invested in the individual cryptocurrencies according to their shares. So for 150€ Bitcoin and Ether are bought and stored in cold wallets.
Another special feature is that BLX token is an ERC-20 token on the Ethereum blockchain. This means that you can store it on your own paper-wallet/hardware-wallet (Trezor, LedgerS).
What is the ICN all about?
The ICN token has several functions. On one hand, the ICN token is needed to be able to interact on the ICONOMI platform and get certain accesses. More detailed information on the individual functions is to be provided by the end of the year.
The ICN token also stands for the entire company ICONOMI. It is one share, so to speak. Although this is not covered by the regulatory framework, the ICONOMI team has spoken out clearly in supporting this decision and is pressing ahead. This allows ICONOMI to distribute the company’s profit indirectly to shareholders (ICN holders). ICONOMI buys ICN from the market with part of its income and sends it to a Smart Contract, which can no longer send it.
The tokens are burned. As a result, fewer and fewer ICNs are in circulation, leading to an increase in ICN prices. Each holder of ICN thus participates indirectly and receives a dividend through an increase in value.
Business model (ICN buy-back / fees)
ICONOMI’s business model, like the one of all platforms, is based on fees. All funds must pay a fee to ICONOMI. With the BLX, each investor has to pay an annual fee of 3%, which is calculated pro proportionally every 6 hours. In addition, everyone has to pay a sales fee of 0.5%. The closed-end CCP fund pays a 20% performance fee to ICONOMI.
In the case of foreign DAAs, these 30% of the self-determined fee must be assigned and there is a 0.1% purchase and sale fee (however, these have not yet been finally determined). All proceeds will be distributed to ICN holders through the above-mentioned buy-back of ICN.
Team of ICONOMI
ICONOMI is a Slovenian company founded by the same team that developed Cashila. Since the ICO, the team has grown to a total of 27 members. Tim M. Zagar, Jani Valjave, Ervin Usic Kovac and Gregor Lah are the founders.
A real disadvantage is that ICONOMI, similar to a normal crypto exchange, needs trust. ICONOMI itself stores the deposited currencies and controls the private keys. The same applies to the US dollar and euro.This makes it not really a decentralized project.
ICONOMI uses an old business principle from the investment industry and has only transferred it to the world of cryptocurrencies. However, this offers many advantages, since on the one hand this financial service does not yet exist for cryptocurrencies, and on the other hand these are proven concepts.
The platform itself will unlock its full potential when the euro and dollar can be deposited. This simplifies the investment in crypto currencies for risk-averse average users. This also includes the intuitive interface of ICONOMI. The development of the DAAs will be interesting. With a wide assortment, they could attract a large number of investors.