Institutional Investors Are Now Using Shrimpy to Rebalance Their Crypto Funds

June 23rd 2022 1,448 reads

@ShrimpyApp
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For years we’ve been hearing how this year will be the year institutional investors start buying cryptocurrencies. If it wasn’t 2017 it will definitely be 2018. The truth is, institutional investors are already buying cryptoassets and more will follow suit. This is not an on-off switch, but a gradient. Hundreds of new hedge funds have been created this year specifically for investing in cryptocurrency. We’re sure next year we’ll see even more.

This is a welcome development, not only due to the increased demand for crypto which will help the price long-term, but due to the technological developments which this new capital will accelerate. Crypto is clearly here to stay and more investors are biting at the bit to own a piece of the action — assuming the infrastructure is in place and they can do proper due diligence.

Insitutional Investors are Under-Allocated in Crypto

Jim Kyung-Soo Liew at Johns Hopkins University Carey Business School released a research paper in December showing how institutional investors are under-allocated in bitcoin. His risk analysis shows these funds should have at least 1.3% of funds in bitcoin. Many endowments are on the fence right now with pension funds likely following.

Adding BTC to a portfolio increases real and risk-adjusted returns moving the Sharpe ratio from 1.76 to 2.03.

“Will there be volatility? Absolutely, but for institutional investors, they need to think long term,” Liew said. “Nobody wants to be the first one, but they want to be fast followers.”

First Movers

Luckily, there are already first movers on Shrimpy — institutional investors who use our standard platform for managing their portfolios. Shrimpy is opening up a new platform designed specifically for institutional investors in response to requests from these funds. This platform will provide the most powerful set of tools on the market to manage institutional funds. Whether you are managing a million dollars in cryptocurrency or nearly a billion, we have the solutions that will complete your management process.

Although we will develop solutions specifically for institutional investors this will also spur us to create new features for our non-institutional users. We will get more input on what features are needed to continue making Shrimpy the easiest, most secure platform for managing a diverse crypto portfolio.

Let’s examine some of our offerings. The bold italicized items are already supported today. The other items are on our roadmap and can be prioritized according to the needs of our users. Areas we will cover include:

Rebalancing

Rebalancing has been the cornerstone strategy for funds over recent decades. Shrimpy is the easiest platform to automate this process.

Automated rebalance based on market cap.
Ability to fix the percentages of desired assets (for example: 20% BTC, 20% ETH). All other assets could then be weighted by market cap.
Schedule the exact time and day of rebalance.
Additional control over rebalancing trading process. E.g. limiting how much of an asset is traded per hour, or optimizing trades based on market movements.

Multi-Exchange Support

Holding assets across multiple exchanges reduces risk and increases liquidity. Additionally, this provides arbitrage-like opportunities where Shrimpy can purchase assets at the best price across these exchanges.

Integration with top exchanges such as Binance and Bittrex.
Integration with additional exchanges such as Coinbase Pro and others based on request.
Rebalance across multiple exchanges.
Notifications can be sent if assets need to be transferred to a different exchange.

Security

Shrimpy was designed with security in mind from the beginning. We use solutions which are trusted by the largest technology innovators. Shrimpy is the only rebalancing platform on the market which is designed for institutional investors.

Some of the features that are currently available or will be available include:

A dedicated server designed to only manage your assets. Access to this server is through a personalized subdomain. E.g. companyname.shrimpy.io
API IP whitelist so your server is the only machine which can perform trades through the API.
Additional IP whitelist to restrict access to your server. This is useful if you want to only be able to access Shrimpy from a single location, like your office.
Two-Factor Authentication (“2FA”) provided by Auth0 which uses the Google Authenticator mobile application.
API keys are encrypted and key management is rooted in hardware security modules (“HSMs”).
The HSMs are provided by AWS, which use FIPS 140–2 validated hardware.
HTTPS (All website data is transmitted over encrypted Transport Layer Security (“TLS”) connections (i.e., HTTPS). Both data at rest and in motion is encrypted — all network communication uses TLS with at least 128-bit AES encryption. The connection uses TLS v1.2, and it is encrypted and authenticated using AES_128_GCM and uses ECDHE_RSA as the key exchange mechanism.)
DDOS mitigation through Cloudflare.

Cold Storage Monitoring

Exchanges can get hacked. To mitigate this risk, we will offer solutions which allow you to maintain most of your assets offline. This ensures the security of assets while still providing enough liquidity on exchanges to perform the necessary rebalances.

Offline assets can be manually entered for inclusion in rebalance calculations.
Automatic updating of offline assets via public address.

Reporting and Monitoring

Between and after each rebalance, you will want to know how your investments are performing. Allowing Shrimpy to perform rebalancing for your portfolio provides a unique opportunity for us to construct these reports and provide you a comprehensive view of the metrics that matter to you.

Read only API key monitoring to ensure secondary source of verification.
Rebalance reports which include every trade which was made, the amount of fees paid in each exchange, and further summaries.
Performance metrics.
Online / offline asset monitoring. This will send a notification when assets should be pulled online from your cold storage or placed in cold storage from an exchange depending on rebalancing activity and individualized factors.

Sign Up

Now that you know a little bit more about the solutions we offer, send us an email at [email protected] to set up a free trial run with Shrimpy. As we continue to develop the platform, we will work with you 1-on-1 to ensure our feature set fits your needs.

We are currently offering 3 months of free service to all new institutional investors. This includes every feature we have to offer and support for custom development. Don’t miss out on the safest, simplest way to grow and manage your fund.

Do you still have questions or want to see a live demo? Send us an email at [email protected].

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