Digital Asset
Risk Management Overview

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Providing unparalleled management of digital asset investment risk is the primary focus of DARMA’s investment program.

Risk management is at the core of our entire trading operation, and it is rooted in every aspect of managing our clients’ assets. Our superior technical expertise allows us to understand and manage the investment risks uniquely associated with digital assets.

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How We Manage:

DARMA Capital combines comprehensive blockchain research and well defined risk controls to identify and manage digital assets ideally suited for institutional investment.

Market Risk

DARMA takes a quantitative approach to managing market risk by defining different risk regimes within a structure's price framework. The methodology, developed from over 30 years of applied analytics, provides objective context to identify where shifts in risk states occur.

Digital Asset Risk

As a new asset class, digital assets have their own unique set of investment risks. DARMA Capital has developed specific processes for monitoring and managing risks specifically associated with digital assets.

How We Manage Market Risk

MARKET RISK PROFILE

DARMA analyzes Risk State and Risk Structure characteristics to determine optimal trading tactics in a given price environment.

Risk State

Risk State regime characteristics set a price behavior expectation for a given trade period.

These characteristics provide context to which strategies and tactics can be aligned to reduce risk and optimize performance.

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Risk Structure

The Risk Structure identifies the points of dynamic equilibrium where shifts in risk states occur.

Market price action, within risk structure, in the context of the risk state, defines the value at risk and offers a framework to standardize execution strategies.

HEDGE STRATEGY THEMES

The dynamics between risk structure and risk state produce specific strategy themes whose value is determined by the markets current position within the risk structure in the context of the risk state. DARMA standardizes the execution of its market risk management program to each strategy theme and aligns trading tactics to optimize performance.

Risk Profit

A Profit Giveback hedge strategy theme is basically a REVERSAL strategy that is applied after a “false breakout.”

Extreme

An Extreme hedge strategy theme is basically a momentum FADE strategy that is applied at exhastive extremes.

Momentum

A Momentum Shift hedge strategy theme is used to participate in transitional shifts in the risk state.

Breakdown

A Breakdown hedge strategy theme is applied to protect against negative downside price events.

How We Manage Digital Asset Risk

Compliance-Source of Funds Risk
Source of Risk

We utilize blockchain IP for tracking in-kind contributions from investors to reduce compliance risk in addition to incorporating traditional AML/ BSA procedures.

Counter-Party and Source of Asset Risk
Counter Risk

We leverage blockchain IP to track our counterparties’ wallets and associated wallets for market edge and illicit asset discovery.

Custody Risk
Custody Risk

We utilize regulated qualified custodians to hold our assets with loss of asset insurance coverage.

Exchange Health Risk
Exchange Health Risk

We use the blockchain to track asset flow averages and spikes in conjunction with social media acceleration.

NAV Price Risk
Nav Risk

We regularly collaborate with industry leaders to establish regulator approved benchmarks not reliant on unregulated exchange pricing to protect investors.

Regulatory Risk
Regulatory Risk

We participate in several advisory coalitions educating the CFTC, SEC, US and Puerto Rico banking commissions among others to lay a proper institutional framework.

Settlement Risk
Settlement Risk

We use an OTC exchange platform to eliminate time difference in exchanging fiat for cryptocurrency.

Up Next: Our Investment Programs

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If you are an institution currently invested or considering an investment in digital assets, contact us to learn more about our investment programs.

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