Digital assets investment and advisory specialist Zerocap has developed a bespoke vehicle to provide investors with an opportunity to potentially benefit by harvesting yield opportunities in the Ethereum (ETH) market.
The Zerocap ETH Merge Note is a structured product that provides dual outcomes on the back of Ethereum’s Proof-of-Stake (PoS) merge this month. By selling the topside return performance above 20% to other market participants, investors could generate yields from the high price of volatility right now. This yield is then harvested to be paid out either in a fixed coupon (40%) or in a discount entry into Ethereum (-15%), depending on where the market is at expiry.
Zerocap brings well-honed investment techniques, instruments and strategies from traditional finance to provide a range of structured products and investment strategies. These aim to enable investors access and enhance yield opportunities on their portfolio, manage the risk/reward equation in the highly volatile crypto markets, and manage market entry and exit risks.
The ETH Merge Note is the latest structured product from Zerocap who have already offered structured products providing yield and growth opportunities in digital assets. Zerocap have also developed and made available proprietary digital asset investment strategies such as the Smart Beta Bitcoin strategy.
Zerocap Chief Investment Officer Jon de Wet said, “It’s fascinating times in cryptoland with widespread institutional adoption continuing and significant venture capital available but currently sitting on the sidelines. However, the macroeconomic environment is clearly weighing heavily on all risk assets, with geopolitical concerns reshaping east and west relationships and inflation trending higher.
“Meanwhile technology breakthroughs are happening that will ultimately take blockchain protocols to the next level. For instance, it’s expected that the upcoming Ethereum (ETH) software upgrade may not only bring scalability improvements, faster transactions, and lower fees, but also turn an energy intensive asset into an ESG friendly one – reducing its carbon footprint by 99.5%.
“The only certainty in digital asset markets is the ebb and flow of volatility. Harvesting this volatility can be an effective way to capture value from the changing market sentiment in Ethereum right now,” Jon de Wet said.
Zerocap believes that the potential value of well designed structured products are generally higher in the crypto space when compared to traditional markets because of the ingrained volatility – for instance bitcoin is six to seven times as volatile as equity markets. Crypto is the one of the few markets in the world that continually has a higher implied volatility ratio when compared to realised volatility. This means that options are priced at a premium, creating the potential opportunity for higher yields on positions. The Zerocap team aims to create defined investing outcomes that take advantage of inefficiencies in the volatile market environments.
Zerocap’s mantra is zero friction, borderless finance. Zerocap is Australia’s leading full-service crypto platform, providing tailored investment products and secure custody to a global client base of wholesale investors, institutions, HNWs and family offices.
Zerocap creates bespoke solutions for investors to build and diversify their investment portfolio with digital assets, through a range of regulated and direct exposure products across the volatility spectrum to fit with their desired levels of investment and risk.
Zerocap’s people bring a deep understanding of digital asset technology, trading, and portfolio optimisation, having processed a billion dollars of digital assets for private investors, family offices and institutions. Zerocap has assembled a team of blockchain experts, institutional portfolio managers and advisers, and experienced traders; backed by strong, compliance, security and reporting functions.
Zerocap provides market leading institutional grade custody and storage facilities backed by insurance policies for all its investors, utilising best-in-class technology such as MPC cryptography and hardware isolation.