Welcome to dFund

dFund is a platform that makes decentralized hedge funds and loans possible, operating in the vast and technically superb Polkadot ecosystem. The dFund network is composed of different decentralized autonomous organization (DAO) modules acting as decentralized hedge funds / investment funds, or as we like to call them, dFunds. Investors can invest / pool money into these dFunds, which would be managed by that dFund’s manager and invested for a profit, just like traditional hedge funds. These dFunds can set their terms and conditions, such as the success fee they will charge on achieved profits, and their internal organization, such as the DAO module (in this case a dFund) members electing the dFund manager(s).

dFunds will be rated and ranked by their performance, so the decentralized hedge funds with the highest returns will be the most visible ones on the website and dApp of the platform, and users will be able to see the returns and profits (in %) of every dFund which will allow them to make informed decisions about in which dFund they want to invest. Obviously, the highest rated dFunds would justifiably charge the highest fees because they are considered high reward / profitability and low risk.Returns and performance will be easy to audit and verify as all transactions are done within smart contracts and on the blockchain, which means that all transactions are 100% transparent, auditable and visible on the public ledger (blockchain).

Users will be able to take out a loan if they provide a collateral, the requirements for the collateral are set by the lender, so depending on their risk tolerance, some lenders will set a requirement that the collateral must be at least 120% of the loan amount, while some high-risk enjoyers can set the collateral requirement to be only 50% of the loan, ensuring total autonomy and freedom of choice for both the lenders and the borrowers. Lenders also set the interest rate and the duration of the loan, and obviously low collateral requirement loans will have a much higher interest rate than high collateral requirement loans.

Borrowers will be rated and ranked with a credit score system, so reliable borrowers who have always paid the loan amount back and honored every agreement will have a higher credit score which would provide them with lower interest rates as they are a low-risk lender who have not defaulted on their loans yet. On the other hand, if a borrower has defaulted many times, they will receive a bad credit ranking, which would mean that they will have to pay higher interest and provide a higher collateral amount, as they are a high-risk borrower

Users will be able to trade their loans on a secondary marketplace, these smart contracts, including both loans and dFund subscriptions / investments, would be able to be instantly transformed into synthetic products within the platform which can be bought, sold and traded. So for example, if you are lending a loan with a 10% interest rate, but you need money / liquidity urgently or you simply don’t want to wait until the end of the loan duration, you can instead decide to sell your loan, and maybe someone will buy it for 4% instantly, which would mean a 6% profit for them after they receive the original 10% interest at the end of the loan’s duration, which is beneficial for both a buyer and the seller. For the seller (the original lender), they don’t have to wait and they are getting a smaller profit with no risk, and for the buyer of the loan, they are receiving a higher profit for waiting until the end of the loan’s duration. This is in many ways similar to real life options and futures trading, which is extremely popular right now.

Stake in dFunds can also be bought and sold, so for example if you have invested into a dFund that has an average return of 40%, you can sell your stake in the dFund, maybe a buyer will decide to pay you 10% on top of the stake amount, and then you are delegating the risk and waiting time to them while receiving a no risk return, just like the loans secondary market.