Q&A with Christopher Brookins of Valiendero Digital Assets
Founder and CIO
Valiendero Digital Assets is a machine learning and data-driven cryptocurrency investment fund, founded out of Carnegie Mellon, and powered by its proprietary investment platform, vd.ai. The vd.ai platform encompasses several quantitative trading algorithms, strategies, and risk models, which allow Valiendero to make probabilistic investments over a variety of liquid digital assets. Historically, outperforming relevant benchmarks by 50% to 100%.
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Is the digital asset (cryptocurrency) market mature enough to profitably trade quantitatively? If so, why should I believe your simulated performance results?
"The short answer is YES. Despite the market limitations, which there are several, our strategy circumvents the majority of the principal risks like infrastructure latency, data noisiness, and volatility. Our platform, vd.ai, leverages probabilistic machine learning and artificial intelligence algorithms to make low to mid frequency directional trades.
Latency - Our algorithms do not trade often given our probabilistic confidence threshold, i.e the hurdle rate or certainty level that the algorithm must clear before making a trade. On average, our system makes ~ 5 - 7 trades per month, per asset, e.g. bitcoin, Ethereum, and litecoin.
Volatility - Our confidence threshold helps mitigate 'false starts' during volatile times because the threshold is dynamically adjusted based upon recent data, i.e. threshold increased in volatile bear periods and reduced in volatile bull periods.
Noisiness - vd.ai ingests public data, creates 70+ proprietary features, overweights algorithm training to recent data, and minimizes cross-correlation between algorithms. The aforementioned process minimizes the likelihood of overfitting to noise, while being flexible enough to adjust when market conditions change.
Yes. The bulk of our performance results are historical simulations. However, not only are the results strong, but also produced without look-back bias, which is a common error in algorithmic backtesting. Furthermore, since vd.ai has been running, we have seen that our live results correspond to our simulated results within an 80-90% band, thus they hold over time. Lastly, not only do we retrain our models on an hourly basis, but we also have built several optimization and anomaly detection features into the system to help spot market regime changes. "
Who is your target investor?
"Our offering and strategy tend to fit best with high net worth individuals and families who fall into one of our distinct profiles.
- Investors looking for exposure to digital assets (cryptocurrencies) for the investment return potential in a low interest rate environment, portfolio diversification away from equities and bonds, or as a store of value from further monetary expansion.
- Investors looking for exposure to digital assets in a systematic and scientific manner rather than the conventional 'buy and hold' or indexing. Both of which are prone to wild swings and large drawdowns.
- Investors that already have exposure to digital assets, but seek to diversify their holdings or reduce overweight beta risks by leveraging quantitative strategies. "
How are we different from other digital asset investment funds?
"We differentiate ourselves from the competition in two primary ways - client service and performance.
Client Service - Valiendero is a smaller upstart fund, which means that our primary focus, outside of performance, is delivering exceptional service to our investors. Our size allows us to provide that intimate level of service, which makes the bonds between Valiendero and investor similar to a marriage. Our consummate goal is to be the best investment partner as possible, in both client service and performance.
Performance - Several unbiased third parties have shown that quantitative investment funds in the digital asset arena have handedly outperformed their counterparts since 2018. Valiendero's simulated performance ranked in the top quartile of returns in said third party rankings. Furthermore, our goal has always been to minimize losses in downturns, so that our investor's capital has the greatest chance to compound over the long run. Comparing Valiendero's performance to bitcoin's over an 18 month rolling window, beginning in 2018, we outperformed bitcoin by ~100%, precisely because we did not have a large drawdown in 2018."
Christopher Brookins of Valiendero Digital Assets
Christopher Brookins is an experienced business executive and technology entrepreneur, including one company acquired, with over 10 years of experience. Additionally, Mr. Brookins leverages his prior equity trading and credit investing experience as a renowned thought leader on digital asset investing with regular publications and quotes in CoinDesk , Brave New Coin, and Forbes. Mr. Brookins earned his MBA from Carnegie Mellon University and was the David A. Tepper Scholarship Recipient.