KR1 (KR1) has invested US$400,000 into Divergence ("DIVER"), a decentralised platform for volatility hedging and advanced financial products, in return for 20,666,666.67 DIVER tokens.
The London-listed digital asset investment company, together with cryptocurrency-focused investor, Mechanism Capital, led the seed and private funding round which saw participation from several notable funds such as P2P Capital, Arrington Capital and Digital Finance Group.
Divergence, which operates as a decentralised platform specifically for volatility hedging and advanced financial products centred around blockchain-native asset prices, is currently developing a range of decentralised volatility derivatives and volatility index products.
It said it is developing these products with the aim of becoming ‘the go-to platform for risk-averse users seeking to hedge both one-sided and two-sided volatility risks, risk-tolerant users seeking to trade and gain leveraged exposure to volatility, as well as risk-neutral users seeking to participate as liquidity providers by funding volatility markets and earning fees.’
Speaking of this latest investment Lianne Li and Bonna Zhu, both Co-Founders of Divergence, commented: "From the very beginning, KR1 has shared in, and committed to, the long-term vision we have for building volatility-based derivatives for the DeFi ecosystem.”
Keld van Schreven, KR1’s MD and Co-Founder, commented "One of crypto's big problems is extreme volatility and Divergence offers an innovative solution for liquidity providers, market makers and enthused community members, to allow them to profit from volatility with higher capital efficiency. With an impressive team, solid incentivisation mechanisms and a great mission, Divergence is a key part of the new era of the DeFi movement."
View from Vox
In its results for the year to 31 December 2020 released last week, KR1 reported a five-fold increase in net asset value as increased investor interest saw cryptocurrencies jump in value.
The digital asset firm reported that net asset value (NAV) was 28.97p as at 31 December 2020 compared with 5.72p per share a year earlier, an increase of 507% over the year.
KR1 reported ‘excellent returns’ on its investments in several projects while strengthening its staking revenue stream with multiple 'Proof-of-Stake' enabled assets, in particular Polkadot. Its assets grew to £37.8m as at 31 December 2020, up from £7.4m in FY19. As a result, the Company reported a profit for the year of £30.3 million (FY19: £1.15 million).
KR1 said its investments were made ‘at a time when digital asset markets were moving in an encouraging way, picking up towards the end of 2020 after facing extreme turmoil in the early stages of the pandemic, which left its operations and portfolio unaffected.’
George McDonaugh and Keld Van Schreven, Managing Directors at KR1, said they believe the emerging digital asset ecosystem remains an investment opportunity without parallel.
They said this will form a revolution in two parts; “Firstly, a new financial system being built out and secondly, decentralised technologies forming the base layer for a new and better internet.”
“As proven by our long-standing successful track record, we have navigated the cyclical crypto markets, continuously invested and actively managed a growing portfolio of assets.
Shares in KR1 have seen an over eight-fold increase since the start of 2021 as blockchain technologies and the cryptocurrencies receive an increased interest from investors.
KR1, whose focus lies in DeFi, Polkadot, Cosmos ecosystems, said it believes it is now strongly positioned for the digital asset markets entering a new bull market cycle.
KR1 is one of Europe's leading digital asset investment firm supporting early stage blockchain and DeFi projects. It is a first investor in many key blockchain and DeFi projects that will power the decentralised platforms and protocols that form the emerging Web3 infrastructure.
Generating Material Revenue
KR1 unveiled in August 2020 that it had started generating material revenue from staking activities on the Polkadot network, its largest investment and portfolio holding to date.
The company has been staking activities on Polkadot to generate revenue on an ongoing basis following its migration to a ‘Proof-of-Stake’ blockchain network back in June 2020.
To date, KR1 holds a total of Polkadot 3,558,490.89 DOT tokens, post-re-denomination. This differs from its original DOT allocation as a result of the bonus pool of unlisted digital tokens allocated pursuant to KR1’s 2017 bonus scheme, which included Polkadot as an asset.
George McDonaugh, Managing Director and KR1’s Co-founder, described the launch of Polkadot as “a momentous event” in the group’s history and one that shareholders have been waiting for since KR1 backed the project in an early funding round in 2017.
Commenting on the group’s largest investment activities, McDonaugh told investors: “We are pleased to have locked in some profit at good prices and we're delighted that Polkadot is further expanding the Company's staking activities as a yield-bearing asset."
Positive Outlook for Blockchain and KR1
McDonaugh said KR1 is seeing huge interest flowing into numerous new projects building on Polkadot, many of which it has already supported, or currently in active discussions.
Follow News & Updates from KR1 here: