At Bitcoin 2024 last July, Samara Alpha Management and Bitcoin Magazine Pro selected Boreal, a market-neutral DeFi hedge fund, as the winner of this year’s Bitcoin Alpha Competition.
Boreal received $1 million in seed capital and access to Samara’s institutional-grade infrastructure to help manage its fund.
Boreal has stood out for its trading strategy, which uses various DeFi protocols to generate yield in addition to US dollars, bitcoin and ether.
“Even when things are extremely bearish, there is always a way to generate returns in DeFi,” said Boreal founder Evan Morris, who has been in the cryptocurrency industry since 2016 and previously worked in traditional finance.
“I started in this space four years ago managing external money with two friends and then ended up joining a larger firm as a portfolio manager where I ran a DeFi strategy for a few years. Most recently I launched Boreal and now, with Samara’s help, we can really take things to the next level,” he added.
Adil Abdulali, Chief Investment Officer at Samara Asset Management and one of the competition judges, commented on why Samara is excited to partner with Boreal.
“Evan is someone who has a great track record of working and the right risk framework for this type of strategy,” he said. “He has a maturity in trading, and since cryptocurrency is a young market, someone with several years of experience in DeFi is rare.”
Abdulali also shared details on how Samara plans to support Morris.
“We thought if there was a way to get it off the ground quickly with all the infrastructure like administration, control, accounting, subscription documents, a bank account, BitGo accounts, etc. – all the things we have – then let’s do it,” he said.
DeFi on Bitcoin
Going forward, Morris sees bitcoin playing a much bigger role in the DeFi space.
“With bitcoin arriving on the DeFi scene, we’re able to do some of the same things we’ve been able to do with stablecoins over the last few years,” he said.
“DeFi 1.0 was very much based on USDC and Tether, but the future of DeFi will involve different types of wrapped bitcoins and bitcoin derivatives. And we are happy to provide liquidity.”
Abdulali also believes that bitcoin will play a bigger role in DeFi, and his company is well positioned to help Boreal capitalize on this.
“Bitcoin isn’t just like all the other coins – it’s some of the best collateral out there,” he said.
“We use bitcoin in our bitcoin-denominated fund, which we started over a year ago and which uses essentially the same type of strategies as our dollar-denominated market-neutral fund. However, the fund transacts entirely in bitcoin,” he added.
“The idea is to use bitcoin in these new DeFi protocols like Babylon in market-making strategies instead of putting collateral like USDC or USDT on the exchange.”
The future of DeFi
Morris explained that DeFi has become much more advanced than it was four years ago, when it first entered the scene as a cryptocurrency sector.
“There are so many other tools to get alerts about smart contracts and evaluate the security of smart contracts,” he said.
“Cyber security and wallet technology are also much better. This enables institutional-grade DeFi products,” he added.
And Abdulali wants to see Boreal take advantage of this institutional-grade DeFi before the institutions get there.
“All this new institutional capital won’t even touch DeFi for a while,” Abdulali explained. “They just got into Bitcoin, so it will take a long time for the DeFi landscape to become saturated and there is too much capital,” he added.
“There will be some juicy returns for some of us who are willing to play in this space now.”