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At Bitcoin 2024 this past 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 was awarded $1 million in seed capital as well as access to Samara’s institutional-grade infrastructure to help manage its fund.
Boreal stood out because of its trading strategy, which utilizes various DeFi protocols to generate yield on top of US dollars, bitcoin and ether.
“Even when things are super bearish, there’s always a way to generate returns in DeFi,” said Boreal’s founder Evan Morris, who has been in the crypto space since 2016 and who worked in traditional finance prior to that.
“I began in this space four years ago managing outside 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. More recently, I’ve launched Boreal, and now, with the help of Samara, we can really take things to the next level,” he added.
Adil Abdulali, Chief Investment Officer at Samara Asset Management and one of the judges in the competition, commented on why Samara is excited to partner with Boreal.
“Evan is somebody who has a very good track record of work and the right risk framework for this type of strategy,” he said. “He has trading maturity, and since crypto is a young market, somebody with several years of experience in DeFi is rare.”
Abdulali also shared details on how Samara plans to support Morris.
“We thought if there’s a way to quickly get him off the ground with all the infrastructure like admin, auditing, accounting, subscription docs, a bank account, BitGo accounts, etc. — all of which we have — then let’s do it,” he said.
DeFi on Bitcoin
Moving forward, Morris sees bitcoin playing a much bigger role in the DeFi space.
“With bitcoin coming onto the DeFi scene, we’re able to do some of the same things that we were able to do with stablecoins over the past few years,” he said.
“DeFi 1.0 was very USDC- and Tether-based, but the future of DeFi is going to involve different types of wrapped bitcoin and bitcoin derivatives. And we’re happy to provide liquidity.”
Abdulali also feels that bitcoin will play a bigger role in DeFi, and his firm is well-positioned to help Boreal capitalize on this.
“Bitcoin is not just like all 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 employs essentially the same type of strategies that our dollar-denominated market-neutral fund does. 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 an exchange.”
The Future of DeFi
Morris explained that DeFi has become much more advanced than it was four years ago, when it first came on the scene as a sector of crypto.
“There are just so many more tools to get alerts on smart contracts and evaluate smart contract security,” he said.
“Cybersecurity and wallet technology is so much better, as well. This enables institutional-grade DeFi products,” he added.
And Abdulali wants to see Boreal take advantage of this institutional-grade DeFi before the institutions arrive.
“All this new institutional capital is not even going to touch DeFi for a while,” explained Abdulali. “They’ve hardly gotten into bitcoin, so it’s going to be a long time before the DeFi landscape becomes saturated and there’s too much capital,” he added.
“There are going to be some juicy returns for some of us that are willing to play in the space now.”
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