Passive vs.

Active Investments in Crypto Assets

Definitions of Passive Investing are as follows:

▪ An investing strategy that tracks a market-weighted index or portfolio.

▪ The investor receives the index return minus the management fee
▪ Reduces investment fees vs. active management
▪ Replaces the uncertainty of under or outperforming the Index with an “average” return

Definitions of Active Investing are as follows:

▪ Active strategies are where the manager makes specific investments with the goal of outperforming
their index.
▪ Active strategies begin with the premise that an “active” selection of investment assets based on
manager investment skill and/or the exploitation of certain market inefficiencies will result in a
higher return than holding the entire basket of market assets

Our fund management team at daoindex.fund employs both passive and active strategies for investing in
cryptographic assets in order to generate superior returns while minimizing unnecessary risk exposures.
Below is a short summary of our passive and active investment strategies:

1. Passive Strategies:

A. Going long on cryptoassets by placing long-term bets on top 25 Crypto Currencies and Crypto
Assets as per coinmarketcap rankings. Reshuffling asset mix once every week based on ranking
parameters of market caps and last 24 hours trading volumes. Therefore, there is an active
component to this passive strategy as we track the top 25 variables representing those assets.

B. Subscribing to quality ICOs and exiting within 1-3 months of listing on major crypto exchanges.

DAOIndex Fund © Copyright August 2017 1

2. Active Strategies:

A. Constructing a balanced long-short portfolio to minimize the market risks and market exposures
while generating alpha returns during both price rise and price fall and during bull and bear phases
of the market.

B. Using Machine Learning, Technical Analysis and Machine Consciousness to analyze historical
patterns and make short and long-term investments.

C. Employing Order Splitting algorithms to place orders based on market impact combined by price-
risk.

D. Estimation of liquidities in different markets and using models to forecast short term price
fluctuations based on probabilities, multifractal fuzziness and vagueness.

E. Execution of risk-free Synchronized Quantitative Arbitrage Operations across the world in multiple
exchanges located in different countries and multiple jurisdictions.

F. Hedging market risks, systemic risks and political risks by using OTC futures/options and other
derivatives and tools.

G. News-based automated trading

H. Margin financing and loans against cryptoassets collaterals

I. Shorting cryptoassets based on cyber-forensics and online/offline investigations.

DAOIndex Fund © Copyright August 2017 2