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January 17, 2024

The Next Generation of Capital Markets for Alternatives is Lighting Up

The Next Generation of Capital Markets for Alternatives is Lighting Up

It has been a busy start of the Year, I am in Abu Dhabi for the week. The next generation of capital markets for Alternatives is lighting up with the full integration of DLT, AI, and Data companies which will transform Capital Markets.

The interaction between off chain data, zk (zero knowledge) proofs, on chain oracles, compute (on chain and off chain), utilizing AI and automation tools to find the comp sets, and/or an NAV can not rely on manual data entry or 10 finger automation. This is referred to as EUC or End User Computing. This is a copy of the Cease and Desist order to Citibank that came with a $400 million dollar fine, start at page 8 for EUC discussion. Google paid $53 million in fines about manipulating data around article 32 & 17 GDPR regulations - click here for more info. In the past 12 months OSFI, OCC, BaFin, and FDIC have all given fines over EUC.

EUC allows humans to input and manipulate data directly (think excel) but with out logs, lineage, or audit capabilities. Inveniam provides all of that, proof of origin of data, and proof of process. (Video)

A number projects from the Token to the Investor are kicking off. We are focused on from the Asset to the Token. The data that the smart contracts ingest can not be EUC if there is value traded. This must have logs, lineage, and auditability, this is where proof of origin and proof of process come in. If you have a valuation model/or AVM that powers your collateral management and you do not have auditability back to source data, it can not trade on a marketplace or DeFi, otherwise it will require a negotiated trading environment.

If you are using AI, or other automation tools to structure data that will power an NAV as you to move your illiquid alternatives fund to an interval fund with daily subscriptions and weekly, monthly, or quarterly redemptions, you must have attribution - this is Inveniam.

We believe the sequence will be as follows:

  1. DLT
  2. AI
  3. Data - proof of origin, and state of data
  4. AI/Automation - with attribution
  5. Compute
  6. DLT
  7. Repeat

This is how alternatives will price, trade, and be serviced pre and post trade. We are excited to move forward this year with our partners at scale around real time or near real time price discovery, better accounting treatment, and better risk reporting on data rich low frequency trading assets.

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