I often fear that the cryptoverse preaches to the converted. I fear as a community we do not make it easy enough for the uninitiated to take part. The market is in an 8 month bear cycle and good news has been hard to come by. Those of us who are already convinced of the merits of crypto investment have learned some painful lessons and we still come back for more. Furthermore I believe most exchanges are designed to cater for existing traders. Coinbase is probably the easiest exchange to use but it is expensive and offers very little choice. I have been waiting for an innovative player in this area. An investment platform that is easy to use and takes unnecessary risk out of inexperienced investors hands. To that end, meet Donut.

Donut – Crypto Investing. Simplified.

I have recently discovered the Donut platform and am really excited about it. Donut appear vastly different from other start ups in the cryptoverse. Starting with the fact that thankfully they have not tried to crowbar some worthless Donut token into their offering. Rather than approaching funding in the wild west of ICO land they are backed by the prestigious Entrepreuners First.

Donut is a cryptocurrency investment platform that addresses some of the real issues associated with crypto investing. I referred above to the painful lessons learned and I think they can be summed up under three broad headings – project vetting, security and volatility. These are three crucial areas where Donut outstrips the established crypto investment platforms.

Security

Security is a long running concern in the cryptoverse. I am certain I am not alone in losing money to hacked exchanges or simply forgetting access keys for wallets. Unlike with traditional equity investments there is a real risk to personally holding your crypto. Donut have recognised this issue and have made investment security paramount in their offering.

“Security is our top priority. We use 256-bit encryption and partner with insured custodians to ensure your assets are held safely.”

In a nutshell, Donut use top quality secure storage to ensure you don’t lose your holdings to nefarious actors.

Volatility & Allocations

Cryptocurrencies are highly volatile, particularly when you venture outside the established top 10 or 20 projects. Most crypto investors are well able to conduct reasonable foundational analysis and determine which projects are worth investing in. However where we tend to fall down as crypto investors is our ability to manage risk through our investment allocations. No existing exchange gives good guidance on investment allocations.

Donut has a clear competitive advantage in this area. The project CEO Neel Popat has nearly 10 years experience working for leading investment firms including Graphite Capital, European Capital, Studio VC and Rothschild. Neel studied Finance and Mathematics at LSE and Harvard and oversees all aspects of Donut’s investment strategy.

This includes Donut’s investment risk allocation engine. Upon signing up to Donut you answer some questions to establish your acceptable risk level. Based on this the Donut algorithm develops a proposed investment bundle for you (fig 1 below). While this may not seem like rocket science, how many of us really put proper thought into the allocation of our investment? Furthermore in an effort to reduce the pain of volatility you are able to set a stop/loss order against your entire fund. This is far better than traditional exchanges where you would have to set a stop/loss per project you’d invested in.

Project Vetting

A lot of money has been lost to hyper-inflated projects with no development beyond a whitepaper. There is also a real risk with early stage ICO type investments as there is no regulated vetting of these enterprises. Coinmarketcap suggests there are 2000 plus cryptocurrencies being traded. I think no more than 50 or so of these are actually viable long term projects.

How to pick the right 2.5% of projects from the smorgasbord of listed cryptocurrencies and tokens? This is again where Donut’s expertise comes in very handy. They do it for you, you can only invest in certain projects via their platform. This significantly de-risks your investment. As you can see below your money is allocated across a series of vetted projects.

Donut – Future Prospects

The platform is still in beta mode but it is starting to garner a lot of attention. This is for good reason, Donut’s ethos of managed risk, secure crypto investment combined with their desire to educate investors is commendable. The Donut university is still in development but promises to be a resource for high quality crypto project analysis.

I believe Donut is the way forward for any crypto investor who does not have the time or expertise to manage risk through allocations and project vetting. Donut’s fees are low and you don’t have to deal with the headache of withdrawing from exchanges and sending your holdings to another platform to convert back to FIAT. With Donut you can simple liquidate your holdings back to the original fiat investment currency at the touch of a button.

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