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# Crypto, Risk-Managed

At Lucid, our mission is crystal clear: to make crypto work better for thoughtful investors, and the professionals who advise them.

Our primary expertise is risk management. We build robust portfolio solutions that let you turn a speculative crypto exposure into a long-term investment, while maintaining the liquidity you need.

Disciplined risk-management is the foundation of any mature investment plan. It lets you take better risks, and lose less sleep in the process. But sticking to a risk-management plan is hard. Cutting your losses is obviously a painful decision, but deciding whether or not to invest in rising market can be equally difficult. Is the growth over? Are you the last one to buy into a bubble?

Lucid's risk-managed portfolios take a lot (but not all) of that stress away.

# Who is Lucid For?

Lucid is for you if:

• You are a principled investor who likes calculated risk;
• You want to maintain a long-run exposure to crypto but would prefer to avoid a 90% loss;
• You are willing to trade-off some upside potential to reduce your downside risk;
• You have liquidity needs in the medium run but want to catch some of the upside;
• You would like to get into crypto, but worry that the market may crash;
• You think it's a good idea for a 911 Porsche to have good brakes and an ABS.

Lucid is NOT for you if:

• You are in it for the thrills;
• You just want to HODL;
• You want to experience all the gains AND all of the losses;
• You want a 100X return and fast!
• You like complicated algos that train a many parameters on small datasets.

# Investment Philosophy

For many investors, volatility (i.e. daily variation in price) is the point of crypto. Indeed, for a well performing asset class, taking on more volatility is like speeding up the process of saving. As a result, risk-management strategies that adjust exposure to keep volatility low just aren't attractive for crypto.

Our approach to risk-management recognizes that volatility is not a primary concern of crypto investors. Instead we monitor two performance metrics that capture the psychology of investing more directly:

• Losses relative to a safe asset: getting poorer is painful;
• Losses relative to the crypto market: not getting rich when others are is painful.

Our Relative Drawdown Control strategies are engineered to offer the best possible compromise between these two types of losses under arbitrary market conditions. Concretely, this means that we tend to

1. Follow the Market during a Bull Run: In times of market exuberance, our strategies seek to capture upside potential.

2. Reduce Exposure in a Downturn: We cut our losses in a declining market. This sometimes means failing to catch a rebound, but it also protects your capital in the case of further deterioration. This allows you to satisfy potential liquidity needs as well as return to markets more confidently during the next bull market.

# Beyond Fear, Uncertainty, and Doubt (FUD)

One of the greatest challenges faced by cryptocurrency investors is the pervasive Fear, Uncertainty, and Doubt (FUD) that can prompt hasty decisions. We understand this struggle, and our strategies are not only about preserving your investment but also about quelling legitimate anxieties.

Part of the way one can manage FUD is through education. Because the benefits of disciplined risk-management materialize over the medium run, it is essential for investors to be well informed and understand the pros and cons of their choices. Risk-management seeks a compromise between too much and too little exposure. As a result, there is always potential for disappointment in the short run. Investors need to properly calibrate their expectations to maintain discipline in tough market conditions.

In the following pages, we'll dive deep into the research powering Lucid's approach to risk management. Whether you're a seasoned investor or new to the crypto scene, our aim is to provide you with the knowledge and tools to invest with clarity and confidence.