Strategy risk

The strategy can lose money. This is the most important risk to understand, because it is the one most likely to actually cost you, and the one MakeBanc does nothing to protect you from.

What strategy risk is:

When you allocate, you give an asset manager authority to trade your capital within limits that asset manager defines. The strategy may make money. It may lose money. Outcomes depend on the asset manager's edge, the market environment, their execution, and the risk parameters they set.

This is not a MakeBanc risk, and MakeBanc does not absorb it. The platform is connectivity infrastructure. It does not trade, select, or manage anything on your behalf.

MakeBanc does not review strategies:

Read this carefully, because it is the opposite of how most platforms position themselves.

We do not review strategies. We do not vet, score, rank, endorse, recommend, or approve them. MakeBanc is the connectivity infrastructure between you and an independent asset manager, nothing more. We verify the asset manager as a counterparty so they can be onboarded to custody and the platform (see Know Your Partner), but we take no view on whether their strategy is good, safe, or suitable for you.

The due diligence is yours. It is up to you, the holder of the invite code, to evaluate the strategy and the asset manager behind it. You choose who you connect your capital to, and you do it at your own risk. If you are not in a position to assess a strategy yourself, do not allocate to it.

There is no marketplace, access is invite-only:

You cannot browse, search, or pick strategies from a list. MakeBanc has no marketplace.

The only way to gain access is through a relationship with an asset manager who generates an invite code for you. When you enter that code, it generates a portfolio for you based on the strategy allocations that asset manager has set. You are connecting to someone you already have a relationship with, not selecting from a menu MakeBanc curates.

Because there is no curated menu, there is no implied "these have been checked." Everything you allocate to comes from your asset manager. The decision to trust them, and their strategy, is yours alone.

Why this is the largest risk:

Technology and counterparty risk have meaningful mitigations: audits, insurance (in progress), segregated custody, regulated counterparties. Strategy risk does not. The only protection is the asset manager's edge, their discipline, and the risk parameters they set, none of which MakeBanc controls.

For most allocators in normal markets, loss from strategy underperformance is more likely than loss from a smart contract bug or custodian failure. Your own evaluation deserves the largest share of your attention.

What you should look at:

When you evaluate a strategy you have been invited to, the platform surfaces the data so you can do the work yourself. Look at:

Historical performance. Net-of-fee returns by month since inception. What was actually delivered, not a projection.

Maximum drawdown. The largest peak-to-trough decline. Your baseline for how bad a bad period can look.

Recovery time. How long recoveries have taken. A 20% drawdown recovered in three months is different from one that took 18 months.

Volatility. Annualized standard deviation. The strategy's "feel" between major drawdowns.

Correlations. Performance in different market regimes (bull, bear, range-bound, high and low volatility).

These describe what the strategy has done. They are imperfect predictors of what it will do, and MakeBanc does not warrant them. Weigh them yourself.

What happens if a strategy is struggling:

How a strategy is managed through a drawdown is the asset manager's responsibility, not MakeBanc's. Your protection is the ability to redeem in the monthly window if you are no longer comfortable with the strategy.

By the time a strategy is deep in a drawdown, the loss has already happened. Redeeming limits further exposure; it does not undo what occurred.

What you can do:

Four practical steps.

Allocate deliberately. Don't put everything behind a single asset manager or strategy type. If you have relationships with more than one asset manager, spread exposure across them.

Match strategy to time horizon. Deep drawdowns with slow recovery require a longer horizon than the worst historical recovery period.

Read the parameters. If the strategy permits things you are uncomfortable with (high leverage, illiquid instruments, exotic derivatives), it is not for you, regardless of returns.

Re-evaluate quarterly. Performance and conditions change. A regular review against platform reporting catches underperformance early.

What this is not:

This page does not predict that any strategy will lose or make money. MakeBanc takes no view on future performance, and it does not vet, select, or endorse the strategies you are invited into.

If you cannot accept capital loss from strategy underperformance, do not allocate to managed strategies, on MakeBanc or anywhere else. The risk is structural, and it is yours.