Date Updated: August 1, 2022

Investment Methodology

PennyWorks follows stringent risk management guidelines to ensure that funds are secure, yields are consistent, and risk is lowered across all possible touch points.

Introduction

PennyWorks uses the PennyWorks Notes to fund collateralized loans through various Decentralized Finance (DeFi) protocols. Extensive risk management procedures have been set up in order to vet various protocols in the decentralized web ecosystem (web3) and help ensure that funds are only placed in responsible protocols with proven track records.

Review Process

While the ecosystem is evolving at a rapid pace, each protocol is reviewed on a holistic approach driven by analysis across a number of factors, including but not limited to:

Security

Liquidity

Economics

Macro

Security: The design and tokenomics of the protocol, source code and implementation of those designs.
Liquidity: The ease with which assets can be transferred across blockchains, placed into/out of a particular protocol, as well as the market impact of such transactions.
Economics: The market need that is fulfilled by the protocol, how the protocol adds value, the applicable risk parameters, the relevant governance processes, and PennyWorks exposure as a participant.
Macro: These factors include how a given protocol interacts with other protocols and related ecosystems, such as exchanges, traditional financial services and market participants.

Furthermore, where available, third-party audits are also reviewed to provide multiple perspectives on each protocol.

Vetted Protocols

The protocols used may change from time to time. Currently, the following protocols have been vetted for use:

Blockchains

Stablecoins

DeFi Protocols Lending

DeFi Protocols Exchanges^1,2

DeFi Protocols Bridges

¹This is a non-exhaustive list as many decentralized exchanges derive from the same source code and liquidity dynamics at any point in time might vary greatly based on market conditions.

² Some of these protocols include other DeFi products such as Automated Market Making (AMM) and Liquidity Pool (LP) staking. Only their exchange functionality is currently used.

Investment Objectives

Within the vetted protocols, the aim is to maximize yields while maintaining a highly liquid profile. Some of the factors that are considered include:

The proportion of investments relative to the total liquidity within any protocol on a per blockchain and per asset basis.
The ease of converting assets back into USD with minimal market impact.
The duration of loans.
Diversification of holdings across protocols.
The transaction costs, market impact and fees associated with switching between protocols.

Offering Documents

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The above information is illustrative of certain aspects of the PennyWorks Notes as of the date hereof. Those aspects may change from time to time at any time without notice and PennyWorks has no obligation, and assumes no duty, to update this page or you regarding the same.
The PennyWorks Notes are securities issued by HybridFi Lending LLC dba PennyWorks (“Issuer”). Furthermore, the information on this page is a summary of certain aspects only and does not purport to be complete and should not be considered a part of the private placement memorandum or other documentation of the offering (“Offering”), or as incorporated in the private placement memorandum by reference or as forming the basis of the Offering.
No person has been authorized to give any information or to make any representations about the Offering other than those contained in the private placement memorandum, and, if given or made, such information or representations must not be relied upon. All investors must read the private placement memorandum in its entirety prior to investing in the securities.

Offers to sell, or the solicitations of offers to buy, any security can only be made through official offering documentation that contains important information about risks, fees and expenses. No communication by HybridFi Inc. ("HybridFi") or any of its affiliates (collectively, with HybridFi, the “HybridFi Group"), through this Site or any other medium, should be construed, or is intended, to be a recommendation to purchase, sell or hold any security or otherwise to be investment, tax, financial, accounting, legal, regulatory or compliance advice. Nothing on this Site is intended as an offer to borrow or extend credit, an offer to purchase or sell securities or a solicitation of any securities transaction.

Neither the Securities and Exchange Commission ("SEC") nor any federal or state securities commission or other regulatory authority has recommended or approved any investment or the accuracy or completeness of any of the information or materials provided by, or through, this Site. HybridFi is not registered, licensed, or supervised as a broker dealer or investment adviser by the SEC, the Financial Industry Regulatory Authority, or any other financial regulatory authority or licensed to provide any financial advice or services. HybridFi is not registered as an investment company under the Investment Company Act of 1940, as amended. HybridFi Lending LLC dba PennyWorks NMLS #2184982.

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