Algoz launches cryptocurrency product that combines pledge and…

How does Quant Pro Stake work?

Digital asset investment company Algoz has launched a product called "Quant Pro Stake"(QPS for short), which combines cryptocurrency pledges with quantitative transactions for professional and qualified investors holding Ethereum, Solana or Boca coins. The product is designed to generate revenue in two ways: some of the assets held by investors are invested in the proof-of-stake (PoS) blockchain network to earn pledge rewards, and the remaining assets are used to support a portfolio of quantitative trading strategies.

Investors deposit ETH, SOL or DOT in a separate wallet held by Zodia Custody. Algoz said client assets will be kept separately rather than consolidated into a comprehensive account, and investors will still retain beneficial ownership of the tokens they deposit. Some of the assets are pledged through infrastructure providers Figment or Blockdaemon, and the remaining collateral is used to support Algoz's trading model on the Bybit exchange. The structure leverages Zodia's Interchange over-the-counter clearing system, which allows assets held by custodians to be used as collateral for transactions without having to transfer the entire balance directly to the exchange. This may reduce the amount of capital directly exposed to the exchange, but does not eliminate trading, clearing or counterparty risk.

What are the risks of combining pledge with transaction?

QPS may allow investors to earn extra income without selling their base tokens, but it is riskier than traditional pledges. Investors remain exposed to the risk of fluctuations in ETH, SOL or DOT prices, while the trading portion may incur losses, offsetting pledge rewards. According to Algoz, these strategies may also use limited leverage. The company said customers can choose not to use leverage while continuing to earn revenue from the portion allocated to the pledge. Algoz did not disclose the standard allocation ratio of pledges to transactions, its leverage limits, or the conditions under which portfolio allocations may change. These details will directly affect the expected return, volatility and risk of margin calls on the product.

In addition, the pledge itself also introduces the risks of specific agreements. Rewards may vary based on network activity and verifier participation, and verifier downtime or improper behavior may result in forfeiture. Assets may also face withdrawal queues or unbinding periods before they can be withdrawn. Algoz said customers can usually redeem assets within 24 to 48 hours. The actual withdrawal time may depend on the pledge exit process, blockchain congestion, available liquidity, and whether trading positions must be closed first.

Note to Investors

QPS increased active trading and leverage risk in an initial investment similar to a pledged product. Investors must evaluate trade allocations, retracement limits and redemption processes, rather than relying solely on their published annualized rates of return.

How reliable is the forecast return?

Algoz announced an assumed annualized net return of 6.2% for ETH, 7% for SOL, and 9.9% for DOT. It also reports the expected Sharp ratio, which is used to compare investment returns with volatility, ranging from 3.33 to 5.54. These data combine average pledge rewards over the past four years with backtest results from Algoz's quantitative model. They do not represent the returns generated by QPS's actual investment accounts. Algoz said the estimates were calculated after deducting a 2% annual management fee, a 20% performance fee and custody and transaction fees.

The announcement did not include a full test period, monthly performance, maximum retracements, leverage assumptions or results during periods of severe market stress. The backtest results may be significantly different from the actual performance. Models may benefit from known historical market behavior at the time of design, while assumptions about liquidity, transaction costs, and execution speed may not hold true in volatile situations. Simulated performance also cannot fully reproduce the actual reactions of managers and investors to losses, margin pressures, or rapidly changing markets. Therefore, reported returns should be regarded as forecasts rather than expected or guaranteed results.

Why do institutions pay attention to pledged products?

The launch of the product comes at a time when there is growing demand for such products: institutional investors want blockchain rewards while retaining digital assets in segregated or regulated custody arrangements. Infrastructure provider Figment has expanded its cooperation with institutional custodians, and recent U.S. regulatory filings have also included Greyscale's ethereum investment products that support pledge and the proposed iShares Pledged Ethereum Trust ETF. Zodia Custody is majority owned by Standard Chartered Bank. The bank said in May that an offer to acquire its remaining business had been accepted by Zodia's shareholders and noteholders, subject to regulatory approval and other transaction conditions.

Algoz stated that it is registered as a commodity trading consultant and swap dealer with the U.S. Commodity Futures Trading Commission and the National Futures Association, with an NFA ID of 550244. This registration does not amount to regulatory approval of the QPS or its performance forecasts. This product is limited to investors who meet the requirements of relevant professional, qualified or recognized investors. Participants still bear the risk of fluctuations in the market value of the tokens they deposit, pledge risk, Algoz's trading performance risk, and the operational reliability risks of the custodians, validators and exchanges involved.