DeFi Technologies, a Canada-based financial technology company, is set to expand its stake in Swiss entity Neuronomics to 52.5% in a move to bolster its foothold in artificial intelligence (AI) and asset management.
Neuronomics is said to have expertise in AI and quantitatively-driven trading strategies. This acquisition supports DeFi Technologies’ objective of integrating traditional capital markets with decentralised finance while diversifying its revenue avenues.
This development follows DeFi Technologies’ earlier acquisition of a 10% interest in Neuronomics through a capital increase. DeFi Technologies trades on the Cboe Canada Exchange, the Börse Frankfurt in Germany, and over-the-counter (OTC) in the US.
By obtaining a controlling stake, the Canadian fintech firm aims to align more closely with its existing projects, such as the DeFi Alpha arbitrage trading desk, gaining from Neuronomics’ technological skills and market research capabilities.
DeFi Technologies is also the parent company of Valour, which is engaged in asset management business.
For the acquisition, DeFi Technologies issued 186,304 common shares to Neuronomics’ selling shareholders along with additional cash considerations. A portion of these shares is subject to a lock-up period. Approval from Cboe Canada Exchange is pending for the acquisition’s completion, which did not involve any finder fees.
Neuronomics is said to have carved a niche in asset management by crafting sophisticated AI-driven quantitative trading strategies. The firm is licensed by the Swiss Financial Market Supervisory Authority (FINMA) to oversee and manage financial assets for its clientele.
Its research predominantly focuses on employing AI and computational neuroscience in finance.
Neuronomics implements advanced AI models that are claimed to surpass market index performance on multiple fronts. These proprietary models combine various algorithms to enhance predictive accuracy while avoiding overfitting.
The firm translates AI model outputs into strategic portfolio allocations that optimise asset distribution, achieving better returns and effectively managing risk. Additionally, Neuronomics adapts large language models (LLMs) for analysing real-time market news, providing it with a competitive edge by identifying investment trends early.
The firm also delves into how cognitive biases and emotional responses influence financial behaviours, thus uncovering market inefficiencies that conventional strategies might miss.
By using computational neuroscience, Neuronomics maps traders’ neural activities to identify predictable market patterns resulting from emotional or overreactive trading behaviours. This approach has been particularly effective in managing cryptocurrency portfolios since July 2020.
Neuronomics also taps AI technology to deliver high risk-adjusted returns, especially within the cryptocurrency segment. Its latest AI-powered quantitative strategy, developed in collaboration with DeFi Technologies, is set to launch soon.
