Dooya MD Kyle Dowie’s first exposure to crypto arbitrage was when he moved back from the UK and wanted to repatriate some funds to SA.
“A friend, who later became one of the co-founders of Dooya, suggested I repatriate these funds by way of crypto arbitrage, which I knew nothing about,” he says. “Instead of paying fees to the banks to bring my money bank, it was explained to me that I could purchase Bitcoin (BTC) on an overseas exchange and sell that at a profit on a South African exchange. Instead of it costing me to bring money to SA, I made a profit on the transaction. That’s how I got my first exposure to crypto arbitrage, and then I started getting family and friends into it. Before long, it had become a full-time business. ”
And the name Dooya?
“That’s an anagram of the names of the founders of the business,” says Dowie. The other directors are David Roux (co-founder and software architect), Jonathan Archer (co-founder and director), and Adam Paardenkooper (co-founder).
While other crypto providers use stablecoins such as USD Coins (USDC) or True USD (TUSD), which are crypto imitations of the US dollar, Dooya sticks to bitcoin because historically it offers 10% to 20% better returns.
The website shows the company has generated more than 2,800 trades in the last 90 days, with a net average profit per trade of 1.22%. The maximum profit on a trade during that period was a net 3.33%.
Moneyweb sat down with Dowie and asked some searching questions about the company.
How long has the business been around?
The company was formed in 2018 and started trading in 2019.
Some people still have trouble understanding how crypto arbitrage works. Can you explain it?
You buy bitcoin on an overseas exchange at a cheaper price than you can in SA, then sell that bitcoin in SA at a higher price to make a profit. It’s as simple as that.
What is a realistic profit expectation?
Our clients have made an average net profit after costs of 1.22% a trade over the last 90 days. Sometimes that profit is higher, sometimes lower. This is not as high as it was in years past when net profits ran as high as 4%, 5% or even higher, but it is still worthwhile. The graph below shows the gross profit in orange and the net profit in white over the last year.
What’s the minimum amount people need to start trading?
We recommend a minimum of R100 000.
To take part in crypto arbitrage you need to take advantage of your R1 million-a-year Special Discretionary Allowance (SDA), for which no approvals are needed, and your R10 million-a-year Foreign Investment Allowance (FIA), for which you need Reserve Bank approval, based on tax clearance from the SA Revenue Service (Sars).
That’s a total of R11 million per person per year. If you make a 1.22% net profit on R11 million, that’s R134 000. If you’re a married couple, you can double that. So it’s a significant amount of profit.
Many people think you need R11 million to participate in crypto arbitrage. You don’t. You need a minimum of about R100 000, which can be traded repeatedly up to a maximum of R11 million.
To do this you have to get approval from Sars, and we have a professional accountant who takes care of these applications, and that’s a service we provide to clients at no charge.
Is the Dooya arbitrage system fully automated?
Yes. It requires no intervention from the client.
Can the client nominate a target profit level?
Yes, obviously within reason. If the client says I only want to trade when the market offers a net profit of 4%, we would have to explain that those situations occur very rarely. A more realistic profit expectation of around 1.2% would be preferable, because that is what we have been able to achieve historically.
What are your costs?
We charge a profit share, so our interests are aligned with that of the customer.
We take a 25% profit share on the first R2.5m traded annually, and 20% on the remainder of the FIA.
Do you hedge your trades to remove forex and crypto price risk?
Yes. The two primary risks in crypto arbitrage are forex and crypto price moves while the trade is underway, bearing in mind it can take 24 to 48 hours to complete a trade. We are able to hedge out both risks, so that we know what profit the client will earn even before we ship forex abroad to purchase BTC. We use our own crypto float to hedge out the crypto risk.
The only other risks are counter-party, in other words, the danger that the overseas or local exchange we are using goes bust while a trade is underway. That’s an extremely low risk since we use very well capitalized exchanges.
What’s your unique edge?
I come from a software development background, as up to several of my colleagues, so we have developed a rather fantastic algorithm to generate the maximum profits for clients. The first step in any business like this is not to make losses for your clients. The second rule is to maximize profits. There are occasions during the year when the arbitrage profit between overseas and local exchanges widens to 5% and even 8%. We are able to grab those – even if they occur in just a few seconds – and bank the profits for our clients.
How secure are client funds?
We’re software specialists, and security is our primary concern. We use multiple layers of security at every stage to ensure client funds are safe throughout the trade process.
Can clients monitor trades?
Yes, our Interactive Trading bot allows you to query your trade and see where it is at.
You’re based in Durban? What’s up with that?
Surfing, kayaking and crypto. These are the great philosophical imponderables of our time.
How do people reach you?
Check our website at www.dooya.co.za. Follow the signup steps here or send an email to [email protected] with your name and we’ll send you more information regarding registration details.
Brought to you by Dooya.
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