An overview of the DeFi asset management landscape and a way forward.

Status Quo

Despite the promise of decentralized finance (DeFi) to enhance transparency, security, and efficiency, over 95% of asset managers in the Web3 space continue to use traditional fund structure. This approach requires investors to relinquish custody of their assets and place significant trust in fiduciaries. The events of 2022 starkly highlighted the risks inherent in such systems, emphasizing the principal-agent problem.

Pioneers in DeFi native asset management infrastructures (Enzyme, dHedge), though promising, have been with a bit over $250M TVL notably limited in attracting capital at scale. Dependence on Oracles and the extensive development time required for integrating new DeFi protocols have been significant barriers. Consequently, TradFi setups, offering more flexibility, continue to dominate the DeFi asset management game.

DAO treasury management professionals at Karpatkey have successfully attracted over $1.5B in AUM leveraging the permissions module (Roles Modifier) on top of DAO Safe multisig treasuries. The setup has proven to be extremely flexible, as the permissions module enables delegated execution of any transaction through scoped permissions. Managers can now execute specified transactions on behalf of multisig using their individual accounts, streamlining operations effectively.

Rethinking Asset Management

Inspired by Safe x Roles Modifier setup, we have identified three key opportunities that are going to enhance the setup, enable on-chain investment vehicles (OIVs), and power the transition to decentralized and non-custodial asset management:

1. Flexible deposits/redemptions

2. OIV native governance

3. Intuitive UX

Flexible Deposits/Redemptions

We are introducing Rethink Safe Module, a set of smart contracts responsible for settling deposit and redemption requests through issuance and burning of OIV tokens. NAV is calculated on-chain based on methods approved by a respective OIV governance. Additionally, the Rethink Safe Module supports automated fee handling. The module is built with distinct separation from Safe's core contract logic, enhancing protocol functionality without compromising on security.

OIV Native Governance

We are facilitating a possibility of transitioning away from multisig setups, by deploying the OpenZeppelin Governor or alternative optimistic governors as the owners of the Safe custody contract. This structure enables the governance to control delegated permissions for managers, methods for valuing OIV positions, and technically handle any other transaction. Such transactions could include liquidating OIVs or deploying the Exit Module.

Intuitive UX

Deploying contracts, generating permissions, defining NAV methods, and managing an OIV have been technically complex. We are introducing the Rethink dApp—an intuitive user interface designed for all stakeholders involved in OIVs. Users can find OIVs, learn about their investment strategies, understand performance, view positions, verify all parameters on-chain, handle deposits and redemptions, and change settings, permissions, and NAV methods through governance.

Rethink is committed to transforming the asset management landscape by minimizing trust assumptions and eliminating intermediaries. Our mission centers on enhancing operational efficiency through automation, reducing the costs associated with asset management, and ultimately fostering a safer and more accessible environment for DeFi native asset management.

We are eager to collaborate with individuals and organizations interested in launching their own On-Chain Investment Vehicles (OIVs) and joining us on our mission to revolutionize asset management. To learn more about potential use cases, please refer to our documentation. If you're ready to start a conversation or have any questions, don't hesitate to reach out via email at rok@rethink.finance or join our Discord.