Asset Management is a financial discipline that involves managing and growing financial assets of individuals, companies, and institutions. This includes strategically allocating investments, selecting and monitoring assets and portfolios, as well as managing associated risks. The primary goal of asset management is to maximize returns while preserving investors' capital.

In 2021, the amount of assets under management reached $120 trillion. It is an important financial sector that is expected to continue evolving in the coming years.

With the evolution and complexity of DeFi and its protocols, there has been a growing demand for this activity.

Furthermore, the design of our decentralized, transparent, and composable ecosystem offers advantages over what traditional finance provides.

Let's explore together the benefits of asset management and the most promising protocols.

Summary

• TradFi

• DeFi

• State of the Ecosystem

• Strateg

  • Strategists

  • Investors

  • Aave

  • Finally

• Valio

  • Customization

  • Networks and Communication

  • Security

  • Demo

  • Launch

Conclusion

TradFi

Asset management in traditional finance is characterized by a centralized model. Investors entrust their financial assets to asset management companies that act as fiduciaries.

These companies use their expertise to make investment decisions, strategically allocate funds, and manage associated risks. They offer a wide range of products, from passive investments to active management.

In exchange for these services, management and performance fees are typically charged.

However, we can identify some issues:

• Opacity: Users often have limited visibility into the assets and their management. There may be a lack of communication between managers and investors.

• Limited access: The services offered often exclude a portion of the population. Finding a suitable manager (risk management, etc.) can sometimes be time-consuming and challenging.

• Custody: You no longer have custody of your funds.

• Fees: The fees charged can easily increase with the addition of intermediaries such as banks or brokers.

DeFi

DeFi is built on blockchain technology and operates through a multitude of smart contracts.

This design allows for the removal of intermediaries in transactions and the programmability of certain actions, which reduces costs and enables greater capital efficiency.

It also brings about a certain level of transparency and the ability to remain in control of one's funds.

Its permissionless nature facilitates financial inclusion for a portion of the population that is typically excluded from the traditional system.

Asset management in DeFi will therefore benefit from all these characteristics that go beyond mere problem-solving, bringing significant improvements.

State of the Ecosystem

The ecosystem is composed of a multitude of protocols ranging from DEXs to options protocols, from dog coins to stablecoins.

It is these protocols and tokens that enable the creation of strategies to generate income, with varying degrees of risk.

They are composable, meaning they can interact with each other to benefit from higher yields (accompanied by higher risks).

If you closely follow or have some knowledge of DeFi, you have surely noticed its continuous growth. There are more and more protocols, strategies, products, chains/L2 solutions, and therefore increasing complexity in understanding and grasping the entire ecosystem.

Even though everything is transparent and information is accessible to all, understanding, theorizing, and implementing yield or investment strategies require time and expertise.

Not everyone has the desire or time to dedicate to this field. Ultimately, only a handful of experts and enthusiasts truly comprehend and master the intricacies of these diverse strategies.

However, there is a growing demand from users (individuals, DAOs, companies) who are seeking yield and/or looking to grow their assets.

On the other hand, there is an increase in the number of enthusiasts and experts who accumulate knowledge and skills without having the means to monetize them optimally.

Now you understand my interest in the sector that connects this supply and demand.

A few protocols already exist, but the ones that interest me the most have yet to be launched.

They leverage LayerZero technology, which unlocks the full potential of DeFi. I'm referring to Strateg and Valio.

Strateg

Strateg is an asset management protocol that focuses on the creation and implementation of complex yield strategies while making sharing and access as simple as possible.

It is the first product by Murphy Labs.

The protocol revolves around two key actors:

Strategists will be able to create highly customizable strategies that align with their desires and the needs of their communities with just a few clicks.

Investors will benefit from these strategies.

The Strategists

You probably already know them. They share French charts, strategies, and alpha on social networks.

The goal of Strateg is to enable them to create, share, and generate income from their skills with just a few clicks.

The protocol will provide them with several tools to simplify integration and automate certain actions, allowing them to unleash their creativity.

Through "creator fees," strategists can generate yield based on their performance. This should also incentivize them to create the most profitable strategies.

And to top it all off, the process requires no development skills or lines of code.

Investors

Everything has been designed to make their lives easier. From one-click investing to informed decision-making through an interface that displays all the necessary metrics.

They can select strategies based on their goals, risk tolerance, strategist reputation, performance, and more.

Aave

Aave is the first protocol to be integrated into Strateg.

Far from doing things halfway, this integration brings significant value.

Among other things, it offers the ability to deposit any token on any chain into Aave through an interface, tools to automate position management and monitoring, a simplified and automated repayment process, automatic rebalancing of positions, and much more.

Finnaly

Strateg allows creators with a community to capitalize on their skills and reputation while enabling enthusiasts to build a community and reputation by showcasing their abilities.

Valio

Valio is a comprehensive asset management protocol designed to facilitate the creation of vaults for asset managers and the search for managers/vaults for investors.

Customization

To manage the fund of investors, managers use vaults. The protocol allows for a high degree of customization for these vaults.

For example, managers can configure monetization with management fees deducted from each deposit and/or performance fees as a percentage of profits.

Another example is their ability to decide whether to open their vaults to everyone or restrict access to specific addresses.

This is just a glimpse. The important thing to understand is that managers can unleash their imagination to create the product that suits them.

Networks, Communication

Valio offers managers the ability to link their Twitter accounts to their vaults. For those who already have a community, this attests that they are the creators and allows them to capitalize on their reputation. For those without a community, they can build one based on their results.

With each vault creation, a private Discord channel will be generated, enabling managers to communicate with investors directly or make announcements.

Security

Security and trust are major concerns for such a protocol, especially for investors. To prevent potential malicious actions by some managers, solutions have been devised.

They are unable to send funds to an external wallet or use unapproved protocols.

However, there remains the possibility for a malicious manager to purchase low-cap tokens in a personal wallet, use the funds they manage to pump he price of those tokens, and then sell them at a profit.

To mitigate this risk as much as possible, Valio has implemented a mechanism called Cumulative Price Impact Tolerance (CPIT). It measures the impact of transactions on an asset's price. The higher the impact, the more the price is affected.

Example: A wallet containing $1 million in USDC with a CPIT set at 5% can only impact the price of an asset by $50,000 across all transactions in a day.

CPIT prevents managers from making transactions that have a significant impact on prices. It is expressed as a percentage and is set at the time of vault creation, unable to be modified afterward.

Since performances are transparent and visible, a manager who still uses the price manipulation mentioned earlier within the CPIT limits would be detectable. Users could withdraw from vaults operated by such bad actors.

There is no limit on withdrawals, but a 24-hour period is required between depositing and being able to withdraw funds.

Demo

A demo of Valio is available, providing an overview of the protocol: https://demo.valio.xyz/

Launch

The launch of Valio will begin on July 24 with its Season 0. Whitelisted participants will have access to the protocol, which will support GMX on Arbitrum and 0xProject on Ethereum.

You have a chance to be selected by filling out this form:

As selected participants, you will be considered early adopters, helping the protocol deliver the best product when it opens to the public. Do your homework.

Season 0 is expected to bring several surprises and a trading competition.

Conclusion

Whether it's Valio or Strateg, I have full confidence in the teams aiming to elevate asset management to a higher level in DeFi.

The choice to use LayerZero, bring a social/reputation-focused dimension, enable a high degree of strategy customization, provide a platform with an impeccable user experience for depositors and managers, and more, are all factors that have made me highly appreciate these two projects.

Both are expected to open to the general public in the coming weeks or months. You are currently in the "early" period, so I encourage you to get involved as much as possible. In my opinion, we very likely have protocols here that will become pillars of DeFi in the coming years.

Find all of my work here: