Written by Bing Ventures

DeFi is the most popular cryptocurrency application field in recent years. It has developed rapidly after the DeFi summer in 2020, attracting more and more attention and investment. Since the booming development of DeFi, the market has witnessed the development of various DeFi protocols, such as AMM, lending, derivatives, synthetic assets, etc., and each track has its own strengths and representative projects.

As a major product in traditional finance, asset management has not followed the development steps of DeFi in its decentralized form. However, decentralized asset management has initially developed a relatively complete model. With the increase in asset types, decentralized asset management will have great growth potential.

This issue of Bing Ventures' in-depth industry research focuses on the decentralized asset management track, introducing you to the competitive situation, development evolution and future trends of this track.

What is decentralized asset management?

Decentralized asset management is a smart contract using blockchain technology to provide asset management services in an unalterable, trustless and uncensorable manner. This asset management method allows investors to entrust investment decisions to external third parties without losing trust and control. In this field, products mainly include on-chain actively managed funds, on-chain passively managed indexes and various structured products.

User profile of decentralized asset management protocols

  • Individual investors: Individual investors are one of the major players in the market. They may be ordinary investors, crypto enthusiasts, or high net worth individuals. They seek to invest their own funds in asset management to obtain better investment returns and risk management.

  • Fund managers and investment professionals: Some traditional fund managers and investment professionals are also exploring opportunities in decentralized asset management. They see the potential of decentralized platforms and hope to provide more efficient, transparent and innovative asset management solutions by combining with blockchain technology.

  • Institutional investors: Institutional investors include funds, investment companies and other institutions. They usually have a large amount of funds and seek to allocate funds to various asset classes to achieve long-term returns and risk diversification.

What problems can decentralized asset management generally solve?

The decentralized asset management protocol aims to make significant improvements to the traditional asset management process. Due to its centralized and bureaucratic nature, traditional asset management is an industry with high costs and high operational friction.

Decentralized asset management takes advantage of blockchain and smart contract technology to improve along the following lines:

  • Lower startup costs — Arguably the most important and immediate improvement; the high legal, registration, and notary fees associated with creating a fund in traditional finance can range from $10,000 to over $200,000. In contrast, it costs less than $100 to start an on-chain fund on Ethereum. By extrapolation, this cost can be reduced to a few dollars on a high-throughput L1 chain.

  • Faster startup time – The process of creating a fund in traditional finance can take months. Decentralized alternatives can reduce this process to minutes.

  • No minimum investor investment requirements - Most funds in traditional finance have minimum investment requirements. These minimum investment requirements can be as high as $10,000,000 or as low as $10,000. Decentralized funds completely eliminate investor minimum investment requirements.

  • Can be non-custodial/trustless - In a blockchain-based fund, the fund manager does not have the ability to custody or withdraw investors' funds, but can only use investors' funds to make certain investments and conduct transactions.

  • Transparency – Funds in the traditional asset management space can suffer from limited transparency due to reliance on real-world contracts, external auditors and non-real-time reporting. Blockchain technology, a continuously updated and transparent ledger, allows funds built on the blockchain to be fully transparent, with all changes to their portfolios updated in real time as they occur.

Composability - While traditional finance exists primarily in centralized silos, decentralized finance has evolved into a set of interconnected, modular "money legos." This allows decentralized asset management to easily plug into other DeFi services to enable trading, reporting, leverage, insurance, exchange, and other functions.

Common decentralized asset management protocols

The following table shows the blockchain-based asset management protocols that are still in operation today. It does not include defunct protocols such as Bskt, TAAS, and some others.

TVL and FDV of major decentralized asset management protocols as of May 2022

Let me briefly introduce the first @Enzyme:

  • Enzyme, formerly known as Melon, is an on-chain asset management protocol that has been under construction since 2017. Managers can build their own investment portfolios on it, and investors can choose specific investment managers to invest in. The most important feature of Enzyme is that it is based on the entire Ethereum, and the range of investment assets is much wider than that of synthetic assets, and the combination of strategic gameplay is rich.

  • Its vision is simple - put hedge funds on the blockchain. The project has about 1,000 "positions". Most are fund-like structures that exist on the chain or are managed by managers; some are DAO vaults managed by DAO members.

  • In early 2021, Enzyme launched version V2, which supports more than 180 assets, adds AMM pools that can be used for portfolios, and supports short selling and liquidity mining. Enzyme also launched a new DeFi product Sulu, which has 9 major upgrade plans, including: increasing borrowing (previously only loans), tokenized transfer of portfolio (Vault) shares, integrating several major DeFi protocols such as AAVE/Balancer, and being able to inherit their mining and compensate portfolio managers for certain transaction fees (on-chain).

Business logic of traditional asset management protocols and decentralized asset management protocols

  • In traditional asset management, an asset management platform is a centralized entity responsible for providing asset management services. Investors entrust their funds to the asset management platform, which manages the investment through its internal team of fund managers. Fund managers are responsible for selecting investment targets, formulating investment strategies, and executing transactions. Asset management products are investment portfolios managed by fund managers, and investors participate in investment by purchasing asset management products. Ultimately, investors can enjoy the professional management of fund managers and asset appreciation.

  • In decentralized asset management protocols, this traditional centralized structure has undergone fundamental changes. First, the asset management platform is replaced by a decentralized smart contract, which automatically executes asset management strategies without relying on intermediaries or platforms. The role of the fund manager is replaced by a smart contract, which manages assets according to preset rules and conditions. As part of the smart contract, the asset management product has the characteristics of automation and programmability.

  • Most importantly, users can interact with smart contracts directly without going through intermediaries or platforms. Users can purchase, redeem or transfer assets by interacting with smart contracts, and adjust investment strategies according to their needs and investment goals. The transparency and immutability of smart contracts ensure that users can check and verify their assets in real time.

Decentralized Asset Management & DeFi

On-chain asset management, stablecoins, and custody have always been the earliest conceptualized blockchain use cases. Today, decentralized asset management can be considered a broader category than the DeFi industry.

There is a category of asset management tools related to data that has attracted much attention in DeFi, such as Debank, Zerion, and Zapper. They mainly track and manage on-chain assets and conduct visual analysis, providing convenience for on-chain users and DeFi users.

The increased difficulty of investing in DEFI provides opportunities for asset management

One dimension of diversified DeFi is the increasing complexity of asset returns. From Bitcoin to public chains to DeFi/NFT, the complexity rises in a step-by-step manner, and it will become more and more complex in the future. Assets are put on the chain, all kinds of strange assets are put on the chain, plus composability, the assets/returns created are diverse. The more complex the types of returns, the greater the space for decentralized asset management.

The Importance of Asset Management in Blockchain

DeFi has brought more profit channels, but it also makes our crypto assets more fragmented. We use a large number of DeFi applications for combination, some of which require collateral, some have conversions, some protocols will give a new token after use, and some protocols will lock assets in contracts. As the gameplay becomes more and more diverse, forgetting the protocols you have participated in has become a common problem. The asset management tool for on-chain data solves this problem very well.

It allows users to manage their assets on different public chains directly through one entrance, opening up a new decentralized, non-custodial and highly accessible investment opportunity for anyone who wants to participate in Defi.

From the picture, you can clearly see the projects that this wallet is involved in, the assets in different projects, the combination methods, the profit situation, etc., which clearly displays the wallet data.

Competitive product comparison

Project Introduction

DeBank helps track DeFi portfolios (information about various DeFi projects/applications), discover DeFi projects and compare DeFi interest rates. It also helps users discover investment opportunities through detailed real-time data.

Simply put, it is an information collection platform for all Defi projects, where you can check the rankings of various projects and some related information (information changes in real time), which brings convenience to investors without having to open a bunch of websites. Secondly, linking your wallet can help you display the income of your current assets in real time (real-time tracking) and other services. Its asset tracking function is also often used to monitor Smart money wallets.

  • The specific operations that can be used on Debank are:

  • a. Monitoring of whale behavior. For example, if you are interested in the token \(OP), you can choose to monitor a whale holding \(OP) and analyze it based on its behavior.

  • b. Personal asset distribution and behavior records. You can view the assets on all chains in your wallet, as well as all interactive behaviors and DeFi activities on the corresponding chain.

  • c. Invest through data tools, which include statistical data on four major markets, including mortgage lending, stablecoins, leveraged trading and spot trading, and display statistical data on each lending platform from three dimensions: assets, income and liabilities.

  • d. Users can log in to DeBank Hi through the Web3 wallet and conduct community interactions in the form of Web3, and can also vote on governance proposals.

  • e. Collect major Defi projects, classify and introduce them, and provide customers with query functions. Information includes token distribution, participating pool types, etc.

  • f. Social platform model, integrating posts from various users and the latest cryptocurrency information.

Main competitors: zerion, zapper

Zerion allows users to trade, invest, borrow, exchange, and perform all DeFi-related work on its platform while retaining full custody of their funds. Zerion is a medium for DeFi protocols, and users can manage funds by connecting to Zerion. It also has the function of viewing on-chain data.

Zapper is a DeFi asset management platform that helps users invest, monitor and manage all their DeFi assets and liabilities in one stop.

Project Positioning

  • Debanka. Debank is positioned as a "decentralized digital asset management platform" that aims to help users manage and track their digital assets. Compared with the other two platforms, Debank's focus is more on asset management and tracking. b. With an increasing focus on ensuring that users understand all the information about each protocol and exchange they participate in, it is more suitable for investors who like DeFi data.

  • Zappera. Zapper is positioned as "the user's Web3 homepage", helping users manage all Web3 portfolios, from DeFi to NFT and other emerging assets, and providing a one-stop platform for investment. b. What makes Zapper a common choice is that its balanced features work together, allowing users to keep a close eye on their entire DeFi portfolio.

  • Zerion a. Zerion is positioned as a "DeFi investment and management platform" that allows users to build and easily manage applications for their entire DeFi portfolio from a single entry point. In terms of asset tracking, Zerion's basic functions are similar to Zapper. b. Zerion was chosen because it is an essential platform for investors who want to actively trade cryptocurrencies to diversify their portfolios.

Judging from the positioning of the three projects, they are mainly aimed at serving on-chain Defi users. Debank focuses on the comprehensive management and tracking of assets, Zapper pays more attention to investment management and optimization, and Zerion pays more attention to asset transactions and management.

Product Model

  • Debank’s product model is to serve as a decentralized asset management platform, providing users with a full range of digital asset management services. Since their mission is to build more connections and understanding between investors and the DeFi world, it is a great thing that DeBank can really help investors gain a deeper understanding of the data behind DeFi.

  • a. Account Overview: Contains the red DeBank full address ranking list (related to the subsequent social interaction), address-related binding information (such as how long the address has been used, whether it is associated with Twitter, Discord, email, etc.), and all asset balances in the address (the balance here covers the assets of the same-name address on all chains).

  • b. Address interaction information: mainly includes people followed by the address, people who follow the address, and the total assets of the people being followed. Click "Follow" or "Fans" to view the list of all relevant people.

  • c. Wallet and currency details: The wallet displays the relevant information of all currencies under the same address.

  • d. Project Details: In the Project Details section, you can not only understand the address’s investment in each project, but also the specific details of the project investment.

  • e. NFT information: Click on the NFT interface to know all the NFT projects included in DeBank and their market value held by the address on different chains.

  • Zapper was chosen for its balanced features that work together to enable users to keep an eye on their entire DeFi portfolio. In addition, Zapper has another feature that stands out - its focus on liquidity and yield farming. a. Zapper allows users to invest directly in liquidity pools, turning users into "liquidity providers" (LPs) in a few minutes. In addition to its easy-to-use interface, Zapper simplifies liquidity provision by automating some tasks for optimizing asset allocation between asset pools.

  • Zerion’s main functionality is similar to Zapper, but it gives investors access to lending markets, liquidity pools, and yield farms. It can also be deposited via fiat currency.

  • Compared with Debank, zerion and zapper are both decentralized asset management platforms, but their product models are different. In addition to asset tracking functions, zerion provides a scalable digital asset management solution that allows users to manage across different DeFi protocols, including AMM, lending, derivatives, synthetic assets, etc. While aggregating transactions, zapper also focuses on emerging assets, such as the minting of NFTs and the registration of ENS.

Debank, Zerion, and Zapper all provide convenient digital asset management services, but they differ in their specific product models. In addition to the core function of providing diversified services and data tracking for Defi, each product also attempts to innovate at different points.

For example, Debank launched a Debank Hi feature that enables users to interact with the community in the form of Web3. Zapper started with NFT and announced the exploration of integrating Arbitrum and Optimism.

As a decentralized finance (DeFi) aggregation platform, DeBank has the following advantages:

advantage:

• Multi-chain support: DeBank includes more than 30 mainstream chains, supporting users to manage and monitor assets on multiple chains.

• Rich project collection: DeBank has included more than 1,000 DeFi projects, covering mainstream projects in the market, making it convenient for users to view and manage.

• Address follow-up function: Users can follow other addresses and learn about the asset changes and dynamics of the followed addresses in real time.

• Detailed asset and project information: DeBank provides detailed information on assets, project investments, NFTs, and historical transactions, making it easier for users to understand their investment status and analyze market trends.

• Real-time updates: DeBank will continuously update the included projects and chains based on industry development trends to keep pace with the market.

However, there are some areas where DeBank can improve:

Areas for future improvement:

• Real-time reminder function: DeBank currently does not have a real-time reminder function, and users need to constantly refresh the page to get the latest updates. In the future, we can consider adding a real-time reminder function so that users can keep abreast of asset changes and market information.

• Support for more projects and chains: Although DeBank has included many projects and chains, some projects and chains are still not included. In the future, the scope of inclusion can be expanded to improve user experience.

• Optimize mobile experience: Currently, the functions of DeBank’s mobile and web versions are not completely consistent. Consider adding more web version functions to the mobile version to make the two closer.

Income

Debank: Currently, the main sources of income are the social functions Web3 ID and Debank hi. It costs 96 to mint a web3 ID, and Debank Hi can interact with other users and charges 1 for sending a message. Debank pro will be launched in the future to charge for more services.

Zapper: The main way to make profits is by selling Zapper API and providing data to other protocols, including DeFi protocols and NFT valuations as well as pool liquidity and prices of different AMMs.

Zerion: The main source of income at present is its own Swap and the transaction fees of Zerion Genesis Card. For each swap on Ethereum, Zerion will charge a 0.5% fee, while Zerion Genesis Card holders can be exempted from the fee and obtain advanced transaction routes.

Comparison of monthly transaction volumes between Zapper and Zerion

Zapper

He was

Financing

Debank

In December 2021, DeBank completed a US$25 million equity financing with a valuation of US$200 million, led by Sequoia China, with participation from Dragonfly, Hash Global, Youbi, Coinbase Venture, Crypto.com, Circle, Ledger, and Distributed Capital.

He was

In December 2019, Zerion completed a $2 million seed round led by Placeholder. In July 2021, it completed an $8.2 million Series A round led by Mosaic Ventures, with participation from Placeholder, DCG, Lightspeed, Blockchain.com Ventures and other companies.

Zapper

In May 2021, it completed a US$15 million Series A financing round, led by Framework Ventures, with participation from Sound Ventures, entrepreneur Mark Cuban, Nascent, ParaFi Capital, Distributed Global, Spartan Group, DeFiance Capital, Maven Capital, Sino Global Capital, LongHash Ventures, Cooley LLP, and Stani Kulechov.

Website data

Social media data Dilemma

  • Currently, there is no single decentralized asset management product on the market that can cover all functions. For a single product, it is crucial to make differentiated functions. The best way for users is to use multiple asset management tools together. In addition, the biggest dilemma of the current decentralized asset management protocol may come from the decline of enthusiasm in the DeFi market, followed by the lack of product functions.

  • The main audiences of the three products of Debank, Zapper, and Zerion are Defi users on the chain. From the perspective of the general environment of the platform, the TVL of the Defi track will be significantly reduced after 2021, and enthusiasm will recede. In this pessimistic world Against this background, it is undoubtedly very difficult to bring huge traffic to the product itself. And the rapid development of DeFi may not happen in the next few months. It will be a painstaking innovation and construction process that lasts for many years.

  • Due to the complexity of asset management protocols, it is difficult to meet the needs of all users. Different users have different asset allocations, risk tolerance, and expected returns, which makes it difficult to design an asset management protocol that can meet the needs of all users at the same time.

  • In the highly competitive asset management market, the speed of asset listing has become a key issue. As more and more protocols emerge, asset management platforms must adapt quickly to this change and be able to quickly connect new projects to their platforms to attract more users. However, this is not an easy task. Asset management platforms need to conduct comprehensive security testing to ensure the security and reliability of new projects. This process may take a lot of time and resources, so asset management platforms are often not fast enough in terms of asset listing.

Outlook

  • With the continuous development of blockchain technology and the gradual maturity of the DeFi market, data asset management protocols will have a broader development prospect in the future. At present, data asset management protocols have achieved great use cases in providing users with asset management, data query, etc. As more emerging DeFi protocols appear in the user's field of vision, asset management protocols that can keep up with the market will receive attention.

  • From the perspective of the asset management industry itself, data asset management protocols may still be deeply integrated with other fields in the future, such as the combination with artificial intelligence technology, and the coordinated development with industries such as RWA (real world assets), so as to provide users with more comprehensive and intelligent asset management services. a. With the hot concept of artificial intelligence today, the asset management protocol + AI approach may be favored by more users, and looking forward to the future, there may be huge use cases in the following directions: i. Automated portfolio management: AI technology can use machine learning prediction models to perform portfolio planning, strategy evaluation, pool weight calculation, signal generation and sentiment monitoring, and build automated agents for active portfolio management. ii. Fraud wallet identification and marking: AI technology can accumulate data, analyze a single address, capture the wallet associated with it, analyze the fraud wallet and store it in the database. This can help users reduce the probability of being deceived. iii. Market prediction and intelligent investment decision-making: AI technology can improve the accuracy of market trend predictions through machine learning and predictive analysis technology, and provide traders with technical and fundamental analysis services. This provides DeFi with opportunities for automated trading and portfolio management. b. Co-development with industries such as RWA (real world assets). The RWA concept is very popular. It is a bridge connecting Defi and the trillion-dollar Trafi industry. Convert tangible or intangible assets off the chain into tokens so that they can be traded on the chain. If in the future, the asset management protocol can cut into RWA from a good angle, there will be a larger market.

In general, there is still a lot of room for the future development of asset management agreements. If a single agreement wants to stand out in the market, it needs to constantly adapt to the market, adapt to new products, and make its own innovations in them.

#DeFi