May 10, 2022
Magnety and the on-chain asset management protocols market
Testnet
We received almost 34,000 requests for the testnet, we are grateful for your interest in Magnety 🤟
Sounds like a majority of you are already confirmed asset managers, we are waiting for you to show your expertiseđź‘€
On-chain Asset management market review
With hundreds of platforms and thousands of coins to choose from the DeFi ecosystem, most people don’t know how to invest their capital. Today, there are so many possibilities to earn money with cryptocurrency and DeFi ( farm, put/call options, day trading, swing trading, arbitrage, trading bot, synthetics, staking, lending/borrowing, and probably much more…). On-chain asset management protocols allow you to copy others’ professional portfolios. Despite this strong value proposition, there is a lack of interest in these Apps.
Currently, most of the funds you can copy/get exposed to are just an index of some coins, working in DeFi or not. When the market goes down, the price of your shares goes down as well. There isn’t coverage or any risk management. Since the opportunities in DeFi are huge but are only exploitable in a short period of time, the real value proposition isn’t to copy an expert portfolio at a time T but to get constantly exposed to an expert strategy that knows how to adapt his position according to the market.
2 main issues with asset management Apps :
- A lack of experienced asset managers.
Digital asset manager is a full-time job, it’s not because you hold crypto and use some DeFi App protocols that you can consider yourself an expert. It is crucial for these Apps to connect with professionals with a well-defined strategy. Otherwise, it would lead to bad or even negative performances, and obviously, no one wants to invest in these funds. Asset management protocol without seasoned players can’t work and these are the reasons why there are not too many :
- Chain Scalability
Creating a fund and managing it can be very expensive for an asset manager if the App is running on a chain that requires high fees for any transactions. It becomes even more difficult if the asset management strategy requires a high rate of transactions: scalping, grid trading or arbitrage strategies.
Magnety will run on Starknet, which is the best scaling solution for Ethereum. You’ll be able to create and manage your fund without spending a lot.
- User Experience
If you have ever used on-chain asset management solutions, you may know that the asset manager has to access his dashboard to interact with any other DeFi applications to make his fund grow. This is not scalable such as the App has to import the interface of the other DeFi App and stick to the last version of it. Most of the time you’ll see an unfinished interface that makes the asset manager’s user experience not that good.
Better than managing your fund through DeFi App in your asset manager dashboard, we delete this intermediary and directly allow you to import your fund into your wallet. You’ll be able to manage your fund outside of Magnety, just connect your new account to the DeFi App you want and perform your transaction as you have always done! We didn’t want to change asset manager habits. (look at the account abstraction part below to know more)
- Weak Community
On-chain asset management Apps let users create a fund in a permissionless way but one important thing is to connect everyone so they can share their knowledge for the general good.
Magnety will Bring and train OG digital asset managers to the platform.
We have dedicated 5% of our supply to subsidize partnerships with different profiles of performing asset managers. Each one will act as an advocate, creating his own fund on the platform and sharing the most relevant tips with the community. they will propose educational contents to form new asset managers, help them to start their careers, and get better and better performances.
- Incentives
Monetizing its investment strategy is already very interesting for an asset manager, but what about the incentives to reward the most performing of them?
We have created a competition system to incentive them to increase their performances. We are organizing a periodical airdrop to reward the leaders with our native token and we are providing them more visibility on Magnety to grow their investors’ community.
- Wrong users targeting
There is no connection between traditional finance users and on-chain asset management protocols. Nevertheless, these are the perfect users to target. So many people want to invest in crypto but do not have any idea of the strategy to use. Most of them just want to deposit money without dedicating any time to the management and finally redeem their funds later with a capital gain. That is precisely the on-chain asset management value proposition. Most web3 users prefer to participate in DAOs investment club solutions. This is a cool alternative, even if it is different on some points such as the fact you are an actor of the fund, so you need to dedicate some time.
To onboard these users we have planned to make our UX really simple to compete with the best traditional finance apps. Moreover, we postponed to earlier the launch of our mobile app.
We are also considering proposing our solution for institutional clients by adding an onboarding process (KYC) to satisfy off-chain compliance.
Account abstraction & utility for Magnety
As you may know, on Starknet, an account is nothing more than a regular contract with features to allow you to perform transactions and validate them using different methods.
👉https://github.com/OpenZeppelin/cairo-contracts/blob/main/src/openzeppelin/account/Account.cairo
You can find some other account libraries that define a different way to validate a transaction like multiple signers, different signature schemes, some additional third-party that have to validate your transaction in order to prevent you from malicious contracts, etc..
I recommend you to read this article to know more about it. https://www.argent.xyz/blog/wtf-is-account-abstraction/
Magnety takes advantage of the account abstraction to add at the top of a regular account library, the logic of the fund (buy shares / sell shares, policies, configuration …). In this way, the asset manager will be able to use the funds outside of Magnety. Just connect your wallet on the DeFi App you want and perform your transaction with the fund’s assets you are managing. Obviously, you will be only able to use the account’s asset through app you have mentioned in the fund creation process. Better than creating a contract and interacting with it, we deleted this intermediary and directly create an account-fund (we didn’t find a sexy name for it yet) that you’ll be able to import into your wallet. In the short term, we will create our own wallet solution such as importing an account into your browser wallet, that is using a different implementation is something really complex (accounts are contracts with addresses that don’t necessarily depend on the signer key). This wallet will be only usable by asset managers from Magnety.
That’s it for now, thanks for your interest in Magnety, stay tuned on our social media 🤙
👉twitter.com/magnetyfi
