Future of Fund Management Industry (Blockchain Edition)
MoatFund is determined to reshape the future of fund managing industry by building a transparent, efficient and hard-to-scam protocol integrated with Kyber Network.
Financial industry is a highly regulated sector and why will it not be? After all, the money involved in it belongs to us.
Despite such high regulations, 21 govt banks lost Rs 25,775 crore in bank frauds in FY18 alone. Here’s a whole list of scams occurred in India since independence involving banks, stock brokers, real estates, government schemes, money laundering and what not. And this doesn’t include the scams which are not yet earthed. I pay the taxes and I don’t want it to end up in these scams.
The 2 biggest factors that lead to these scams:
- Centralisation.
- Lack of Transparency.
That’s why we badly need permissionless blockchains to decentralise things and make it more transparent.
Blockchain is a miraculous innovation which creates a distributed and immutable ledger of transactions on the chain of blocks. Fully transparent and secured with 100% uptime. No central power controlling the network.
Bitcoin is one of the implementation of blockchain, however Ethereum took this an extra mile by supporting others to create smart contracts on their blockchain which makes it real easy to build decentralised app (aka dApps) on ethereum blockchain itself.
We — at MoatFund — are committed to disrupt the Fund Managing Industry by shifting its operations on Ethereum Blockchain. In this article, I’ll show you how we are building a transparent system to shift Fund Managing Industry on Ethereum Blockchain.
If you stuck anywhere, reach us out on our telegram group. Let’s dive in.
We have 25 investors at MoatFund, all from India. Despite of RBI banned banks from involving in cryptos, not even a single investors panicked to fetch out their funds from MoatFund. We really liked that gesture.
Why? Because they believe their funds are safe in MoatFund and they believe in the future of cryptos.
Money will be the native and compulsory feature of next era of internet (web3) where the money will be signed/verified digitally using cryptography technology. Think about paying every second for using Netflix. Sooner or later, everyone will realise and use it in their day to day life. Crypto is redefining the way we exchange values and it’s absolutely here to stay.
So what exactly is MoatFund trying to do?
(Important) Instead of giving central authority of funds to fund managers, MoatFund restricts the manager from taking the funds on their individual hands and lets them easily manage assets directly from an immutable smart contract.
If you‘re new — What are smart contracts? — you may ask.
In simple words, they are the immutable codes running on a decentralised world computer (like ethereum blockchain) which helps you to trade anything of value in a transparent, conflict-free way, allowing credible transactions without much relevance on third-parties middlemen. It offers independence, trust, cost savings, productivity, precision, and backups that traditional contracts (banks) cannot offer.
I would only like to discuss 3 Primary Operations of Fund Management Industry and How MoatFund Protocol is Redefining those Operations.
#1 — Investment & Redemption of Funds.
This is one of the primary fund managing activity which involves accepting funds from new (or maybe existing) investors and redeeming funds to existing investors.
So previously…
You’ve to contact the fund manager (or a mediator) to invest your funds or priorly let them know when you want to redeem the funds. In the process, some PMS firms also charge you fees on redemptions. You’ve to provide a proof for your identity and sign the contract deeds. You are interacting with and sending funds to a central party.
But at MoatFund…
Investors & redeemers will deposit their ETH or MTU respectively in MoatFund smart contract. We will calculate net assets at the end of each month (or quarter) and define the price on smart contract. Investors & redeemers will collect their MTU or ETH respectively from the contract. No paperwork. No signing. Your ethereum address private keys are the proof that you own that ETH or MTU. You are interacting with and sending funds to MoatFund smart contract.
*we have plans to change the base currency to DAI stable coin from Ethereum.
#2 — Portfolio Allocation.
It includes the allocation of funds into different assets and rebalance the funds accordingly. If you go through this list of Indian scandals, you will find out that many scams involves IPOs issuance where funds are used for the purpose other than what the IPO prospectus describes. People really don’t know where their funds are being deployed. One such scam was Bhansali scam in 1995 (and is worth Rs 1,200 crores). Later, we came to know about the scam but it was to late to take actions to undo things. Freshen up the recent PNB case.
So previously…
You transfer your funds into the given bank account. Now, they have central power over your funds. They start trading your funds from their institute’s account. They create a report on quarterly (or yearly) basis but again the transparency is not maintained on day to day basis which is also not practically possible in existing system. This leaves out chances to scam or manipulate the system.
But at MoatFund…
You transfer your funds at MoatFund smart contracts. The fund manager starts managing your funds on smart contracts (codes running on ethereum blockchain) which is publicly accessible anytime, anywhere with no delay. The trade takes place contract to contract — which means — MoatFund smart contract directly interact with Kyber Network.
For example, if we want to buy KNC, fund manager will call the trade function with required information (like what to buy, how much to buy etc) in MoatFund smart contract which will transfer Ethereum to Kyber Network smart contract that allows instant token conversion. And then Kyber contracts will send back the equivalent KNC tokens to MoatFund smart contracts.
Check out following transaction on Ethereum Testnet where the ETH and ERC20 token is being transferred between MoatFund contract and Kyber Network contract.
Pretty amazing to see contracts are interacting with each other with no human interruption.
It’s a complete peer to peer trading (where the peers are smart contracts instead of individual ethereum addresses) with no middlemen interruption leaving out no chance to scam the system. And there’s no way to get funds or tokens out from smart contracts.
- Kyber Network is a decentralised liquidity network just like MoatFund is a decentralised fund managing protocol.
Actually, I lied that “there’s no way to get funds or tokens out from smart contracts”. Here’s why?
#3 — Governance.
Crypto is decentralized. Successful projects are driven by proper incentives, not central planning. Incentives are also important at the human level.
Incentives. Are. Everything.
Similarly, being a crypto project, MoatFund also needs some level of Governance to secure the fund managing protocol.
So previously…
The total governance power recites with the central financial institute. They made you sign a “terms & conditions” paper which you completely ignored before signing so they have complete rights to change the rules of game anytime. They can make risky investments and move large funds without the permission of real owner of the funds. You can’t get your funds out until and unless fund managers want it to.
But at MoatFund…
Moving funds out from smart contracts need the acceptance of MoatFund investors. So the fund manager will draft a proposal on MoatFund smart contract by specifying the amount of ethereum he wants to fetch out on his individual address.
For example, fund managers want to take out 2 Ethereum from MoatFund smart contract to loan out DAI stable coins, they will draft a new proposal by calling out the function with ether amount and the description of their proposal as a parameter. Share the proposal with MoatFund investors, if it seems legitimate, they will vote positive for it or else negative. Don’t let the proposal pass if the amount is very large or if the investment doesn’t seems promising.
If the proposal passed out, the amount will be transfered to the fund manager. Below is the most recent proposal Tx of MoatFund seeking out 12 Ether for DAI creation (Come on click the link, I’ll wait).
That way, we make sure that the fund manager doesn’t mess with large funds or risky investments. And that’s how the decentralised governance is maintained in MoatFund ecosystem.
You’ll soon see all the financial industry being shifted to blockchain. What can you not do on blockchain?
There are dozens of decetralised exchanges which facilitates peer to peer trading. A protocol to get insane cheap loans on blockchain (really, it’s a steal). Derivative trading on blockchain. Payment gateway on blockchain. Tokenized gold on blockchain. Security offering on blockchain.
Crypto wave is unstoppable. Every central power is afraid.
And MoatFund is commited to shift Fund Management Industry on blockchain.
Claps, comments, a share will be truly appreciated :)
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