Introducing SolStreet.finance

SolStreet is a Solana-based, non-custodial asset management and investment protocol that allows anyone to launch a decentralized hedge fund directly to market.

All trades and assets remain verifiably on-chain via the use of the Serum DEX.

Solana offers low latency, high-throughput, minimal transaction fees and deep liquidity — improving on previous attempts on non-performant blockchains, like Ethereum.

Powerful tokenomic incentives designed to drive long-term, sustainable protocol growth.

Experienced and competent Solana development team — recent winners of the Solana Season Hackathon’s Orca prize.

Strategic seed investment and incubation from Invictus Capital — pioneers in blockchain-based asset management and with a proven history of successful seed investments.

Introduction

As former members of the traditional financial community, we’ve always felt dismayed by the needless inefficiencies intrinsic to traditional asset management — many of which have been unnecessarily regulated into existence, and which are primarily passed as added costs onto investors. All this while an unbroken string of enormous bonuses for Wall Street bankers continue, despite the industry adding little true value. These problems are not only the cause of widespread disdain for the sector as a whole, they also result in investors receiving sub-standard and overpriced investment management. SolStreet is a Solana-based, non-custodial asset management and investment protocol that aims to solve the problems inherent to traditional finance by allowing anyone to launch a decentralized fund directly to market, with negligible up-front or ongoing costs. All trades and assets remain verifiably secure, on-chain via the use of the Serum DEX.

The problem

Despite the global asset management industry managing in excess of $100 trillion, and continuing to grow upwards of 10% per year, the industry is faced with many challenges, including:

• Large third-party set up costs. Before even raising capital and operating a fund, a myriad of service providers and advertising costs are required — meaning the barrier to entry for new, talented fund managers without a reputation is enormous.
• Slow settlement. Subscriptions and redemptions from TradFi funds take days or weeks to complete, and at worst, are impossible. This is owing to the frictions of unautomated fund management processes, or due to a lack of sufficient secondary market liquidity for the underlying assets.
• High minimum investment amounts. Hedge funds are typically only available to Accredited Investors, and minimum investments are typically upwards of $100,000.
• Compliance overheads. A significant portion of asset management fees go towards paying custodians, auditors, administrators and a legion of other service providers whose use is mandated by regulators. This hampers both investor, and fund manager returns unnecessarily.
• Misaligned incentives. TradFi fund managers typically profit via management fees regardless of performance. The rise of index investing and benchmarking exacerbates the problem — disincentivizing deviation from the herd and reining in potential investment returns.

Powered by Solana

Blockchains provide a natural solution to many of the problems facing traditional asset management, and it is unrealistic to think that the industry will not be heavily disrupted by decentralized offerings going forward, particularly with the continuing trend of more and more assets and instruments becoming available for trade on blockchains.

On-chain transparency and the use of smart contracts for custody and accounting entirely eliminate the need for third-party auditors or custodians, and also eliminate geographical and economic constraints to investment. Blockchain’s value-add from disintermediation is quite pronounced in the realm of asset management.

However not all blockchains are created equal, and very few lend themselves to a smooth investment experience for either investors or fund managers. Other asset management protocols on the Ethereum blockchain, for instance, are rendered unusable for all but the wealthiest who can afford the exorbitant network fees. Solana is an exceptional blockchain for the task. It offers throughput of 65,000 transactions per second, near-zero fees, and sub-second block times. Additionally the blockchain has a focus on finance and providing deep, cross-platform liquidity via its Serum DEX.

This allows an asset management platform to cater to a range of higher-frequency strategies previously restricted to custodial forms of asset management and contrary to the ethos of the growing DeFi movement. The Solana ecosystem is outpacing even the growth of DeFi as a whole, having eclipsed $1bn in TVL for the first time in May 2021. This provides SolStreet the opportunity of partnering with other projects to expand functionality and symbiotically grow TVL, volumes and community awareness.

How it works

Anybody can directly launch, or invest into, a decentralized, non-custodial fund. All trades and assets remain verifiably on-chain via the use of the Serum DEX. The protocol facilitates subscriptions and redemptions to and from investment funds seamlessly and at near-zero cost.

In addition, it’s possible to invest using a currency of your choice, or similarly, to redeem your investment into any currency with the required transactions automatically routed through the Serum DEX. This helps the asset manager solve the hassles of cash drag or portfolio unbalancing arising from investment inflows, or the need to provide withdrawal liquidity. The asset manager is able to manage their fund’s portfolio allocation by authorizing asset swap transactions, without being able to withdraw funds — ensuring investor funds are secure.

The platform utilizes the Serum exchange, the Solana ecosystem’s liquidity engine, for asset swaps. Serum currently has 70+ asset pairs to trade, including leveraged tokens, with daily peak volumes just shy of $200m in May 2021. Crucially, the protocol provides support for order books — trumping traditional automated market makers for the amount of liquidity provided per unit of capital committed.

A simplified fee structure is used, with performance fees charged on any fund appreciation, subject to a high watermark, and this is realized by a redistribution of fund tokens from investors to the fund manager. By eliminating management fees and complex fee structures we aim to improve fund comparability and streamline the investing process.

Beyond this, the protocol plans to integrate a governance token that makes use of innovative tokenomic incentives to drive sustainable platform growth. More information about the platform can be found on the website, and in forthcoming Medium posts where we plan to delve into the project’s powerful token-driven incentives.

The Team

SolStreet is being built from the ground up by a talented team led by 0xab — the recent winners of the Solana Season Hackathon Orca prize with their innovative arbitrage bot, Orca Arb.

The team has also received strategic seed investment from Invictus Capital. Invictus — with around $150 million in AUM and a community of over 20,000 investors — is a pioneer in cryptocurrency and blockchain-based asset management and has helped incubate the project with assistance from their internal teams. Invictus’ vision and mission aligns perfectly with SolStreet and the company will be amongst the first users of the platform.

The team’s expertise goes beyond just operating investment funds, and extends into making successful seed investments into groundbreaking disruptors in finance and tech, including Quantfury and Syntropy. The synergistic relationship of proven and robust Solana developers partnered with asset management expertise is an exciting prospect for SolStreet, and makes for a good marriage between concept and infrastructure.

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