“All functions in this release aim to establish a best practice standard of collaborative investment on Web3. Combining the rigor of professional management and the flexibility of DAO, any investment-focused decentralized organization can now organize and operate in a Web3 environment to launch, fundraise, manage, and clear investment fund products. Such a standardized model puts safety, transparency, and compliance at the forefront of investment management, delivering the ultimate investor protection.”
The demand for collaborative investment in Web3 is continuously growing. Either from the regulatory angle or by the missions of the DAOs themselves, the industry needs a safe, professional, pragmatic, and flexible standard to support the management and operation of investment products. Ink Finance is proud to announce the release of Investment Management, marking another important milestone in the progress of the entire project.
Ink Finance enables any community to quickly and safely start an investment group in the form of a DAO. It also opens the door to the Web3 world for the traditional asset management industry with the easiest implementation.
Investment Management is one of the core “pluggable” components of the Ink Finance platform, seamlessly integrated into the overall governance framework. From the configuration of the Investment Committee to the actual investment activities, risk management, liquidity management, compliance, auditing, allocation, and liquidation, it has formed a standard of fund operations, which will be briefly introduced here.
The Investment Committee
Before a DAO launches any fund product, the primary focus is to set up fund managers within the organization, which is the cornerstone to ensure its healthy development. Instead of not knowing how to trace and who should be held accountable after a problem occurs, identity verification, clear responsibilities, and clear processes shall be well defined from the very beginning. The setting of this group of managers is determined by the DAO according to its own mission and voted by its members. Smart contracts execute the decision-making process and resolutions on the blockchain.
Who are in the Investment Committee
- Fund Administrator is responsible for creating, starting, and dissolving funds.
- Fund Manager is responsible for carrying out the investment activities of funds.
- Fund Risk Manager is responsible for conducting risk reviews on transactions made by the Fund Managers to ensure that each transaction complies with the fund’s operating rules. If the transaction does not comply, the Risk Managers have the right to reject it, and the transaction will not occur.
- Fund Liquidator is responsible for liquidating and distributing funds when risk triggers are set off or when unpredictable risk events occur.
- Fund Auditor is responsible for auditing the transaction price and the price of the assets held in the funds, as well as the completeness of off-chain assets, to ensure that the transacted price and presented price of assets are reasonable, to detect cherry-picking or other loopholes.
These five positions with different responsibilities create the checks and balances among each other, improving fund operations' security, transparency, and traceability to the highest standard.
Set up Fund — Launch & Start Fund
Fund Structure Highlight: 3 options for fund issuance
- After fund investors subscribe, the information is recorded on-chain. Investors only need to wait for the fund to distribute income or the termination of fund operation and receive the income and repayment directly with their wallets. Such fund products do not allow investors to transfer investment shares.
- Allow Fund to be Tokenized
Tokenization of fund shares is allowed, that is, when users’ investment subscriptions are completed, they will also get token allocation with a 1:1 mapping to their shares in the fund (the DAO sets the token name). Tokenization means that investors can trade or transfer fund shares after the subscription is over, thus providing them with flexible liquidity. They do not need to wait until the fund's termination to regain liquidity and can transfer at any time during the fund's operation to exit. Any fund token holder can directly redeem with the DAO when the fund is terminated.
- Allow Exchange for Portfolio Holding
The holders of fund shares can exchange the assets held in the fund according to their shares, provided that the assets held in the fund can be fractionalized. Such a construct supports true ETFs.
During the operation of a fund product, the Fund Manager can distribute irregular incomes to investors according to the investment situation, and the investors can access the DAO operation page to collect them. The smart contract automatically calculates the amount that can be claimed.
The above different forms of fund products provide investors with flexible use cases to meet very diversified needs.
To support the description and clearing of off-chain assets, Crypto assets on the local blockchain（FT & NFT）, Crypto assets on other blockchains（FT & NFT), and Real-world assets off blockchains
The setting of these parameters makes the rules of investment management concrete and transparent. To improve the transparency and enforceability of risk control and establishes safety protection mechanisms for investors in the system.
Compliance Supports Dual Verifications
Financial operation with compliance has always been a pain point of decentralized finance, and it will be the cornerstone of the steady development of this field in the future. Ink Finance provides the tools of regulatory compliance that funds must meet to operate, which can be used by DAOs that focus on asset management.
Biometric Identity and/or Legal Identity Verification. Once these tools are activated in the Compliance section, the personnel involved in the management and the users involved in the investment must meet the condition of identity verification before they can manage or invest. The requirements for biometric or legal verification are entirely adopted and enforced by the organization according to its need.
After the DAO has set up all managers at the Committee level, it can launch multiple “themed” fund products simultaneously and assign different managers to manage these funds, including the Fund Managers and Risk Managers. Each fund product operates independently without breaking away from the main body of the DAO.
The collection and distribution of management fees are coded into the contract and executed on-chain. The fixed management fee is automatically deducted when fundraising is successful. When the fund ends its operations, the Performance Fee will be calculated and deducted from the contract. If the fundraising fails, no fees will be deducted, and investors can redeem all investment subscriptions on the DAO operation page.
The Fund Administrator will shut down investment activities and conduct liquidation when the fund operation period expires. Afterward, Investors can redeem their investments based on wallet addresses or their fund share tokens.
Introduce Asset, Initiate Trade, Approve Asset, Approve Trade, Audit, Liquidate. These are the transparent operations performed by the fund managers during the process of a fund. The basic steps are requests, approval, and execution. This collection of functions will be released very soon.
How to set up Fund: Check here to start your Fund.
The release of Ink Finance’s Investment Management plugin takes blockchain-based collaborative investment to a whole new level. Ink Finance will not stop reaching its mission and will continue to deliver groundbreaking DeFi solutions, enabling investors to experience a safer and more efficient DeFi.
Stay tuned for more news and updates from Ink Finance!
About Ink Finance
Build On-chain Competence & Financial Credit with Ink Finance, an on-demand Web3 financial management SaaS, enabling on-chain organizations to build effective operation structures and perform best-practice financial management.