Trading Functions of Investment Management live on testnets
Ink Finance Integrates Unparalleled Trading Transparency and Risk-Management into our Cutting-Edge Web3 Financial SaaS
We’re thrilled to announce that the Trading Functions of Investment Management are now fully operational on our Testnets. This exciting milestone signifies the completion of all Investment Management functionalities. Whether you are an investment DAO or an on-chain institution, you can now seamlessly run your investment funds from start to finish using the INK WebApp!
A Brief Overview of Investment Funds
Investment funds have a three-phase life cycle: Setup & Raising, Operations, and Dissolution.
- Setup & Raising: The Fund Administrator initiates the fund, setting parameters, and opens it for investors to buy the fund shares.
- In Operation: In the operational stage, the Fund Manager makes decisions on buying and selling assets, all under the Risk Manager’s approval for risk control. The Investment Vault holds all invested assets and securely logs all transactions.
- Dissolution: When the fund reaches maturity, the Fund Administrator formally dissolves it. Investors then redeem their total returns, including any distributions earned during the fund’s lifespan.
How the Trading Functions Work
After a Fund enters the In-Operation stage, three main roles are engaged in the transactions:
- Fund Managers introduce tradable assets to a whitelist and initiate trading according to their market knowledge and opinions.
- Risk Managers approve the tradable assets and the submitted trading requests to catch destructive behaviors, reduce errors, and enforce limits.
- Counterparties trade with the Fund Managers.
Typical workflow supported by the Trading Functions
Step 1: Fund Manager introduces assets to the whitelist.
Within the INK WebApp, the process of “Introducing Assets” is divided into two main functions:
- Maintain Whitelist: Add FTs (Fungible Tokens) or NFTs (Non-Fungible Tokens) from the local network to the fund’s approved list of tradable assets.
- Wrap New Assets: In this process, assets from other blockchains or real-world assets (RWAs) are mapped onto the local network, creating new FTs or NFTs within the local ecosystem.
Step 2: The Risk Manager approves the whitelist.
Risk Managers verify the assets on the whitelist for their legitimacy and integrity, confirming they align with the investment domain and other requirements. They can disapprove of the whitelist if they find irregularities or rule violations.
Step 3: The Fund Manager initiates trading requests.
The Fund Manager carries out the following actions:
1. Selects the assets to be swapped from the whitelist
2. Specifies the volume of the transaction
3. Inputs the wallet address of the counterparty
Step 4: Fund Risk Manager approves the trading request.
The Fund Risk Manager:
1. Reviews the trading request against pre-established trading limits and rules.
2. Evaluates the necessity and viability of the trade.
3. Decides to approve, restrict, or reject the trading request based on the evaluations.
This step ensures that all trading activities adhere to the pre-set rules, safeguarding the fund’s integrity.
Step 5: Counterparty commits to trading
In this final step, the Counterparty, defined as a user who transacts assets with the fund, proceeds with the trade:
1. The Counterparty accesses the DAO using the “DAO Activities” shortcut.
2. The Counterparty initiates the trading process by clicking the “Commit Trade” button.
3. The Counterparty reviews and confirms the approved trade details, including the exact assets and their quantity set aside by the Fund.
Once the trade is approved, the Fund actively freezes the correct assets in the right amount, guaranteeing the Counterparty a secure and transparent trading experience.
Key Highlights of the Trading Functions
For Investment DAOs & On-Chain Institutions
New Asset Adoption: The system allows for the introduction, verification, assurance, and trading of new assets that are unavailable on the local blockchain, all executed within a transparent and accountable process.
Reduced Trading Risks: The separation of trading and risk approval safeguards investor interests by preserving asset integrity, adhering to preset risk limits, minimizing errors, and catching irregularities.
Compliance & Regulatory Ready: The platform records trade history and operational processes and traces asset origins, facilitating easier regulatory oversight when required.
Monitor Transparency to Gain Confidence & Trust: Transparency in the trading process fosters trust between investors and fund management, a crucial component of a lasting relationship.
Monitor Trading to Gain Insight: A clear view of the fund’s holdings, strategies, and risk control provides investors with valuable insights into the style and characteristics of the funds.
Enhanced Liquidity: Informed investors, aware of the fund’s activities, can more easily find liquidity for their investments.
Compliance Ready: Ink Finance actively supports KYB (Know Your Business). Funds must comply with regulatory standards and rules, and managers may need to meet specific qualifications or licenses. Allowing investors to verify compliance, adding an extra layer of assurance and peace of mind.
About Ink Finance
Ink Finance is an on-demand financial management SaaS, enabling on-chain organizations to build effective operation structure and perform best-practice financial management. Motto: Finance is built on credit, and credit comes from competence.