Can Arbitrum's innovative project FactorDAO usher in a big explosion in on-chain asset management?

06/02/2023·1years ago

I. Introduction

Currently, FactorDAO is a decentralized asset management protocol in the Arbitrum ecosystem. It connects the world's best investment managers and investors on the Ethereum blockchain in a permissionless and trustless manner, allowing anyone to create fund products on a peer-to-peer basis while maintaining a fair compensation structure beneficial to all parties. Becoming an investment manager does not require a minimum asset size limit, and individuals from any background have the opportunity to become outstanding investment managers.

From the perspective of investors, FactorDAO allows anonymous investors to select the best and most suitable top hedge fund managers based on their transparent performance and investment style, and to track their investment performance in real time. FactorDAO is a newcomer in the on-chain asset management race. What innovations could lead to a big explosion in on-chain asset management?

II. Key Innovations

2.1 Infrastructure Framework Innovation

Factor's tokenized vault infrastructure is based on the ERC-4626 token standard. The previous ERC-4626 contract state did not support multiple assets by default, but Factor made effective adjustments to the ERC-4626 contract state, expanding contract functionality and flexibility. This will allow creators to add multiple supported tokens to the vault, opening up many possibilities:

Innovations:

Fund products can adopt any complex revenue strategy represented by ERC-4626 vault tokens.
Investors can hold fund shares simply and securely without the impact of rebase inflation.
A fund product can aggregate various investment strategies within the project itself, as well as other protocol or community investment strategies, to maximize revenue potential and performance/risk indicators.

2.2 Tokenized Basket

The function of creating tokenized baskets provides a simple and flexible way to create Assets Under Management (AUM) and maintain on-chain records, allowing investment managers to interact and collaborate frictionlessly with other vaults (products) or other web3 protocols in the ecosystem. It also allows investors to use tokens to manage the risk exposure of different assets and access tokenized baskets, fully controlling their investment portfolios. Tokenized baskets are like on-chain index funds, containing a variety of different assets and allowing investors easy access to the exposure of their chosen index. The difference is that Factor vault managers can easily rebalance assets as needed, supporting both passive and active investment strategies.

Innovations:

Easily create tokenized baskets containing any type of underlying assets—on-chain native cryptocurrencies, carbon credit tokens, commodities, or other asset-backed tokens, revenue-bearing tokens, derivative tokens, etc.
Trustless and permissionless
Support both passive and active investment strategies
Easily enhance liquidity with third-party protocols based on the AMM mechanism
Creators can flexibly set fee structures
Easy implementation of short selling connected to Factor's lending pool

2.3 Revenue Pool

Creators can deploy permissionless, non-custodial lending pools for lending operations, with each lending pool customizable based on various risk conditions. Each lending pool is isolated, so the risk of a single lending pool will not affect other pools. The revenue pool allows fund managers to easily short tokens or lend to earn income from held assets.

Innovations:

Permissionless creation of non-custodial lending pools
Compatible with any revenue-bearing assets supported by oracles
Customizable to meet any risk exposure needs
Creators can create restricted pools: for example, requiring KYC or only applicable to whitelisted addresses

2.4 Derivatives

Factor allows users to create, settle, and trade decentralized derivatives on any crypto asset. This architecture will support the generation of derivatives on crypto tokens supported by traditional assets (such as physical commodities, securities, and carbon credits), meaning fund managers can build investment portfolios composed of crypto and non-crypto assets, using various basket tokens and derivative tokens (carbon baskets, DeFi, privacy, quantitative themes, trading robots, swaps, options, futures, etc.) to hedge positions and implement market-neutral strategies. This innovative change to on-chain derivatives is still under development, so stay tuned for how it will be implemented.

Innovations:

Trustless and permissionless requirements
Create derivatives using an intuitive interface
The framework includes most types of derivatives, including options, futures, and CDS
Compatible with any underlying crypto asset and oracle pricing
Support any ERC-20 token or stablecoin as collateral
Oracles can prevent manipulation of price feed data

2.5 Strategy Templates

Templates are "recipes" supported by the community to simplify the user's strategy creation process. By browsing a set of strategy templates, you can find the most suitable investment strategy for you. Templates save users time by providing pre-made modules for their strategies and help users communicate and share strategies more effectively with others.

2.6 Dashboard and Alliances

Factor's dashboard ranks baskets and pools based on various performance metrics (absolute, relative, risk-adjusted). Managers who perform best at different times will receive rewards from Factor. Investment managers can also test their investment skills by submitting strategies to one of Factor's alliances. Alliances are organizations where outstanding fund managers cooperate and compete with each other, and can be public (such as Factor Open) or private (created for talent recruitment or asset management outsourcing), with private leagues possibly requiring KYC based on league settings. FCTR stakers can access community-generated alliances, while others may need to pay an entry fee.

Various rewards will be distributed to the best performers in the league. Factor Open will be incentivized by DAO ecosystem funds and will distribute FCTR as rewards. DAO will also use Factor Open for talent recruitment activities, to headhunt future vault financial managers or other roles within the community. The protocol can create its own branded alliances, allowing it to reach a wide trader community and drive trading volume and liquidity for its native token.

III. Token Economic Model

FCTR is a utility token. Users can lock FCTR to obtain veFCTR, which provides:

Protocol fees and governance rights
50% of platform revenue

Maximum token supply: 100 million

IV. Roadmap

Q4 2022

Market and PR
Testnet launch
Community building
Contract testing
Bootstrapping financing

Q1 2023

Public sale
Arbitrum mainnet launch
Cross-chain aggregation
Derivatives aggregation
Protocol partnerships

Q2 2023

Native derivatives
Multi-chain deployment
Development toolkit
Institutional integration

Q3 2023

AMM launch
Native asset tokenization
Institutional-grade liquidity
Ecosystem expansion

V. Core Team

VI. Financing Information

The project has no private fundraising information, and may have a Bootstrapping fund. The project will conduct a public token sale on February 20, 2023, at 18:00 UTC at @CamelotDEX. The sale will last for 5 days, and 10% of the total supply of FCTR will be used for the public sale, distributed using a fair issuance and price discovery model.

The starting price is $0.10 (FDV $10 million), but the final price for all participants will depend on the amount raised. The product is not yet officially launched.

VII. Related Links

Official website: https://www.factor.fi/

Whitepaper: https://factorlaunch.notion.site/Whitepaper-d25b8a9d8d3341948c439038e387cf97

Follow Us

veDAO is a DAO-led decentralized investment and financing platform dedicated to discovering the most valuable information in the industry, and is committed to exploring the underlying logic and cutting-edge tracks of the digital encryption field, allowing every role within the organization to fulfill their responsibilities and receive rewards.

Website: http://www.vedao.com/ Twitter: https://twitter.com/vedao_official Facebook: bit.ly/3jmSJwN Telegram: t.me/veDAO_zh Discord: https://discord.gg/NEmEyrWfjV

🔴Investment carries risks, the project is for reference only, please bear the risks on your own🔴