Deep Dive: Evolution of Asset Management Tools from Debank’s Perspective

Asset Management Tools: A Look at Debank's Perspective

Authors: Bing Ventures

Authors: Tillock, Oscar, Kyle, Bing Ventures

DeFi is one of the most popular cryptocurrency application areas in recent years and has developed rapidly since the DeFi summer of 2020, attracting more and more attention and investment. Since the rapid development of DeFi, the market has witnessed the development of various DeFi protocols, such as AMM, lending, derivatives, synthetic assets, etc., and each track has representative projects.

Asset management, as a large category of products in traditional finance, has not followed the development steps of the entire DeFi in its decentralized form. However, decentralized asset management has already preliminarily formed a relatively complete mode, and with the increase of asset types, decentralized asset management will have great growth potential.

This issue of Bing Ventures’ in-depth industry research focuses on the decentralized asset management track, introducing the competitive situation, development evolution and future trends of this track.

What is decentralized asset management?

Decentralized asset management is a smart contract that uses blockchain technology to provide asset management services in an immutable, trustless, and uncensorable manner. This asset management method allows investors to entrust investment decisions to external third parties without losing trust and control. In this field, products mainly include on-chain active management funds, on-chain passive management indexes, and various structured products.

  • User portrait of using decentralized asset management protocols

  1. Individual investors: Individual investors are one of the main participants in the market. They may be ordinary investors, crypto enthusiasts, or high-net-worth individuals. They seek to invest their funds in asset management to obtain better investment returns and risk management.

  2. Fund managers and investment professionals: Some traditional fund managers and investment professionals are also exploring the opportunities of decentralized asset management. They see the potential of decentralized platforms and hope to provide more efficient, transparent, and innovative asset management solutions through the combination with blockchain technology.

  3. Institutional investors: Institutional investors include funds, investment companies, and other institutions. They usually have a large capital scale and seek to allocate funds to various asset categories to achieve long-term returns and risk diversification.

  • What problems can decentralized asset management generally solve?

Decentralized asset management protocols aim to significantly improve traditional asset management processes. Due to the centralized and bureaucratic nature, traditional asset management is an industry with high costs and operational friction.

Decentralized asset management leverages the advantages of blockchain and smart contract technology to improve in the following ways:

  1. Lower startup costs – arguably the most important and direct improvement; the high legal, registration, and notarization costs associated with creating a fund in traditional finance can reach $10,000 to $200,000 or more. In contrast, launching an on-chain fund on Ethereum costs less than $100. It can be inferred that costs on high throughput L1 chains can be reduced to a few dollars.

  2. Shorter startup time – the process of creating a fund in traditional finance can take several months. Decentralized alternatives can shorten this process to a few minutes.

  3. No minimum investment requirement for investors – most funds in traditional finance have requirements to reach a minimum investment amount. These minimum investment requirements can range from $10,000,000 to as low as $10,000. Decentralized funds completely eliminate minimum investment limits for investors.

  4. Can be non-custodial/trustless – in blockchain-based funds, fund managers have no ability to custody or withdraw investors’ funds, and can only execute certain investments and trades with investors’ funds.

  5. Transparency – funds in the traditional asset management field may be subject to limited transparency due to reliance on real-world contracts, external auditors, and non-real-time reporting. Blockchain technology is a constantly updating and transparent ledger that can make funds built on the blockchain completely transparent, with all changes to their investment portfolios updated in real-time as they occur.

  6. Composability – while traditional finance largely exists in centralized silos, decentralized finance has developed into a set of interrelated, modular “money legos”. This allows decentralized asset management to easily plug into other DeFi services to achieve trading, reporting, leverage, insurance, exchange, and other functionalities.

  • Common decentralized asset management protocols

The following table shows blockchain-based asset management protocols that are still operational today. It does not include protocols that have become obsolete, such as Bskt, TAAS, and others.

TVL and FDV of major decentralized asset management protocols as of May 2022

  • Briefly introduce the first one, @Enzyme:

  1. Enzyme, formerly known as Melon, is an on-chain asset management protocol that has been under development since 2017. Managers can build their own investment portfolios on it, and investors can choose specific managers to invest with. Enzyme’s main feature is that it is based on the entire Ethereum platform, which allows for a much wider range of investment assets than synthetic assets, and rich gameplay strategies for portfolio combinations.

  2. Its vision is simple – to put hedge funds on the blockchain. The project has about 1000 “positions”. Most are fund-like structures that exist on the chain or are managed by managers; some are DAO treasuries managed by DAO members.

  3. In early 2021, Enzyme launched V2, which supports over 180 assets and adds AMM pools that can be used for portfolio investment, short selling, and liquidity mining. Enzyme also introduced a new DeFi product, Sulu, with nine major upgrade plans, including: increasing borrowing (previously only lending), tokenizing the transfer of portfolio (Vault) shares, integrating AAVE/Balancer and other major DeFi protocols, and allowing them to inherit mining and compensate portfolio managers for certain transaction fees (on-chain).

  • Business logic of traditional asset management protocols and decentralized asset management protocols

  1. In traditional asset management, the asset management platform is a centralized entity responsible for providing asset management services. Investors entrust funds to the asset management platform, which manages investments through its internal team of fund managers. Fund managers are responsible for tasks such as selecting investment targets, formulating investment strategies, and executing trades. Asset management products are investment portfolios managed by fund managers, and investors participate in investments by purchasing asset management products. Ultimately, investors can enjoy professional management by fund managers and appreciation of assets.

  2. In decentralized asset management protocols, this traditional centralized structure undergoes fundamental changes. First, the asset management platform is replaced by a decentralized smart contract that automatically executes asset management strategies without relying on intermediaries or platforms. The role of fund managers is replaced by smart contracts, which manage assets based on preset rules and conditions. Asset management products, as part of smart contracts, have automation and programmability characteristics.

  3. Most importantly, users can interact directly with smart contracts without intermediaries or platforms. Users can buy, redeem, or transfer assets by interacting with smart contracts, adjusting investment strategies according to their needs and investment goals. The transparency and tamper-proof nature of smart contracts ensure users’ real-time and verifiable access to assets.

Decentralized Asset Management & DeFi

On-chain asset management and stablecoins have always been the earliest conceptualized use cases for blockchain. However, today, decentralized asset management can be considered a broader category than the DeFi industry.

A type of data asset management tool has been highly regarded in Defi, such as Debank, zerion, zapper. They mainly track and manage on-chain assets, provide visual analysis, and provide convenience for on-chain users and defi users.

  • Investment opportunities are given to capital management as the difficulty of investing in DeFi increases.

Diversification of DeFi is that the complexity of asset income is increasing. From Bitcoin to public chains to DeFi/NFT, the complexity shows a ladder-like increase, and it will become more and more complex in the future. Assets on-chain, all kinds of strange assets on-chain, plus composability, create a variety of assets/income. The more complex the income type, the greater the space for decentralized asset management.

The Importance of Asset Management in Blockchain

DeFi brings more profit channels but also makes our encrypted assets more fragmented. We use a large number of DeFi applications for combination, some need to be pledged, some will be converted, some protocols will give a new token after use, and some protocols will lock assets in contracts. As playing methods become more diversified, forgetting about participating protocols has become a common problem. The on-chain data asset management tool solves this problem well.

It allows users to directly manage their assets on different public chains through a single entry, opening up a brand new decentralized, non-custodial and highly accessible investment opportunity for anyone who wants to participate in Defi.

Figure shows a wallet of a user displayed by Debank

It is very clear from the figure that the wallet has participated in projects, assets in different projects, combination methods, profit situations, etc., displaying wallet data clearly.

Competition Comparison

Project Introduction

  • DeBank helps track DeFi investment portfolios (information about various DeFi projects/applications), discover DeFi project comparisons, and help users discover investment opportunities through detailed and real-time data.

In short, it is an information collection platform for all DeFi projects, where users can query rankings and some related information for various projects (information is updated in real-time), which brings convenience to investors without the need to open a lot of websites. Secondly, linking your wallet can help you show the real-time profit status of your current assets (real-time tracking) and other services. Its asset tracking function is also often used to monitor Smart money wallets.

  1. Specific operations that can be performed on Debank include:
    a) Monitoring the behavior of whale holders, such as being interested in the $OP token, you can choose to monitor a $OP holder whale and analyze their behavior accordingly.
    b) Personal asset distribution and behavior records, you can view all assets in your wallet on all chains, as well as all interactions and defi activities on the corresponding chain.
    c) Investment through data tools, which collects statistics on four major markets including collateral loans, stablecoins, leveraged trading, and spot trading, and displays various lending platform statistics from the perspectives of assets, income, and liabilities.
    d) Users can log in to DeBank Hi through a Web3 wallet and engage in Web3-form community interaction, and can also vote on governance proposals.
    e) Collecting and classifying major DeFi projects, providing customers with query functions, including information such as token distribution and pool types.
    f) Social platform mode, integrating user posts and the latest currency circle information.

Main Competitors: zerion, zapper

  • Zerion allows users to trade, invest, borrow, exchange, and perform all DeFi-related work on its platform, while retaining full custody of their funds. Zerion is a mediator for DeFi protocols, allowing users to manage funds by connecting to Zerion. It also has a function to view on-chain data.

  • Zapper is a DeFi asset management platform that helps users invest, monitor, and manage all their DeFi assets and liabilities in one place.

Project Positioning

  1. Debank
    a) Debank is positioned as a “decentralized digital asset management platform” aimed at helping users manage and track their digital assets. Compared to the other two platforms, Debank’s focus is more inclined towards asset management and tracking.
    b) It is more suitable for investors who like DeFi data as they are increasingly concerned with ensuring that users understand all the information about each protocol and exchange they participate in.

  2. Zapper
    a) Zapper is positioned as “being the user’s Web3 homepage” to help users manage all Web3 portfolios, including from DeFi to NFTs and other emerging assets, and provides a one-stop platform for investment.
    b) The reason why Zapper is a common choice is that its balanced features can work together, allowing users to closely monitor their entire DeFi product portfolio.

  3. Zerion
    a) Zerion is positioned as a “DeFi investment and management platform” that allows users to build and simply manage the entire DeFi product portfolio from a single entry application. In terms of asset tracking, Zerion’s basic functionality is similar to Zapper.
    b) Choosing Zerion is essential for investors who want to actively trade cryptocurrencies to diversify their investment portfolios.

  • From the positioning of the three projects, they are all mainly designed to serve on-chain DeFi users. Debank focuses on comprehensive asset management and tracking, Zapper focuses more on investment management and optimization, and Zerion focuses more on asset trading and management.

Product Model

  1. Debank’s product model is as a decentralized asset management platform that provides users with comprehensive digital asset management services. As their mission is to establish more connections and understanding between investors and the DeFi world, DeBank believes that helping investors gain deeper insights into the data behind DeFi is a great thing.

  • Account Overview: Includes the DeBank full address ranking in red (related to the following social interactions), binding information related to the address (such as how long the address has been used, whether it is associated with Twitter, Discord, email, etc.), and all asset balances in the address (the balance here includes assets with the same name on all chains).

  • Address interaction information: Mainly includes the people the address is following, the people following the address, and the total assets of the followers. Clicking “Follow” or “Fans” will show a list of all relevant personnel.

  • Wallet and currency details: The wallet displays relevant information for all currencies under the same name address.

  • Project details: In the project details section, you can not only learn about the address’s investment in each project, but also the specific details of the project investment.

  • NFT information: Clicking on the NFT interface will show all DeBank-listed NFT projects and their market value that the address holds on different chains.

  1. Zapper was chosen for its balanced features that work together, enabling users to focus on their entire DeFi investment portfolio. In addition, Zapper has a standout feature – it focuses on liquidity and yield farming.

  2. Zapper allows users to invest directly in liquidity pools, transforming them into “liquidity providers” (LPs) in a matter of minutes. In addition to an easy-to-use interface, Zapper simplifies liquidity provision by automatically executing tasks to optimize asset allocation between asset pools.

  3. Zerion’s main features are similar to Zapper’s, but it allows investors to access lending markets, liquidity pools, and yield farms. It also allows for fiat deposits.

  4. Compared to Debank, Zerion and Zapper are both decentralized asset management platforms, but their product models are different. In addition to asset tracking features, Zerion provides a scalable digital asset management solution that allows users to manage across different DeFi protocols, including AMM, lending, derivatives, synthetic assets, and more. Zapper, on the other hand, while aggregating trades, also focuses on emerging assets such as NFT minting and ENS registration.

Debank, Zerion, and Zapper all provide convenient digital asset management services, but they differ in their specific product models. In addition to core features that revolve around providing diverse services and data tracking for DeFi, each product also attempts to innovate in different areas.

For example, Debank has launched a Debank Hi feature that allows users to engage in Web3-style community interaction. Zapper has focused on NFTs and has announced NFT exploration integrated with Arbitrum and Optimism.

DeBank, as a decentralized finance (DeFi) aggregator platform, has the following advantages:

  • Multi-chain support: DeBank covers more than 30 mainstream chains, allowing users to manage and monitor assets on multiple chains.

  • Rich project collection: DeBank has collected more than 1,000 DeFi projects, covering mainstream projects in the market for easy viewing and management by users.

  • Address tracking function: Users can follow other addresses to stay up-to-date on asset changes and dynamics.

  • Detailed asset and project information: DeBank provides detailed information on assets, project investments, NFTs, and historical transactions to help users understand their investment status and analyze market trends.

  • Real-time updates: DeBank will continuously update the projects and chains it covers according to industry development trends, keeping pace with the market.

However, DeBank also has some areas for improvement:

Areas for future improvement:

  • Real-time notification function: DeBank currently does not have a real-time notification function, and users need to constantly refresh the page to get the latest updates. In the future, it can consider adding a real-time notification function so that users can timely understand asset changes and market information.

  • More project and chain support: Although DeBank has included many projects and chains, there are still some that have not been included. In the future, it can expand the scope of inclusion and improve user experience.

  • Mobile experience optimization: Currently, the mobile and web versions of DeBank have different functions. It can consider adding more web version functions to the mobile end to make the two closer.

Income situation

Debank: The main source of income is currently the social function Web3 ID and Debank hi. Creating a web3 ID requires $96, and Debank Hi can interact with other users and charge $1 for sending a message. Debank pro version will be launched in the future for more service charges.

Zapper: The main way of profit is to sell Zapper API, providing data to other protocols, including DeFi protocols and NFT valuation, as well as the liquidity and price of different AMMs.

Zerion: The current main source of income is the built-in Swap and the handling fees for Zerion Genesis Card transactions. For each Ethereum swap, Zerion will charge a handling fee of 0.5%. Zerion Genesis Card holders can exempt handling fees and get advanced transaction routes.

Comparison of monthly transaction volumes between Zapper and Zerion

Zapper

Zerion

Financing situation

Debank

In December 2021, DeBank completed a $25 million equity financing at a valuation of $200 million, led by Sequoia China, with participation from Dragonfly, Hash Global, Youbi, Coinbase Ventures, Crypto.com, Circle, Ledger, Distributed Capital, and others.

Zerion

In December 2019, Zerion completed a $2 million seed round led by Placeholder.

In July 2021, it completed an $8.2 million Series A financing round led by Mosaic Ventures, with participation from Placeholder, DCG, Lightspeed, Blockchain.com Ventures, and others.

Zapper

In May 2021, it completed a $15 million Series A financing round led by Framework Ventures, with participation from Sound Ventures, Mark Cuban, Nascent, Block ingraFi Capital, Distributed Global, SBlockingrtan Group, DeFiance Capital, Maven Capital, Sino Global Capital, LongHash Ventures, Cooley LLP, and Stani Kulechov.

Website Data

Social Media Data

Challenges

  1. Currently, there is no single decentralized asset management product that can cover all functions. It is crucial to differentiate features for individual products. In addition, the biggest challenge for current decentralized asset management protocols may come from the cooling enthusiasm of the DeFi market, followed by the insufficient product features.

  2. The main audience for the three products Debank, Zapper, and Zerion are on-chain Defi users. From the perspective of the platform’s environment, the Defi track has significantly decreased its TVL and enthusiasm in 2021. In this pessimistic context, it is undoubtedly difficult to bring huge traffic to the product itself. Moreover, DeFi’s rapid development may not occur in the next few months, and this will be a long and arduous process of innovation and construction that may take many years.

  1. Due to the complexity of asset management protocols, it is difficult to meet the needs of all users. Different users have different asset allocations, risk tolerance, and expected returns, making it very difficult to design an asset management protocol that can simultaneously meet the needs of all users.

  2. In the fiercely competitive asset management market, the speed of asset introduction has become a key issue. As more and more protocols emerge, asset management platforms must quickly adapt to this change and be able to quickly onboard new projects to attract more users. However, this is not an easy task. Asset management platforms need to conduct comprehensive security checks to ensure the security and reliability of new projects. This process may require a lot of time and resources, so the speed of asset introduction on asset management platforms is often not fast enough.

Outlook

  1. With the continuous development of blockchain technology and the gradual maturity of the DeFi market, data asset management protocols will have broader development prospects in the future. Currently, data asset management protocols have achieved great use cases in providing users with asset management, data querying, and other aspects. As more emerging DeFi protocols appear in the user’s field of vision, asset management protocols that can keep up with the market will receive attention.

  2. From the perspective of the asset management industry itself, data asset management protocols may also be deeply integrated with other fields in the future, such as the combination with artificial intelligence technology, and the collaborative development with RWA (real world assets) and other industries, so as to provide users with more comprehensive and intelligent asset management services.

    a) Today, with the popularity of artificial intelligence concepts, the combination of asset management protocols and AI may be favored by more users. Looking ahead, the direction of huge use cases may include:

    • i) Automated portfolio management: AI technology can use machine learning predictive models for portfolio planning, strategy evaluation, pool weight calculation, signal generation, and emotion monitoring tasks to build automated agents for active portfolio management.
    • ii) Fraudulent wallet identification and marking: AI technology can analyze fraudulent wallets by accumulating data and extracting wallets associated with individual addresses, and mark them in a database. This can help users reduce the probability of being deceived.
    • iii) Market forecasting and intelligent investment decision-making: AI technology can improve the accuracy of market trend forecasting through machine learning and predictive analysis technology, providing technical and fundamental analysis services for traders. This provides an opportunity for DeFi to provide automated trading and portfolio management.

    b) Collaborative development with RWA (real world assets) and other industries. RWA is a very popular concept that links the Defi and Trafi industries worth trillions of dollars. It converts tangible or intangible assets off-chain into tokens, enabling them to be traded on-chain. If in the future, asset management protocols can make a good entry point into RWA, there will be a larger market.

Overall, there is still significant room for growth in the future of asset management agreements. However, individual agreements need to continually adapt to the market, adapt to new products, and make their own innovations in order to stand out in the market.

We will continue to update Blocking; if you have any questions or suggestions, please contact us!

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