Asset Management Products

Asset management requires raising proceeds first and then deploying them toward investment purchases. In this class of applications, INK’s Unified Custodian Vault (UCV) must first be used to hold investors’ deposits, and then used to hold the targeted components of the investment portfolio. The INK Products Module guarantees that any outflow of proceeds is for strictly purposed acquisitions only. It also guarantees that the final liquidation proceeds are sent back to the vault for redemption distribution.

Example 1 - A Secondary Market Focused Fund

An ETF, or Exchange Traded Fund, is a passively managed fund, which is invested in a portfolio of multiple products that are chosen according to a preset formula of specific member composition. Note that shares of such funds can be listed and traded on an exchange (hence an ETF). This is assured by InkEnvelope’s abstraction power—any financial product can be detached from the INK domain as a fungible token, making it immediately tradable on any locally available DEX.

With the INK Products Module, an asset management DAO can specify composition formulas with eligible members and execution rules (such as which DEX to use).

The ETF constructor supports two redemption modes: liquidation at maturity and instantaneous swap. The latter allows an investor of a fund token to swap it back to the vault in exchange for component tokens, enabling arbitrage trading.

The convenience of such modulated construction of financial products is apparent, particularly for small-to-mid sized DAOs seeking to quickly launch their fund operations to service, and hopefully, build up their fellow investors.

Example 2 - A Private Holding Fund

A private fund can hold the ownership of anything from the off-chain world that is neither in an immediately tradable format nor in an established marketplace. It is by nature discretionarily managed, and the integrity of the operation is key. The INK Products Module attaches rules regarding outflowing proceeds, to make sure they strictly go through the managing DAO’s governance structures.

When used properly, such a fund format can become a SPAC-like (Special Purpose Acquisition Company) acquisition vehicle, a powerful “raise first and build up later” scheme that can target collectable arts, film production rights, or metaverse assets.

InkEnvelope’s abstraction power enables complicated fund management details to be fully encompassed within the Envelope structure, making such funds available to regulated crowdfunding institutions or regulated on-chain auction houses.