In-depth Study: The Evolution of Asset Management Tools from DeBank

Authors: Tillock, Oscar, Kyle, Bing Ventures

DeFi has become one of the hottest areas of cryptocurrency applications in recent years, experiencing rapid development after the DeFi summer of 2020, attracting increasing attention and investment. Since the boom of DeFi, the market has witnessed the development of various DeFi protocols, such as AMM, lending, derivatives, synthetic assets, etc., with significant projects emerging in each sector.

Asset management, as a major product category in traditional finance, has not followed the developmental steps of the entire DeFi landscape in its decentralized form. However, decentralized asset management has begun to establish a relatively complete model, and with the increase in 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 sector, introducing the competitive landscape, developmental evolution, and future trends of this sector.

What is decentralized asset management?

Decentralized asset management is a method of providing asset management services using blockchain technology and smart contracts, offering immutable, trustless, and auditable solutions. This method allows investors to delegate investment decisions to external third parties without losing trust and control. In this field, products mainly include on-chain actively managed funds, on-chain passively managed indices, and various structured products.

User Profile of Decentralized Asset Management Protocols

• 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 achieve better returns and risk management.
• Fund Managers and Investment Professionals: Some traditional fund managers and investment professionals are also exploring opportunities in decentralized asset management. They see the potential of decentralized platforms and hope to provide more efficient, transparent, and innovative asset management solutions by integrating with blockchain technology.
• Institutional Investors: Institutional investors include funds, investment companies, and other entities. They typically manage large amounts of capital and seek to allocate funds across various asset classes to achieve long-term returns and risk diversification.

What problems can decentralized asset management generally solve?

Decentralized asset management protocols aim to make significant improvements to traditional asset management processes. Due to the centralized and bureaucratic nature, traditional asset management is a high-cost, friction-heavy industry.

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

Lower startup costs --- --- This can be considered the most important and direct improvement; the high legal, registration, and notarization fees associated with creating a fund in traditional finance can range from $10,000 to over $200,000. In contrast, the cost of launching an on-chain fund on Ethereum is less than $100. Thus, it can be inferred that costs on high-throughput L1 chains can be reduced to a few dollars.

• Shorter startup times --- --- The process of creating a fund in traditional finance may take months. Decentralized alternatives can shorten this process to just a few minutes.
  No minimum investment requirements for investors --- --- Most funds in traditional finance have minimum investment requirements that can range from $10,000 to $10,000,000. Decentralized funds completely eliminate minimum investment limits for investors.
• Non-custodial / Trustless --- --- In blockchain-based funds, fund managers do not have the ability to custody or withdraw investors' funds; they can only execute certain investments and trades with investors' funds.
• Transparency --- --- Due to reliance on real contracts, external auditors, and non-real-time reporting, funds in the traditional asset management field may suffer from limited transparency. Blockchain technology provides a continuously updated and transparent ledger that allows funds built on the blockchain to be fully transparent, with all changes to their portfolios updated in real-time as they occur.
• Composability --- --- While traditional finance primarily exists in centralized repositories, decentralized finance has evolved into a set of interconnected, modular "money Legos." This allows decentralized asset management to easily integrate with other DeFi services for trading, reporting, leveraging, insurance, swapping, and other functions.

Common Decentralized Asset Management Protocols

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

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

A brief introduction to the top protocol @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 portfolios on it, and investors can choose specific investment managers to invest with. The main feature of Enzyme is that it is built entirely on Ethereum, with a much broader range of investment assets compared to synthetic assets, and offers a rich variety of strategic plays.
2. Its vision is simple --- --- to put hedge funds on the blockchain. The project has about 1,000 "positions." Most are structured like funds existing on-chain or managed by managers; some are DAO treasuries managed by DAO members.
3. In early 2021, Enzyme launched its V2 version, supporting over 180 assets, adding AMM pools available for investment, enabling shorting and liquidity mining, among other features. Enzyme also launched a new DeFi product called Sulu, which includes nine major upgrade plans, such as: adding borrowing (previously only lending), tokenizing shares of portfolios (Vaults), integrating major DeFi protocols like AAVE/Balancer, and providing compensation for portfolio managers in the form of transaction fees (on-chain).

Business Logic of Traditional Asset Management Protocols vs. 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 their funds to the asset management platform, which manages investments through its internal team of fund managers. Fund managers are responsible for selecting investment targets, formulating investment strategies, and executing trades. Asset management products are portfolios managed by fund managers, and investors participate in investments by purchasing these products. Ultimately, investors can enjoy the professional management and asset appreciation provided by fund managers.
2. In decentralized asset management protocols, this traditional centralized structure undergoes a fundamental change. 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 according to pre-set rules and conditions. Asset management products are part of the smart contract, featuring automation and programmability.
3. Most importantly, users can interact directly with smart contracts without going through intermediaries or platforms. Users can buy, redeem, or transfer assets by interacting with smart contracts, adjusting their investment strategies according to their needs and investment goals. The transparency and immutability of smart contracts ensure that users can verify and track their assets in real-time.

Decentralized Asset Management & DeFi

On-chain asset management, along with stablecoins and custody, has always been one of the earliest conceptualized blockchain use cases. Today, decentralized asset management can be considered a broader category than the DeFi industry.

There is a category of data asset management tools that have gained significant attention in DeFi, such as Debank, Zerion, and Zapper. They primarily track and manage on-chain assets, providing visual analysis and convenience for on-chain users and DeFi participants.

The Increased Investment Difficulty in DeFi Provides Opportunities for Asset Management

One dimension of diversified DeFi is the increasing complexity of asset yields. From Bitcoin to public chains to DeFi/NFT, complexity has shown a stepwise increase, and it will become increasingly complex in the future. With various bizarre assets being brought on-chain, combined with composability, the types of assets/yields created are diverse. The more complex the types of yields, the greater the space for decentralized asset management.

The Importance of Asset Management in Blockchain

DeFi has brought more profit channels, but it has also made our crypto assets more fragmented. We use a multitude of DeFi applications for combinations, some requiring collateral, some involving conversions, some protocols issuing new tokens after use, and some protocols locking assets in contracts. As the methods become more diverse, forgetting about previously participated protocols has become a common issue. On-chain data asset management tools effectively address this problem.

They allow users to manage their assets across different public chains through a single entry point, opening up a new decentralized, non-custodial, and highly accessible investment opportunity for anyone looking to participate in DeFi.

The projects that this wallet participates in, the assets within different projects, the composition methods, profit situations, etc., are clearly displayed in the wallet data.

Competitive Comparison

Project Introduction

DeBank helps track DeFi portfolios (information on various DeFi projects/applications) and discover DeFi projects by comparing DeFi interest rates. It assists users in identifying investment opportunities through detailed real-time data.

The image shows a user's wallet displayed by Debank

In simple terms, it is an information collection platform for all DeFi projects, allowing users to query rankings and related information (which changes in real-time) to provide convenience to investors without needing to open multiple websites. Additionally, linking your wallet can help display your current asset yield situation in real-time (real-time tracking) and other services. Its asset tracking feature is also frequently used to monitor Smart Money wallets.

1. Specific operations available on Debank:

a) Monitoring whale behavior, for example, if interested in the token $OP, you can choose to monitor a whale holding $OP and analyze its behavior.

b) Personal asset distribution and behavior records, allowing users to view all on-chain assets in their wallet, as well as all interactions and DeFi activities on the corresponding chains.

c) Investment through data tools, which collects statistics from four major markets: collateral lending, stablecoins, leveraged trading, and spot trading, displaying statistics from various lending platforms from the dimensions of assets, yields, and liabilities.

d) Users can log in to DeBank Hi through Web3 wallets and engage in Web3-style community interactions, as well as participate in governance voting for proposals.

e) Collecting major DeFi projects, categorizing and introducing them, providing clients with query functions, including token distribution, types of participation pools, etc.

f) Social platform model, integrating posts from various users and the latest cryptocurrency news.

Main Competitors: Zerion, Zapper

• Zerion allows users to trade, invest, lend, swap, and perform all DeFi-related tasks on its platform while retaining full custody of their funds. Zerion acts as a medium for DeFi protocols, enabling users to manage funds by connecting to Zerion. It also has the functionality to view on-chain data.
• Zapper is a DeFi asset management platform designed to help 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 focuses more on asset management and tracking.

b) With increasing attention on ensuring users understand all information regarding each protocol and exchange they participate in, it is more suitable for investors who appreciate DeFi data.

2. Zapper

a) Zapper is positioned as "the user's Web3 homepage," helping users manage all their Web3 portfolios, including DeFi, NFTs, and other emerging assets, providing a one-stop platform for investment.

b) The reason Zapper is a common choice is its balanced functionality that works synergistically, allowing users to closely monitor their entire DeFi portfolio.

3. Zerion

a) Zerion is positioned as a "DeFi investment and management platform," enabling users to build and manage their entire DeFi portfolio from a single entry point. In terms of asset tracking, Zerion's basic functions are similar to Zapper.

b) Choosing Zerion is essential for investors looking to actively trade cryptocurrencies to diversify their portfolios.

From the positioning of the three projects, they all primarily serve on-chain DeFi users. Debank focuses on comprehensive management and tracking of assets, Zapper emphasizes investment management and optimization, while Zerion is more concerned with asset trading and management.

Product Model

Debank's product model serves as a decentralized asset management platform, providing users with comprehensive digital asset management services. Their mission is to establish more connections and understanding between investors and the DeFi world, making it a great thing that DeBank helps investors gain deeper insights into the data behind DeFi.

• Account Overview: Includes a red DeBank full address leaderboard (related to upcoming social interactions), binding information related to the address (such as how long the address has been used, whether it is linked to Twitter, Discord, email, etc.), and all asset balances within the address (the balances refer to assets across all chains for the same address).
• Address Interaction Information: Mainly includes people followed by the address, people following that address, and the total assets of those being followed. Clicking "follow" or "fans" allows users to view the list of all related individuals.
• Wallet and Token Details: The wallet displays relevant information for all tokens under the same address.
  Project Details: In the project details section, users can not only understand the address's investment situation in each project but also learn about the specific details of the project investments.
• NFT Information: Clicking on the NFT interface reveals all DeBank-listed NFT projects held by the address across different chains and their market values.

1. Zapper is chosen for its balanced functionality, which can work synergistically, allowing users to focus on their entire DeFi portfolio. Additionally, Zapper has an outstanding feature --- --- it focuses on liquidity and yield farming.

2. Zapper allows users to invest directly in liquidity pools, transforming users into "liquidity providers" (LPs) within minutes. Besides its user-friendly interface, Zapper simplifies liquidity provision by automatically executing tasks to optimize asset allocation between asset pools.

3. Zerion's main functions are similar to Zapper, with the distinction of enabling investors to access lending markets, liquidity pools, and yield farms. It also allows deposits through fiat currency.

4. Compared to Debank, Zerion and Zapper are also decentralized asset management platforms, but their product models differ. In addition to having asset tracking capabilities, Zerion offers a scalable digital asset management solution that allows users to manage across different DeFi protocols, including AMM, lending, derivatives, synthetic assets, etc. Zapper, on the other hand, places some emphasis on emerging assets while aggregating trades, such as NFT minting situations and ENS registration statuses.

Debank, Zerion, and Zapper essentially provide convenient digital asset management services, but there are differences in their specific product models. Besides the core functions revolving around diversified services and data tracking for DeFi, each product attempts innovation in different aspects.

For example, Debank launched a Debank Hi feature that enables users to engage in Web3-style community interactions. Zapper has focused on NFTs, announcing NFT exploration integrations with Arbitrum and Optimism.

As a decentralized finance (DeFi) aggregation platform, DeBank has the following advantages:

Advantages:

• Multi-chain support: DeBank includes over 30 mainstream chains, allowing users to manage and monitor assets across multiple chains.
• Rich project inclusion: DeBank has included over 1,000 DeFi projects, covering mainstream projects in the market, making it convenient for users to view and manage.
• Address following feature: Users can follow other addresses to stay updated on asset changes and dynamics of the followed addresses in real-time.
  Detailed asset and project information: DeBank provides detailed information on assets, project investments, NFTs, and historical transactions, making it easy for users to understand their investment status and analyze market trends.
• Real-time updates: DeBank continuously updates the projects and chains included based on industry developments, keeping pace with the market.

However, DeBank also has areas for improvement:

Future Improvement Areas:

• Real-time alert feature: DeBank currently lacks a real-time alert feature, requiring users to refresh the page continuously to get the latest updates. In the future, it could consider adding real-time alert features to help users stay informed about asset changes and market information.
• More project and chain support: Although DeBank has included many projects and chains, some projects and chains are still not included. In the future, it could expand its inclusion range to enhance user experience.
• Mobile experience optimization: Currently, the functionality of DeBank's mobile version and web version is not entirely consistent; it could consider adding more web version features to the mobile version to bring the two closer together.

Revenue Situation

Debank: Currently, the main sources of revenue are the social feature Web3 ID and Debank Hi. Minting a Web3 ID costs $96, and Debank Hi allows interaction with other users, charging $1 for sending a message. A Debank Pro version will be launched in the future to charge for more services.

Zapper: The primary revenue model is through selling the Zapper API, providing data to other protocols, including DeFi protocols and NFT valuations, as well as liquidity and pricing for different AMM pools.

Zerion: The main revenue sources currently come from its built-in Swap and transaction fees for Zerion Genesis Card transactions. For each Ethereum swap, Zerion charges a 0.5% fee, while holders of the Zerion Genesis Card can waive the fee and gain access to premium trading routes.

Monthly Trading Volume Comparison of Zapper and Zerion

Zapper

Funding 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, and Distributed Capital.

Zerion

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

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

Zapper

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

Website Data

Social Media Data

Dilemmas

• Currently, there is no single decentralized asset management product on the market that can cover all functions. For individual products, differentiating features are crucial. The best approach for users is to combine multiple asset management tools. Additionally, the biggest dilemma facing current decentralized asset management protocols may stem from the waning enthusiasm in the DeFi market, followed by deficiencies in product functionality.
• The primary audience for Debank, Zapper, and Zerion are on-chain DeFi users. From the broader environment in which these platforms operate, the DeFi sector has seen a significant decrease in TVL and enthusiasm since 2021. In this pessimistic backdrop, attracting significant traffic to the products themselves is undoubtedly challenging. Moreover, rapid development in DeFi may not occur in the coming months, leading to a prolonged process of innovation and construction over several years.
• Due to the complexity of asset management protocols, it is difficult to meet all users' needs. Different users have varying asset allocations, risk tolerances, and expected returns, making it challenging to design an asset management protocol that satisfies all user requirements.
• In the competitive asset management market, the speed of asset onboarding has become a critical issue. With the emergence of more protocols, asset management platforms must quickly adapt to these changes and rapidly onboard new projects to attract more users. However, this is not an easy task. Asset management platforms need to conduct comprehensive security assessments to ensure the safety and reliability of new projects. This process can be time-consuming and resource-intensive, often resulting in slower onboarding speeds for asset management platforms.

Outlook

1. With the continuous development of blockchain technology and the gradual maturation of the DeFi market, data asset management protocols will have broader development prospects in the future. Currently, data asset management protocols have achieved significant use cases in providing asset management and data querying for users. As more emerging DeFi protocols come into view, asset management protocols that can keep pace with the market will attract attention.

2. From the perspective of the asset management industry itself, data asset management protocols may also undergo deep integration with other fields in the future, such as combining with artificial intelligence technology and collaborating with industries like RWA (real-world assets) to provide users with more comprehensive and intelligent asset management services.

a) In today's hot AI concept landscape, asset management protocols + AI may attract more users. Looking ahead, potential areas for significant use cases include:

1. Automated portfolio management: AI technology can utilize machine learning predictive models for portfolio planning, strategy evaluation, pool weight calculations, signal generation, and sentiment monitoring, constructing automated agents for proactive portfolio management.
2. Fraud wallet identification and tagging: AI technology can analyze data accumulation and identify associated wallets through individual address analysis, conducting fraud wallet analysis and storing them in a database for tagging. This can help users reduce the likelihood of falling victim to scams.
3. Market prediction and intelligent investment decision-making: AI technology can enhance the accuracy of market trend predictions through machine learning and predictive analytics, providing traders with technical and fundamental analysis services. This presents opportunities for automated trading and portfolio management in DeFi.

b) Collaborative development with industries like RWA (real-world assets) is a hot concept; it serves as a bridge linking the DeFi and multi-trillion-dollar Trafi industries. Converting off-chain tangible or intangible assets into tokens allows them to be traded on-chain. If asset management protocols can effectively engage with RWA in the future, there will be a larger market.

In summary, the development space for asset management protocols in the future is still vast, and for individual protocols to stand out in the market, they need to continuously adapt to the market, embrace new products, and innovate in their unique ways.