The Democratization of Wealth Management: Hedged Mutual Fund Blockchain Protocol
- URL: http://arxiv.org/abs/2405.02302v1
- Date: Tue, 12 Mar 2024 11:16:35 GMT
- Title: The Democratization of Wealth Management: Hedged Mutual Fund Blockchain Protocol
- Authors: Ravi Kashyap,
- Abstract summary: We develop innovations designed to bring the best practices of traditional investment funds to the blockchain landscape.
We illustrate how fund prices can be updated regularly like mutual funds and performance fees can be charged like hedge funds.
We provide detailed steps - including mathematical formulations and instructive pointers - to implement these ideas as blockchain smart contracts.
- Score: 0.0
- License: http://arxiv.org/licenses/nonexclusive-distrib/1.0/
- Abstract: We develop several innovations designed to bring the best practices of traditional investment funds to the blockchain landscape. Our innovations combine the superior mechanisms of mutual funds and hedge funds. Specifically, we illustrate how fund prices can be updated regularly like mutual funds and performance fees can be charged like hedge funds. We show how mutually hedged blockchain investment funds can operate with investor protection schemes - high water marks - and measures to offset trading slippage when redemptions happen. We provide detailed steps - including mathematical formulations and instructive pointers - to implement these ideas as blockchain smart contracts. We discuss how our designs overcome several blockchain bottlenecks and how we can make smart contracts smarter. We provide numerical illustrations of several scenarios related to the mechanisms we have tailored for blockchain implementation. The concepts we have developed for blockchain implementation can also be useful in traditional financial funds to calculate performance fees in a simplified manner. We highlight two main issues with the operation of mutual funds and hedge funds and show how blockchain technology can alleviate those concerns. The ideas developed here illustrate on one hand, how blockchain can solve many issues faced by the traditional world and on the other hand, how many innovations from traditional finance can benefit decentralized finance and speed its adoption. This becomes an example of symbiosis between decentralized and traditional finance - bringing these two realms closer and breaking down barriers between such artificial distinctions - wherein the future will be about providing better risk adjusted wealth appreciation opportunities to end customers through secure, reliable, accessible and transparent services - without getting too caught up about how such services are being rendered.
Related papers
- IT Strategic alignment in the decentralized finance (DeFi): CBDC and digital currencies [49.1574468325115]
Decentralized finance (DeFi) is a disruptive-based financial infrastructure.
This paper seeks to answer two main questions 1) What are the common IT elements in the DeFi?
And 2) How the elements to the IT strategic alignment in DeFi?
arXiv Detail & Related papers (2024-05-17T10:19:20Z) - Tokenization of Real Estate Assets Using Blockchain [0.0]
This paper proposes a framework that uses blockchain as an underlying technology.
It supports many of these problems that can be alleviated in the real estate investment ecosystem.
These include smart contracts, immutable record management, tokenization, record tracking, and time-stamped storage.
arXiv Detail & Related papers (2024-05-03T04:50:17Z) - Enhancing Trust and Privacy in Distributed Networks: A Comprehensive Survey on Blockchain-based Federated Learning [51.13534069758711]
Decentralized approaches like blockchain offer a compelling solution by implementing a consensus mechanism among multiple entities.
Federated Learning (FL) enables participants to collaboratively train models while safeguarding data privacy.
This paper investigates the synergy between blockchain's security features and FL's privacy-preserving model training capabilities.
arXiv Detail & Related papers (2024-03-28T07:08:26Z) - Blockchain for Finance: A Survey [16.663984332579247]
We focus on blockchain-based securities trading, in which blockchain technology plays a vital role in financial services.
We investigate the 12 most popular blockchain platforms and elaborate on 6 platforms that are related to finance.
This survey provides a comprehensive summary of blockchain-based securities trading applications.
arXiv Detail & Related papers (2024-02-27T05:25:05Z) - Generative AI-enabled Blockchain Networks: Fundamentals, Applications,
and Case Study [73.87110604150315]
Generative Artificial Intelligence (GAI) has emerged as a promising solution to address challenges of blockchain technology.
In this paper, we first introduce GAI techniques, outline their applications, and discuss existing solutions for integrating GAI into blockchains.
arXiv Detail & Related papers (2024-01-28T10:46:17Z) - Challenges of Blockchain adoption in financial services in China's Greater Bay Area [0.5524804393257919]
The increasing use of technology in financial services has the potential to generate benefits for many stakeholders.
In China's Greater Bay Area (Guangdong-Hong Kong-Macao), the increasing use of technology in financial services has the potential to generate benefits for many stakeholders.
This paper provides insights into the current progress of applications in insurance, banking, payments, asset trading, loans, remittances, the Internet of Things (IoT) for the finance industry.
arXiv Detail & Related papers (2023-12-25T00:58:11Z) - Exploration of Hyperledger Besu in Designing Private Blockchain-based
Financial Distribution Systems [0.7366405857677227]
This article focuses on the development of an innovative consortium blockchain based financial distribution application.
It demonstrates the diverse applications of blockchain, ranging from remittances to lending and investments in finance to data administration in healthcare and supply chain tracking.
The investigation sheds light on the combination of consortium blockchain controlled access and Hyprledger Besu comprehensive functionality.
arXiv Detail & Related papers (2023-11-14T19:18:16Z) - A Tale of Two Currencies: Cash and Crypto [0.0]
We discuss numerous justifications for why crypto-currencies would be highly conducive for the smooth functioning of today's society.
We summarize seven fundamental innovations that would be required for participants to have greater confidence in decentralized finance.
arXiv Detail & Related papers (2023-02-13T13:30:43Z) - Uniswap Liquidity Provision: An Online Learning Approach [49.145538162253594]
Decentralized Exchanges (DEXs) are new types of marketplaces leveraging technology.
One such DEX, Uniswap v3, allows liquidity providers to allocate funds more efficiently by specifying an active price interval for their funds.
This introduces the problem of finding an optimal strategy for choosing price intervals.
We formalize this problem as an online learning problem with non-stochastic rewards.
arXiv Detail & Related papers (2023-02-01T17:21:40Z) - Quantum-resistance in blockchain networks [46.63333997460008]
This paper describes the work carried out by the Inter-American Development Bank, the IDB Lab, LACChain, Quantum Computing (CQC), and Tecnologico de Monterrey to identify and eliminate quantum threats in blockchain networks.
The advent of quantum computing threatens internet protocols and blockchain networks because they utilize non-quantum resistant cryptographic algorithms.
arXiv Detail & Related papers (2021-06-11T23:39:25Z) - Regulation conform DLT-operable payment adapter based on trustless -
justified trust combined generalized state channels [77.34726150561087]
Economy of Things (EoT) will be based on software agents running on peer-to-peer trustless networks.
We give an overview of current solutions that differ in their fundamental values and technological possibilities.
We propose to combine the strengths of the crypto based, decentralized trustless elements with established and well regulated means of payment.
arXiv Detail & Related papers (2020-07-03T10:45:55Z)
This list is automatically generated from the titles and abstracts of the papers in this site.
This site does not guarantee the quality of this site (including all information) and is not responsible for any consequences.