Research Guide for Blockchain-Based Asset Management Systems

Research Guide for Blockchain-Based Asset Management Systems

Blockchain: A distributed database that uses cryptography to link and secure a growing list of data records (called blocks).

Smart Contract: A piece of code stored on a blockchain that automatically executes when predefined conditions are met.

Ethereum: An open-source blockchain platform that supports smart contracts and decentralized applications (DApps).

Solidity: An object-oriented programming language used to write Ethereum smart contracts.

Decentralization: The transfer of control and decision-making power from a central entity (such as a bank or government) to a distributed network.

Cryptocurrency: A digital or virtual currency that uses cryptography to secure transactions.

Multi-Signature: A security mechanism that requires multiple keys to authorize a transaction.

Oracle: A third-party service that provides external data to smart contracts.

Custodial Risk: The risk associated with entrusting assets to a third party for safekeeping.

Hedging: An investment strategy that offsets potential losses.

Short answer questions

Please explain what a smart contract is and what role it plays in this asset management system?

A smart contract is a piece of code stored on the blockchain that is automatically executed when predefined conditions are met. In this system, smart contracts are used to create, execute and settle asset portfolio swap agreements between buyers and sellers, ensuring that transactions are automated and trustless.

How to reduce or eliminate custody risk in asset management?

The need for third-party custodians is eliminated through smart contracts and multi-signature technology. Users always hold the private keys of their assets, and the assets are stored on the blockchain and are not controlled by any single entity, thereby reducing custody risk.

How is a "custom portfolio swap" different from a traditional index swap?

Unlike traditional index swaps based on fixed components, "custom portfolio swaps" allow users to select and adjust the components of the asset portfolio according to their own investment strategy, providing greater flexibility and personalization.

What role does the oracle play in?

Oracles provide external data to smart contracts, such as asset prices, market data, etc. In this system, oracles are used to determine the value of the asset portfolio so that it can be fairly distributed at settlement.

How do multi-verification oracles enhance the security of the system?

Multi-validation oracles use multiple independent validators to verify and confirm data, ensuring that the data is authentic and reliable, reducing the risk of single point failure and improving the security of the system.

How does the "leader/follower" function work and what are its potential applications?

The "leader/follower" function allows users to authorize their portfolios to receive rebalancing instructions from other users' portfolios. For example, experienced traders can create a "leader" portfolio, and other users can choose to "follow" the portfolio to automatically copy their trading strategies.

How to deal with potential vulnerabilities and security risks in smart contracts?

A variety of security measures are implemented, including contract suspension, manual override, and multi-signature verification. These measures help mitigate the risks posed by smart contract vulnerabilities and hacker attacks.

In what ways is it better than traditional asset management methods?

Provides greater transparency, security, cost-effectiveness, and accessibility. It eliminates the need for intermediaries, reduces custody risks, and enables individual investors to more easily build and manage diversified asset portfolios.

How can blockchain technology be used to improve transparency and accountability?

All transactions are recorded on the blockchain, an immutable and public ledger. This ensures transparency of transaction history and allows users to track the performance of their portfolios.

What are some potential future developments?

It can be expanded to include a wider range of asset classes, such as stocks, bonds, real estate, etc. It can also integrate more advanced trading strategies and risk management tools to meet the growing needs of institutional investors