Fund Operations

Overview of Operation

The following diagram shows the entire fund operation workflow.

Avareum Fund Operation Workflow

1. Asset Definitions for Smart Contract Engineers

Smart contract engineers populate a list of strategy-aware assets and deploy them to the protocol using the fund factory module. The assets, including their pricing method, balance-checking method, are thus defined and tested there. See Strategy-Aware Assets for mode details. The engineers also need to define other configurations such as execution timeout, gas usage. All the assets and configurations will then be stored in the IPFS database, ready to be used by the subscription, redemption, and rebalance processes.

2. Fund Management for Fund Managers

Fund managers set up a fund by submitting a set-up request together with fund configurations such as management fees, performance fees, slippages, etc. Information regarding the initial set-up is available in the fund policy section, which can also be verified against the on-chain data. Once the fund has been set up, the managers are then responsible for implementing the investment strategies by submitting rebalancing requests to the protocol. The protocol facilitates rebalancing operations to achieve the target portfolio allocation. See Fund Rebalancing for more details.

3. Investment Portal for Investors

To use our investment platform, investors connect their crypto wallet to Avareum protocol on a supported chain through Avareum.finance. See the document for the details on the development plan. To invest in a fund, the investors deposit a denomination asset to the protocol ($USD) and receive fund tokens ($NAV) representing the part of ownership, in return. To withdraw funds, investors redeem the fund token ($NAV) with the protocol. The investors will receive their funds back in the denomination asset ($USD), netting the investment gains and losses. See Fund Tokens for more details. The protocol is entirely responsible for managing subscription and redemption requests from the investors and automating the underlying fund operations such as asset transfers and asset allocation. See Fund Subscription and Fund Redemption for more details.

4. Peripheral Components

The protocol incorporates several auxiliary components. Price oracle or price feed is an off-chain module responsible for gathering and summarizing the price of assets as well as fund tokens. See Price Oracle for more details. The balance-checking module or balance feed is another module used for tracking asset amounts. The fund module is a high-level planner that utilizes the price information and the asset balance to handle incoming requests from fund managers and investors. It digests the requests into a sequence of readily executable actions for the executor, e.g. trading orders. Finally, there is also a fee management module that works in conjunction with the fund module and the pricing module. See Fee Management for more details.

5. Interoperable Components

The executor module receives commands from the fund module and collaborates with various on-chain smart contracts called workers to execute the delegated action sequences across different chains. First, the executor transfers/receives the fund to/from wallets on specific chains through the cross-chain workers through flow controllers called X-Bridge. The workers then execute the actions assigned to them and report back to X-bridge. X-bridge waits until the results from all the workers arrive and finally updates the executors.