KEY POINTS
- Alvara Protocol is built on the new ERC-7621 token standard and recently launched its testnet
- ASC said in its May 2024 research report that Alvara is a unique alternative to BlackRock due to its transparent approach
- The protocol is being outshined by centralized players, but its unique features are gaining attention on Uniswap
The entry of digital assets into the fund management market has led some of the most prominent players such as BlackRock and Fidelity to dabble into the crypto space, and while these centralized players are basking on top of the asset management ranks, a decentralized, new player is making waves in the industry: Alvara Protocol.
Designed to create and manage decentralized crypto-fund baskets, Alvara Protocol, which is built on the new ERC-7621 token standard, offers a unique digital asset management alternative for investors and crypto users seeking a "democratized" system where transparency is king.
Since Alvara Protocol is itself a decentralized autonomous organization (DAO) – governed by holders of ALVA, the protocol's native token, users are empowered to manage their own crypto-fund baskets, eliminating the need for traditional fund managers.
In its May 2024 research report on the protocol viewed by International Business Times, leading blockchain hedge fund management firm Alpha Sigma Capital (ASC) highlighted how Alvara's Basket Token Standard (BTS) Factory allows users to design and deploy brand new tokenized funds on the blockchain.
The protocol also has a BTS Marketplace where any BTS creator or holder can list their token, similar to a nonfungible token (NFT) auction platform. Alvara also empowers users to verify a fund manager's performance within the protocol as part of its vision of breeding the next generation of fully transparent digital asset managers.
Alvara's testnet went live earlier this month, with its co-founder Dominic Ryder saying the protocol's mission was "to create a financial system that truly belongs to the people."
Unlike traditional fund management systems, Alvara has a leaderboard that will rank all BTS tokens so users can see the BTS funds and the fund managers' track record. "What makes Alvara truly unique from centralized players like Fidelity and BlackRock is its transparency and competition-driven approach," Alpha Sigma wrote in the report.
Alvara's recent performance has been subpar and it has lost -77% of its market value since launch "mostly due to competition" from more centralized fund managers. On the other hand, the protocol's decentralized investment products have been gaining attention on crypto trading protocol Uniswap.
"We believe that the Alvara Protocol represents a competitive player in decentralized fund management, offering a level playing field for all participants and driving innovation within the ecosystem," the hedge fund management firm stated.
Also included in ASC's report is an industry outlook wherein it noted that asset management protocols have yet to gain significant traction in the decentralized finance (DeFi) space. It also detailed the specific challenges faced by decentralized asset management firms such as security concerns given how DeFi fund management relies heavily on smart contracts that could be exploited by threat actors.
Market volatility is another major issue in decentralized asset management, as well as uncertainties related to traditional regulatory frameworks.
Still ASC said proper risk management, proper compliance practices, and constant monitoring and safeguarding of smart contracts can help mitigate risks related to DeFi fund management.
ASC reiterated that its research report is not investment advice and the information it collected is based on current public information that it deems reliable even as it does not represent the data as accurate or complete.
