AlgoCellar Mechanics
AlgoCellar is user-centric protocol. That does not mean that users are productized to compete with one another to generate yield. Users will resourcefully interact with the external world and deal with all the above-mentioned complexity on behalf of the fund’s smart contracts.
To eliminate third parties custody and risks associated with the growing AUM, which can attract hackers, we introduced the AlgoCellar smart custody.
The smart-custody functionality locks the tokenized funds’ underlying assets on-chain, while concurrently developing a system that can enforce micro-transaction across multiple counterparts to facilitate rebalancing. These trade transactions allow Investors and Arbitrageurs to bond digital assets to a selected XTF fund, while the Portfolio Manager can optimize the portfolio performances by issuing rebalancing instructions securely and transparently.
AlgoCellar infrastructure assumes the following elements:
AlgoCellar Token ($ALC) is the governance token used to vote on proposals concerning the platforms’ fee distribution and feature requests.
ALGO Tokenized Fund is the funds’ token. Each fund will be represented by a relative ALGO token created by the fund; managers. These are fully tokenized assets with the private keys solely owned by the investors who will be allowed to transfer the tokens in/out of the fund at any time;
Fund Managers (FM) are normal users that intend to create a fund (ALGO) and follow a strategy for the benefit of investors. They own a special private key of the fund’s contract (ALGO smart contract) that gives them the right to issue rebalancing instructions to the contract. This will change the composition of the underlying basket
Investors (IN) are normal users that intend to invest in one or more XTF funds;
Arbitrageurs (AR) are normal users (can be anyone) who mint and burn units of an ALGO fund by contributing or receiving their content in kind;
Trustees (TR) are witnesses who stake $ALC to guard against fund managers’ dishonest acts and keep track of the ALGO balances.
Rebalancing Basket (RB) is chosen by the FM. When a re-balancing instruction is issued, the ALGO will change the basket that it accepts for an AM to take place.
Effective Basket (EB) is the effective basket custodized by the ALGO. It is determined by the actions of the AR and will tend, over time, to RB
AlgoCellar On-chain Custody
The AlgoCellar blockchain will lock the assets in a tamper-resistant distributed ledger. The ALGO tokenized fund issued under AlgoCellar will directly "own" the underlying assets. The resulting infrastructure will eliminate the need for the current silos and therefore its associated reconciliation and aggregation services.
Most importantly, it will eliminate the need for trusted counterparties and the correlated operational, credit, and legal risks.
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