The Development and Future of DeFi Investment Vehicles

Complex on-chain activities are being simplified, and the technological infrastructure has matured. The old systems are facing a historic opportunity to be reshaped, and new opportunities have emerged. New technologies such as Intent, on-chain robots, and AI Agents need to address authorization issues.

On April 16, a company specializing in Decentralized Finance investment vehicles completed a $4 million financing round. The company has secured a position in the seemingly simple yet actually complex field of on-chain investments, thanks to the favor of technologies such as Intent and LLM. However, the DeFi sector as a whole does need to be reorganized to simplify investment thresholds.

The era of DeFi Legos is over, and the era of securely coupled wealth management is coming.

Past: Challenges of Early Decentralized Finance Tools

In the early days, there were some projects that attempted to simplify the DeFi investment process, but ultimately failed. These projects mainly focused on helping users reduce confusion when faced with DeFi strategies, similar to today's Meme coin tools, except that back then it was about combining yield strategies rather than discovering high-potential low-value Meme coins.

However, most users do not use these tools for the long term. On-chain yield strategies are an open market where retail investors cannot compete with whales in terms of server and capital volume, meaning that most yield opportunities cannot be captured by retail investors. Compared to the unsustainability of yields, security issues and strategy optimization are secondary. In the era of high returns, there is no room for prudent financial management.

Now: The Democratization of Asset Management

The wealthy have ETFs, while retail investors have ETS. ETF tools can not only operate in the stock market, but mainstream cryptocurrency trading platforms had already attempted this in 2021. From a technical perspective, asset tokenization ultimately gave rise to the RWA paradigm.

The industry is exploring how to complete the on-chainization of ETF tools. From the APY calculations and displays of certain platforms to the ongoing operation of other projects, it indicates that there is a demand in the market for this.

Some projects are strictly speaking strategy sales and showcase markets, relying on the precise calculations of a vast number of professionals, combined with human and AI-assisted decision-making. However, on-chain transparency means that no one can truly hide efficient strategies without being imitated and modified, ultimately leading to an arms race where returns tend to balance out.

No benchmark projects have yet emerged in this field that can redefine the market, like decentralized exchanges or prediction market platforms.

The current important question is whether the old forms of Decentralized Finance can be revived after the end of the Meme coin supercycle. Is the industry temporarily at its peak or is it permanent? This relates to whether Web3 is truly the next step for the internet or a 2.0 version of fintech.

From the strategy of the latest projects, it can be seen that on-chain yields are transforming into an era of asset management for the masses. Just like index funds and 401(k) jointly created a long bull market for US stocks, the absolute amount of funds and a large number of retail investors indicate a huge market demand for stable income.

This may be the meaning of the next Decentralized Finance. There are other public chains beyond Ethereum that still need to bear the innovation of Internet 3.0, and DeFi should become Financial Technology 2.0.

Future: Physical Assets on the Blockchain

In the cryptocurrency space, only a few product types have truly gained market recognition: exchanges, stablecoins, Decentralized Finance, and public chains. Other product types, including NFTs and Meme coins, are merely phase-based asset issuance models that lack sustainable self-maintenance capabilities.

However, RWA (Real World Assets) has been taking root and growing since 2022, especially after some significant events, where people are more focused on returns and stability, rather than just decentralization. Even without the active embrace of the government, the productization and practicality of RWA are accelerating. If traditional finance can accept digitization and informatization, then blockchainization should not be an exception.

In the current cycle, complex asset types and on-chain DeFi strategies severely hinder centralized exchange users from migrating on-chain. However, some projects are attempting to transfer exchange liquidity on-chain:

• Some projects convert rate earnings into on-chain earnings through benefit alliances.
• There are also projects that introduce perpetual contracts on exchanges through LP Tokens on-chain.

These cases prove that liquidity on-chain is feasible, and RWA demonstrates the possibility of asset tokenization. This is a critical moment for the industry; although Ethereum is considered to lack vitality, in reality, many projects are migrating to the chain.

In addition to these products, several open-source APY calculation tools have been running for years. Different platforms have different focuses, showcasing the APY of project parties, and the emphasis of income tools has gradually shifted over time, becoming increasingly concentrated on interest-bearing assets.

Currently, if these types of investment vehicles increase trust in AI, they will face the issue of responsibility allocation; if they enhance human intervention, it will lower user experience. A possible solution is to separate information flow and capital flow, create a UGC strategy community, foster internal competition among project parties, and benefit retail investors.

Conclusion

Emerging DeFi investment vehicles have gained market attention due to the support of well-known investment institutions, but long-standing issues in the industry remain. Authorization and risk issues are still key; here, authorization refers not only to wallets and funds but also to whether AI is capable of meeting human needs. If AI investments cause significant losses, how will liability be allocated?

Nevertheless, this world is still worth exploring the unknown. Cryptocurrency, as a public space in a divided world, will continue to thrive.