What is SolStreet? is a non-custodial asset management and investment protocol built on Solana that allows asset managers and traders to launch non-custodial, decentralized investment funds directly to investors on the Solana blockchain while utilizing the deep liquidity provided by the Serum DEX.
The SolStreet protocol allows investors to deposit and withdraw funds into a smart contract (fund) that permits the asset manager to perform asset swap transactions and manage the fund portfolio, without ever being able to withdraw investor funds. This is crucial to the non-custodial nature of decentralized asset management.
The protocol utilizes the Serum DEX for asset swaps. Serum has been developed as the liquidity engine for the Solana ecosystem and has 70+ asset pairs to trade, with daily peak volume touching almost $200m in May 2021. Crucially, the protocol provides support for order books β€” typically more efficient at ensuring deep liquidity than automated market makers (AMMs), however, trades can also be executed on these order books using the swap approach more familiar to users of traditional AMM DEXs.
A simplified fee structure is used, with performance fees charged on any fund appreciation, subject to a high watermark. Fees are set by the fund manager. By eliminating management fees and complex fee structures we aim to improve fund comparability and simplify the investing process. On top of this the fund manager will be the seed investor into any fund, aligning incentives with investors.
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An example of the investment process.
The protocol also leverages powerful tokenomic incentives through its STRT token in order to drive sustainable, long-term growth of the protocol’s assets under management. This is achieved through multiple channels, with the core being Performance Mining program being key to incentivising efficient allocation of investor capital, whilst STRT staking helps align incentives between token holders and protocol users.
A set protocol fee, starting at 10%, will be charged on the performance fees accruing to asset managers on the SolStreet protocol. Protocol fees will be allocated to the Protocol Treasury. In the first two years these can only be deployed via governance vote. From year 3 protocol fees will initially be made available for 1 month for protocol-enhancing governance proposals, after which the remainder will be allocated to the buy-and-distribute (see Performance Mining and Staking).
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