With a conclusion finally being reached over the hotly discussed topic of ETFs in the crypto space, it’s worth noting again that celebrating the entrance of these powerful centralized institutions goes against everything that crypto was intended to stand for and against. It’s on us as builders to fight to ensure that the true potential of crypto and DeFi especially are fully realized. In its groundbreaking attempt to reshape the landscape of traditional finance, Alvara Protocol’s vision for a transparent fund management ecosystem will revolutionize how we perceive and engage with crypto ETFs.
At the very core of our mission is to enable the creation of decentralized, meritocratic, and transparent tokenized funds through our innovative ERC-BTS Factory. This article explores how Alvara’s core DeFi infrastructure differs from the centralized nature of traditional Exchange-Traded Funds (ETFs) and highlights its unique features such as full transparency, decentralization, multi-asset support, and the ability to build a robust governance system.
Decentralized Fund Creation
The BTS Factory serves as the architectural backbone, enabling users to design and mint their own BTS tokens. Unlike traditional ETFs, where fund creation and management are centralized, Alvara empowers users to deploy tokenized funds on the blockchain independently. This decentralized approach eliminates the need for intermediaries, ensuring a trustless and permissionless environment. The BTS creation process begins with users connecting their compatible web3 wallets, such as Metamask or Trust Wallet. The platform allows users to add underlying assets from various supported blockchains, fostering cross-chain fund creation. Notably, each fund on Alvara contains ALVA at a minimum weighting of 5%, promoting ecosystem participation.
Creation, Contribution & Redemption
Alvara’s creation mechanism lets users mint a BTS management token and BTS LP tokens. Besides the creation mechanism, other investors have the possibility to contribute to the BTS fund and gain BTS LP tokens. Whenever a contributor wants to exit the fund, they can simply use the redemption mechanism.
The redemption mechanism on Alvara enables users to burn BTS LP tokens in exchange for the value of underlying assets. The flexibility to redeem tokens for either ETH or the underlying assets provides users with unprecedented control. Users cover associated gas fees, reinforcing the decentralized and user-centric nature of the platform.
Alvara’s governance model sets it apart from traditional ETFs, which are typically managed by centralized entities. The Alvara and BTS DAOs allow participants to propose and vote on alterations to fees, routing structures, and other key parameters, ensuring a truly democratic and adaptive system.
The total cost of creating a BTS on Alvara is transparent, consisting of a 1% fee plus associated gas fee during creation, the fees are divided across 0,85% Alvara Foundation, 0,05% charity, 0,05% ALVA stakers and 0,05% buyback & burn. For contribution and redemption, gas fees plus a 0,5% fee are charged. This fee-sharing structure promotes sustainability and ecosystem growth.
Alvara introduces a unique management fee sharing structure, converting 2% of Assets Under Management (AUM) to ETH annually. This fee distribution benefits fund managers, contributes to ALVA token burning, and enhances the staking rewards pool. Importantly, participants can influence these allocations through proposals in the Alvara and BTS DAOs.
Mark your calendars: The presale on Tenset’s TGLP for Alvara’s native token, $ALVA, is scheduled for February 2024. Secure ALVA tokens and participate in this groundbreaking ecosystem from its earliest stages through to global prominence.
About Alvara Protocol
The Alvara Protocol is a decentralized platform that utilizes the ERC-BTS (Basket Token Standard) to create and manage funds on the blockchain. Alvara offers a comprehensive fund Factory and Marketplace, with a transparent leaderboard showcasing the performance of every BTS created. ALVA and veALVA tokens assume crucial roles in driving the ecosystem’s growth and governance with veALVA holders wielding significant influence over the substantial ALVA reward stream. Removing traditional barriers, Alvara fosters a democratic meritocracy in crypto investing, enabling full lifecycle fund management, from creation to ownership transfer, within its seamless framework.