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Institutional investors will be able to subscribe to the tokenized fund through the direct minting of tokens, via a decentralized exchange aggregator, or through a built-in marketplace.
On Tuesday, February 21, Deutsche Bank Singapore published a report with a proof of concept (PoC) in order to provide a platform for asset managers to issue tokenized funds. For this Deutsche Bank has partnered with Memento blockchain.
Deutsche Bank and Memento Partnership
The two players are working together on a PoC project dubbed Project DAMA (Digital Assets Management Access). This project will facilitate the management of digital funds investing in tokenized securities.
Besides, the report notes that the project gives asset managers the to create a digital asset fund with their native token. They can also launch a direct fiat-to-digital on-ramp for users. Through the direct minting of tokens, institutional investors can subscribe to the fund via a decentralized exchange aggregator or through a built-in marketplace.
To begin with, Deutsche Bank and Memento Blockchain built a decentralized platform (DeFi) on Ethereum that would have a unique, non-transferable soulbound token (SBT). With the help of the SBT platform, developers can identify the identity of wallet owners. Later, they can give them access to investment opportunities without asking them for their personal information each time.
On the other hand, a trust anchor would keep all the accompanying documents and KYCs off-chain. Furthermore, the SBT will be used to restrict access to services or products which do not match users’ risk tolerance or experience.
Institutional Investors Participation
In order to invest in the fund, institutional investors holding the SBT tokens will have to provide collateral so that they can mint and receive the tokenized shares of the underlying digital investment fund.
Later, they can swap these tokenized shares to a built-in digital marketplace for digital assets, such as stablecoins. Similarly, asset managers can create tokenized funds by leveraging one window on Ethereum testnets using different strategies such as DeFi staking.
For Project DAMA, Deutsche Bank and Memento Blockchain have decided to leverage MetaMask for offering asset security. In order to access the platform’s decentralized applications (dApps), institutional investors will have to hold SBT in the MetaMask wallet along with KYC.
Deutsche Bank said that it’s exploring the use of Project DAMA in Singapore. This small country has 1,100 registered fund managers with a total of $3.36 trillion in assets under management.
One of the major use cases with blockchain and tokenization is enabling fund customization. As said, investors can subscribe in various ways for the tokens issued on the public Ethereum blockchain. This includes minting a token directly or a user investing through a decentralized exchange.