A multi-family office (MFO) catering to several tech and crypto-native clients wanted to incorporate DeFi yield strategies. Some clients already had digital asset holdings, while others wanted to add crypto to a diversified portfolio. As a result, the MFO would like to extend its portfolio management services to include crypto holdings while actively managing assets in the DeFi space.
Specifically, the client’s objectives were to:
- Manage multiple portfolios of direct crypto holdings for their clients in a safe and regulated manner.
- Invest digital assets in various DeFi platforms to generate attractive yields.
- Customize DeFi strategies depending on the clients, automating deployment and rebalancing activities.
- Maintain a consistent overview of portfolios, DeFi markets, and risks while generating regular reports (including compliant tax reports at year-end).
Although the MFO employed several investment professionals well-versed in crypto-related matters, they still faced several hurdles. The main dilemma was finding a way to offer a combination of assets that fulfilled institutional-level criteria while remaining scalable across clients. Recognizing the magnitude of this undertaking, the MFO aimed to address the following challenges:
- The infrastructure and technology required to tailor DeFi strategies for multiple client portfolios are vast. Managing these strategies required interactions with multiple components and counterparties, all of which needed to be centrally managed by the MFO.
- Given the sophistication of the client and MFO teams, applying one strategy across all clients was not an option, so asset managers needed to define and constantly manage multiple strategies.
- Investing various cryptocurrencies across DeFi protocols required knowledge of the options available for each asset, including how to deploy them through various platforms and potentially manage reward claims.
- Finally, producing compliant crypto tax reports for an international clientele with multiple holdings required additional tools.
The client was looking for a platform and associated infrastructure that provided them with the flexibility needed to serve sophisticated clients while maintaining a high level of security and mitigating operational risk. The solution needed to support onboarding existing crypto holdings while allowing new fiat to be allocated over time. Finally, it was critical that their clients could navigate the DeFi space intuitively and with enough flexibility to benefit from the most attractive yield opportunities.
The MFO turned to Alloy to ensure they were operating on a safe, regulated, and transparent platform, allowing them to build custom DeFi strategies for each client—here are a few of the resulting benefits:
- With Alloy’s proprietary Strategy Builder, constructing and maintaining cross-protocol strategies became intuitive and effortless.
- Clients have full transparency of their accounts and on-chain transactions.
- Data is automatically pulled from Alloy and fed into the MFO’s wealth management and client reporting solution, ensuring a coherent portfolio view across asset classes.
- Worldwide, locally compliant tax reports are produced at the push of a button and ensure compliant crypto reporting at all times.
- The MFO can extend their portfolio management service to include their client’s crypto holdings while maintaining the highest security, regulatory and compliance standards.