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Custody and Fund Creation
Instead of using a bank account, digital wallets become the general ledger of the fund. The wallet address manages the investor whitelist, receives capital contributions from investors, issues shares, records the fund's AUM, processes fees, and pays out redemptions.
This could be any traditional wallet or multi-signature wallet, including MPC wallets provided by Fireblocks, Copper, Coinbase etc.
If you are starting a new fund, it's ideal to use a new Ethereum address in order to create a clean transaction history. Multiple wallets can be added and aggregated later to hold assets and make trades.
Managers can customize parameters at the fund creation process including management fees, performance fees, minimum investment amount and investor lockup periods.
When a fund manager creates a SmartFund, the smart contracts create a non-transferrable ERC20 with a ticker symbol unique to that fund.
Each fund's share price starts at $0.01, and increases accordingly as the fund's NAV grows.
As these tokens cannot be sold or transferred, they can be thought of as accounting tokens, minted for the purposes of tracking ownership interests and fees and burned at redemption.
Once off-chain legal processes have been handled, the fund creation process can take as little as 30 seconds.