How Project DAMA Can Disrupt Digital Asset Fund Management
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How Project DAMA Can Disrupt Digital Asset Fund Management

Although proof of concept, Project DAMA showcases the future of digital assets in TradFi.
Neither the author, Tim Fries, nor this website, The Tokenist, provide financial advice. Please consult our website policy prior to making financial decisions.

Deutsche Bank and Memento Blockchain have finished a proof-of-concept called Project DAMA (Digital Asset Management Access). The project aims to make issuing and managing digital asset funds safe, easy, and flexible.

What is Project DAMA?

Launching an investment fund is no small matter, but launching a fund for digital assets is even more complex. Due to the nature of digital investment products, asset managers have to deal with multiple intermediary parties: payment processors, transfer agents, custody service providers, and fund administrators.

Project DAMA aims to streamline this process as a plug-in platform. Deutsche Bank and Memento Blockchain coordinated their efforts to make this proof of concept the baseline for future applications. The project showcased that it is feasible to have a one-stop digital asset investment platform that reduces the time and costs associated with launching and administering digital funds in the TradFi arena. 

As proof of concept, Project DAMA streamlined the relationship between asset managers and intermediaries. Image credit: Deutsche Bank

As such, the Monetary Authority of Singapore’s Financial Sector Technology and Innovation (FSTI) awarded Project DAMA last August. The FSTI gave it the Proof of Concept (POC) grant for its contribution to developing innovative financial technologies. 

“The extension of traditional fund services with digital capabilities can significantly lower cost-related barriers to entry for asset managers looking to launch a digital fund – and for qualified investors seeking exposure to such funds.”

Anand Rengarajan, Deutsche Bank Global Head of Sales & Head of Asia Pacific, Securities Services.

How Does Project DAMA Tackle Digital Investment Funds?

At the center of Project DAMA is digital identity authentication. When wallet owners interact with the platform, they do so with a non-transferrable token representing their digital ID. Taking advantage of the concept of soulbound tokens (SBTs), these tokens hold investors’ profiles and credentials. 

First coined by Ethereum co-founder Vitalik Buterin, soulbound tokens give multiple advantages as ERC-721 non-transferrable tokens:

  • They can delegate authority.
  • They represent verifiable credentials.
  • They can attach certificates in a modular fashion.

In the case of Project DAMA powered by the Memento Blockchain, SBTs can restrict access to some services while also providing benefits, depending on the token holder’s risk level. 

Regarding bridging TradFi with blockchain, Project DAMA’s SBTs enable asset managers to comply with various regulations so that only qualified legal investors can tap into digital funds. As the transfer agent, the bank itself would be responsible for running KYC/AML checks and minting and attaching SBTs to investors’ wallets. 

Alongside non-transferrable tokens, Project DAMA experimented with decentralized exchange gateways for fiat-to-digital asset conversion. Memento Blockchain used the Metamask self-custodial wallet to connect to either decentralized or centralized custody wallets (exchanges). When connected, funding the wallet and sending digital cash are checked against the investor’s KYC status. 

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Customizing Digital Fund Investment Strategies

Project DAMA provides a one-window wizard for asset managers to create and launch a fund. The asset manager would have to pick the underlying assets and their weight, rate the fund’s risk, define the fees, define the strategy, and define whether it is active or passive.

One-stop wizard for digital asset fund managers. Image credit: Memento Blockchain

Overall, Project DAMA offers an open architecture for banks’ digital asset managers to customize. If implemented, a new competitive digital fund landscape will emerge among banks. 

 “The result is an innovative and practical infrastructure that combines core components of transfer agency, fund administration, custody and payments for the digital fund environment, while also allowing for an open architecture that enables self-custody of assets.”

Nicola Lanteri, CEO, Memento Blockchain

Headquartered in Singapore, Memento Blockchain was founded in 2017 to build in-house blockchain protocols and auditing services. Since then, they have launched four major products: DOMANI as a multi-chain asset management protocol on Ethereum and Avalanche, AlgoCellar which does the same on the Algorand blockchain, Klay Cellar for the Klaytn blockchain; and ComboSwap as the pioneering multi-swap aggregator.  

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Would you switch banks if another one started offering digital asset funds? Let us know in the comments below.