I threw a pile of idle cryptocurrencies into Lorenzo, watching as they were automatically broken down, combined, and matched by smart contracts, eventually turning into a continuously growing net asset value. It felt like hiring a never-resting investment advisor for my funds.
Late at night, I stared at the idle assets in my wallet from five different chains—some Bitcoin, some Ethereum, and various stablecoins. They were like a group of idle soldiers, without a commander and without a mission.
At this moment, I remembered what my friend said about the 'on-chain investment bank' Lorenzo Protocol and decided to hand over the control of my funds to it to give it a try.
01 Funding Café
My crypto assets have arrived at a place called Lorenzo, which resembles an all-day open funding café rather than a traditional bank counter.
Here, both large institutional funds and small retail change like mine are transformed into standardized 'tokenized' beverage lists. My Bitcoin has become stBTC liquidity tokens, and stablecoins are ready to enter various strategy pools.
The best part of this café is that there is no minimum consumption threshold; regardless of the amount of funds, one can find a suitable 'seat'. More importantly, all operations here are transparent, and the flow of every fund can be verified on-chain, unlike the opaque black box operations in traditional finance.
02 Strategy Supermarket
Next to the funding café is Lorenzo's strategy supermarket. It is filled with a variety of yield strategies, available for selection like items on a shelf.
There are basic strategies focused on Bitcoin staking, liquidity mining combinations across multiple chains, as well as complex trading strategies from professional quantitative teams. Even traditional financial instruments like treasury yields and commercial papers have been tokenized and placed on the shelf.
These strategies are packaged into standardized modules, free to combine like Lego blocks. Simple strategies form a single strategy pool, while complex strategies are made up of multiple modules managed by professional teams or AI for rebalancing.
03 Intelligent Matching Engine
Once the funds and strategies are ready, Lorenzo's core system financial abstraction layer begins to work. It acts like an indefatigable matchmaker, specifically pairing funds with strategies.
The workings of this engine are quite ingenious: it translates my funding needs into a language that machines can understand, while breaking down complex strategies into executable standardized instructions.
For instance, when I deposit stablecoins, the system automatically assesses the risk-return ratios of various stablecoin strategies in the current market and allocates my funds to the most suitable strategy combinations. The entire process requires no manual operation on my part, all completed automatically by smart contracts.
04 Tokenized Matchmaking Agency
After being matched by FAL, the combination of funds and strategies is encapsulated as OTF - you can think of it as an on-chain trading fund share.
I deposit stablecoins to obtain USD1+ OTF, just like purchasing fund shares in traditional finance. But unlike traditional funds, these OTF operate entirely on-chain, with net value growth directly reflected in token prices rather than changes in the number of shares.
What's even better is that these OTF themselves have liquidity, can be traded in the secondary market, and can also be used as collateral for other DeFi activities. My funds are not locked up but have become more active due to their yield-generating attributes.
05 Governance Committee
In Lorenzo's matching mechanism, the governance committee composed of BANK token holders plays a crucial role. They act like the board of directors of this on-chain investment bank, determining the operational rules of the entire platform.
veBANK holders vote to decide which strategies can receive more funding support and which strategies need parameter adjustments. This design ensures that the platform's development direction aligns with the interests of all participants.
Unlike traditional investment bank executives who earn high salaries, here, the income of the governors is directly tied to the platform's performance. Lorenzo allocates most of the protocol's revenue to veBANK holders, creating an annualized yield rate as high as 89%. This design completely overturns the profit distribution model of the traditional asset management industry.
06 Risk Control Center
No financial activity can be separated from risk management, and Lorenzo's on-chain investment bank has also innovated in this regard. It achieves a fully transparent risk control mechanism through smart contracts.
Each strategy has clear risk parameters and stop-loss rules, which are encoded in smart contracts and cannot be arbitrarily changed. When extreme market conditions arise, the system automatically executes preset risk management strategies to protect investors' funds.
At the same time, Lorenzo collaborates with several well-known auditing firms to conduct regular security audits of the protocol. All audit reports are publicly accessible, a level of transparency that traditional financial institutions find hard to match.
07 Funding Hand-in-Hand Strategy
Now, let me take you through how my funds are seamlessly integrated with strategies in Lorenzo.
First, I deposit multi-chain assets into Lorenzo, and the system automatically converts them into standardized token forms. Next, FAL selects suitable strategy combinations from the strategy supermarket based on my risk preferences and return goals.
Then, my funds are allocated to these strategies and start generating returns. These returns accumulate automatically every day and are reflected in the net value growth of the OTF I hold. I can check the source of each return at any time, completely transparent with no hidden aspects.
If I need to exit, I can directly sell the OTF in the secondary market or redeem the underlying assets. The entire process requires no communication with anyone, all completed automatically by smart contracts.
Through Lorenzo's on-chain investment banking services, my previously idle crypto assets are now working 24/7. They flow between different strategies, traverse across different chains, and continuously create value for me every moment.
I no longer need to study complex DeFi protocols or worry about gas fees for cross-chain operations. All of this is quietly accomplished by smart contracts made up of lines of code. What I can do is occasionally check the growth curve of my asset net value and enjoy the stable returns brought by the 'on-chain matchmaker'.
