Current Status, Risks, and Future Development of the Crypto Assets Wealth Management Product Market

1. A Brief Overview of Blockchain and Crypto Assets Wealth Management

1.1 Background and Significance

The development of blockchain technology since 2008 has greatly changed our world, especially in the financial sector. Blockchain technology and Crypto Assets have brought profound impacts to the global economy, most notably by providing financial market participants with new opportunities for investment and wealth management.

The emergence of Crypto Assets financial products is one of the latest achievements of blockchain technology in the financial services industry. For investors, these products offer new effective ways to maintain asset liquidity and achieve competitive returns. For the global financial market, the development of Crypto Assets financial products expands market depth and breadth, provides new risk management tools, and enriches the supply of products and services.

Understanding the definition, types, background, and significance of Crypto Assets financial products holds important value for investors, market participants, policymakers, and regulators. Next, we will delve into this topic, hoping to provide readers with valuable insights and strategies for Crypto Assets.

1.2 Definition and Types of Crypto Assets Financial Products

Crypto Assets wealth management products are an innovative financial service that applies blockchain technology. These products provide investors with the opportunity to store and appreciate digital assets. Essentially, Crypto Assets wealth management products can be divided into two major categories: fixed-term and demand. Fixed-term products require investors to lock in funds for a specified period to obtain predetermined returns; demand products allow for withdrawals at any time, but the yield may vary. Both types of products effectively complement traditional bank savings accounts, opening up new profit opportunities for investors.

2. Current Status and Development Trends of the Crypto Assets Wealth Management Market

2.1 Crypto Assets Wealth Management Market Size and Growth Situation

According to statistics, the global Crypto Assets wealth management market size reached $292 billion in 2021, a year-on-year increase of over 600%. It is expected to exceed $5 billion this year (2023), indicating that investors' interest and confidence in digital assets continue to grow. Crypto Assets wealth management forms involve digital coins and their derivatives. Bitcoin is widely regarded as an investment target, and the new wave generated by its trading has also spawned more wealth management tools.

The most popular forms at present mainly include: direct investment in Bitcoin, investing in new types of digital assets (such as NFTs, etc.), and various lending services. Directly holding Bitcoin has always been a popular investment method. Additionally, with the continuous issuance of new tokens, investors have shown interest in other digital assets. Many custody institutions that absorb assets for trust business also provide lending services for Bitcoin and other digital tokens, lending out digital tokens to earn interest.

The rapid growth of the Crypto Assets wealth management market is due to the high risk and high return that digital currencies can provide, while users prefer the decentralized and transparent attributes of currencies. It is predicted that since the emergence of extreme events in the world, the entire Crypto Assets wealth management market is expected to continue to expand rapidly as investors increasingly recognize the value of Crypto Assets.

2.2 The main investor groups and their behaviors in Crypto Assets financial products

The main investor group consists mostly of young and wealthy technology enthusiasts. This group is full of curiosity and confidence in digital assets, pursuing high returns from venture capital. Most of them learn about and participate in investments through online social networks and forums. This group is primarily concentrated in the age range of 30 to 45 years.

In addition, mid-to-high-end individuals have also become investors. The high returns offered by Crypto Assets wealth management products attract them to participate. This group of investors often has a higher investment capability and a willingness to bear risks.

The common characteristics of Crypto Assets investors mainly include: high risk tolerance; a strong recognition of digital currencies; and a willingness to participate in emerging markets. They mostly pay attention to the latest news and data on popular tokens and make investment decisions quickly. However, they also need to pay special attention to high-risk factors such as significant price volatility of encryption assets.

Their investment behavior tends to be more focused on the short and medium term, with long-term holding being uncommon. They mainly focus on potential returns rather than long-term asset appreciation.

3. Detailed Explanation and Risk Analysis of Crypto Assets Financial Products

3.1 Introduction to Crypto Assets Financial Products

Specifically, Crypto Assets financial products are financial activities conducted using Crypto Assets, and their product forms and investment returns vary significantly. They are mainly divided into two categories: one is decentralized finance (DeFi) financial products, and the other is centralized finance (CeFi) financial products. These two types of products each have their characteristics, as well as different risks and returns. When investing, users need to have a clear understanding of them, comprehend their operational principles and possible risks, in order to make informed investment decisions.

Before delving into these two types of products, we first need to clarify one point: encryption wealth management products are different from traditional financial wealth management products. They are not financial activities based on government currency, but rather based on Crypto Assets. This means they are not constrained by the traditional financial system, but they also bring some new challenges and risks, such as market volatility, technical risks, and so on.

3.1.1 DeFi Crypto Assets Management Products

3.1.1.1 Curve

Curve is one of the earliest automated market makers (AMM), initially providing trading primarily between stablecoins (the V2 version expanded to non-stablecoin trading), offering large-scale, low-slippage stablecoin trading through innovative algorithms.

The main stablecoin pool on Ethereum for Curve is 3pool, providing trading between three stablecoins: DAI, USDC, and USDT, with a maximum yield of 2.44%.

3.1.1.2 Aave

Aave is one of the two giants in DeFi lending. Aave offers five markets, including V1, V2, AMM, Polygon, and Avalanche, with the highest annualized yield being the USDT lending pool in the AMM market, with an interest rate of 7.66%.

3.1.1.3 Compound

Compound is one of the two giants in DeFi lending, currently deployed on the Ethereum network, supporting lending services for DAI, USDC, and USDT. According to the latest data, its total locked value (TVL) is $13.2 billion. On Compound, the annualized yield for deposits of DAI, USDC, and USDT is 2.84%, 2.97%, and 2.52%, respectively, with USDC having the highest yield at 2.97%.

3.1.1.4 Yearn

Yearn is a DeFi yield aggregator, with a current total locked value of 4.23 billion USD. Yearn can automatically allocate users' funds to other protocols to achieve maximum returns. Yearn currently supports two chains, Ethereum and Fantom, and offers two yield products: Vaults and Iron Bank, where Vaults is a yield aggregation product and Iron Bank is a collateral lending product. The highest annualized yield is from the DAI Vaults on Fantom, with an interest rate of 24.96%.

Among them, the USDT yield rate of Ethereum-Vaults is the highest at 7.68%, followed by the USDC yield rate at 5.76%.

3.1.2 CeFi Crypto Assets Wealth Management Products

3.1.2.1 CeFi Stablecoin Wealth Management

Although decentralized finance (DeFi) is rapidly developing, centralized finance (CeFi) remains an important part of Crypto Assets finance. In the stablecoin wealth management sector, CeFi mainly focuses on major exchanges. With their vast user base and abundant capital reserves, exchanges provide unique conditions for their wealth management businesses.

The exchange's stablecoin financial products are more like traditional bank wealth management products, while also incorporating the characteristics of blockchain, and have launched a series of new products. These mainly include: flexible wealth management, fixed-term wealth management, regular investment plans, high-interest flexible savings, dual-coin investment, node staking, ETH2.0, etc. Below, we will introduce some of the exchange's stablecoin financial products.

The most typical stablecoin financial product of a certain exchange is the high-yield demand deposit product. This product supports deposits and withdrawals at any time, and the returns are quite stable, with a relatively high level of asset security. Currently supported coins include USDT, DOT, FIL, TUSD, USDC, and ETH (other coins will be gradually opened up).

Applicable objects for high-yield current products of a certain exchange:

1. High Net Worth Individual Investors: If you have significant wealth accumulation and are seeking high return investment opportunities, this product is suitable for you as a long-term stable asset allocation, requiring you to bear the costs of short-term redemption fees.
2. Professional Investors: If you are an institutional investor, fund manager, or other professional investor. With market insights and investment experience, you can screen quality financial products, and this product is also suitable as a stable and high-return investment.
3. Long-term investors: If you have a sum of money that can be invested for a long time, such as retirement savings, children's education funds, etc., and are willing to invest the funds in financial products for the long term, this product is also suitable for you, as it can help you combat short-term market fluctuations while locking in steady returns.

Other well-known exchanges, as experienced trading platforms, also offer a variety of stablecoin wealth management products, including current accounts, fixed-term accounts, lending, and DeFi mining.

3.1.2.2 CeFi Non-Stablecoin Wealth Management

The above elaborates on the content of stablecoin financial products at major exchanges. Next, we will introduce some financial products related to non-stablecoins.

1. "Regular Investment Plan" product The "Dollar-Cost Averaging Plan" is a product designed for long-term investors, particularly suitable for those with limited time, lacking investment experience, but seeking long-term growth and risk diversification. This plan allows investors to lower their investment costs by regularly contributing funds, reducing the impact of market fluctuations, thereby achieving the effect of accumulating wealth gradually and enjoying compound interest growth.

This plan is especially suitable for investors who make good use of the average cost method, busy professionals, long-term investors, and small investors.

2. Spot Balance Auto Wealth Management

Spot balance automatic wealth management is a convenient way of investing that can be activated with one click, helping investors easily invest in all supported crypto assets for flexible wealth management. Through this method, investors can achieve automatic compound investment of their assets while enjoying flexible subscription and redemption.

3.2 The main types of risks associated with Crypto Assets financial products

Although Crypto Assets wealth management products offer investors the potential for high returns, like any investment, they also come with certain risks. Based on the characteristics of Crypto Assets, the associated risks may be higher. These risks mainly include the following aspects:

3.2.1 Market Risk

The Crypto Assets market is a highly volatile market. Price fluctuations can be very severe, and these fluctuations are often due to various uncertainty factors, including technological changes, policy or regulatory changes, and changes in market participants' sentiments. For example, the release of a new technology or policy that may benefit a certain Crypto Asset could lead to an increase in its price. Conversely, if unfavorable news or events arise, it could lead to a price drop. In some cases, these fluctuations can be very drastic, with significant price increases or decreases occurring in a short period.

3.2.2 Liquidity Risk

Liquidity