Overview
Abstract
In this paper, we propose a decentralized framework for launching AI-managed portfolio tokens—effectively enabling users to create hedge fund–like investment vehicles directly on the Solana blockchain. Our system integrates customized LLM-based AI agents for real-time portfolio optimization, tokenizes investment strategies using SPL standards, and enables liquidity provisioning and trading via Raydium. By abstracting complex asset management processes into a simple user interface, the platform empowers both retail and institutional actors to deploy, govern, and scale personalized on-chain ETFs.
Introduction
Traditional hedge funds and ETFs have long been restricted to institutional actors due to barriers in regulation, capital requirements, and technical complexity. In the decentralized finance (DeFi) ecosystem, tokenization and smart contracts allow the creation of similar instruments without centralized intermediaries. However, current tools lack intelligent asset allocation, intuitive UX, and permissionless customization.
We propose a new class of financial primitives: AI-powered portfolio tokens. These tokens encapsulate a diversified basket of crypto assets, structured like ETFs, dynamically optimized by AI agents, and traded on-chain. The platform is built on the Solana blockchain to leverage high throughput, low fees, and composability with existing DeFi infrastructure.
Problem Definition
Despite DeFi’s permissionless nature, portfolio creation remains either manual
Asset allocation is typically static or emotion-driven.
Launching index-style products requires smart contract expertise.
Rebalancing strategies are not easily accessible.
Retail investors have no easy way to invest in actively managed crypto funds.
There is a critical need for a platform that
Tokenizes investment strategies as tradable assets.
Incorporates AI for risk-aware optimization.
Removes gatekeeping in fund creation and participation.
System Architecture
Token Creation Process. Building Your Own AI-Powered ETF
The core functionality of the platform is enabling users to create their own portfolio token that represents a crypto ETF. This process abstracts away the technical complexity of smart contract deployment and portfolio allocation, offering a user-friendly interface combined with AI-driven insights.
Define Portfolio Strategy
The user begins by specifying their investment strategy. They can
Manually select assets (e.g., SOL, USDC, BONK)
Define weight percentages (e.g., SOL 40%, BONK 30%, USDC 30%)
Or, use the AI Portfolio Advisor to generate an allocation automatically based on:
Market volatility
On-chain liquidity
Recent price action
User-defined risk preference (low, balanced, aggressive)
Example:
"I want a mid-risk Solana ecosystem ETF." → AI suggests: SOL 50%, BONK 25%, JITO 15%, USDC 10%
Asset Vault & Swap Execution Process
Secure Custody and Automated Portfolio Composition
Once the portfolio configuration is submitted and the system is ready to mint
The Vault system automatically executes a series of swaps, using DEX aggregators (like Jupiter or Raydium) to convert SOL into the specified assets.
Each asset is purchased in proportion to the target weights.
For example, if the configuration is
40% SOL → Held directly
30% BONK → Swapped from SOL
30% USDC → Swapped from SOL
Then
40% of the funds remain in SOL
30% of the funds are converted into BONK
30% into USDC
All swap transactions are executed atomically and trustlessly on-chain by the vault authority.
Token Minting Based on the Portfolio
After the target assets are successfully acquired:
The system mints a fixed total supply of Portfolio Tokens (e.g., 1,000,000,000).
The composition of the underlying assets is backed and locked in the vault, fully transparent and queryable.
The Portfolio Token now represents ownership of a fractional share of that basket.
Claiming the Token
Eligible users (the creator and early contributors) can claim their share of the newly minted Portfolio Token.
The share is determined based on the user's contribution ratio.
When a user calls the Claim function:
Their allocated tokens are transferred directly to their wallet.
No intermediary custody or additional approval is required.
This concludes the tokenization process. From this point forward, the user can:
Trade the token on DEXs (if listed)
Hold it as a diversified ETF-style asset
Participate in staking, governance, or rebalancing (future features)
Redemption the Token
The redemption process enables users to convert their Portfolio Tokens (ETF-style tokens) back into their proportional share of the underlying crypto assets that the token represents.
This process is permissionless and executed fully on-chain via the Vault and its associated redemption logic.
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