The person running the best-performing DeFi basket on our platform right now is not a fund manager. They are a developer who got interested in tokenomics, built a thesis around yield-bearing assets, and deployed a BSKT that now has real holders and growing TVL. Their entire track record is onchain. Anyone can verify it.
That scenario was impossible two years ago. Not because the strategy was hard, but because offering a managed portfolio to other people required licenses, legal entities, bank relationships, and six figures in setup costs. Alvara changes that equation. BSKTs (basket tokens built on the ERC-7621 standard) let anyone with a strategy put it into practice and earn fees from holders who trust it.
This post is about what we think good onchain portfolio management looks like, who it is for, and where it still falls short.
The Problems We Are Solving
These are not abstract criticisms. They are the specific problems that pushed us to build ERC-7621:
High barriers to entry
Launching a hedge fund in the US typically requires $50,000 to $100,000 in legal and compliance costs before you manage a single dollar. Mutual funds cost even more. These costs filter out small, innovative managers and concentrate power among established firms.
Opacity by default
Most funds report holdings quarterly, with a 45-day delay. Investors have no real-time visibility into what they own. This creates information asymmetry that benefits managers at the expense of investors.
Excessive fees
The traditional "2 and 20" fee structure (2% management fee plus 20% of profits) has eroded somewhat, but the average actively managed mutual fund still charges around 0.68% annually. Layer on trading costs, administrative fees, and distribution costs, and the real drag on performance is often well above 1%. Over a 30-year horizon, a 1% fee difference can reduce final portfolio value by 25% or more.
Limited access
The best-performing funds are often closed to new investors or require minimum investments of $250,000 to $1 million. Geographic restrictions add another layer. A skilled analyst in Lagos or Jakarta can't easily invest in a fund domiciled in the Cayman Islands, regardless of their capital or sophistication.
How BSKTs Fix This
BSKTs are onchain basket tokens that represent a portfolio of underlying assets. A programmable wrapper around a specific investment strategy. They are built on the ERC-7621 token standard, which defines how basket tokens are created, managed, rebalanced, and dissolved.
Here is what that changes in practice:
Permissionless creation
Anyone can create a BSKT. No application process, no minimum AUM, no licensing requirement. If you have a thesis on which tokens will outperform over the next year, you can express that thesis as a BSKT and make it available to others. The total cost is a gas fee.
Real-time transparency
Every BSKT's holdings are visible onchain at all times. No quarterly reporting delay, no window dressing, and no possibility of hidden positions. Every token, every weight, every rebalance is verifiable by anyone.
Programmable fee structures
BSKT managers set their own fees, and these fees are encoded in the smart contract. They cannot be changed retroactively or applied selectively. Competition drives fees down naturally because investors can compare fee structures across BSKTs transparently and switch with a single transaction.
Global access, 24/7
BSKTs trade on decentralized exchanges with no market close, no settlement delay, and no geographic restrictions. An investor in Buenos Aires has the same access as one in Boston. Entry and exit happen in seconds, not days.
What a Good BSKT Manager Actually Does
Managing a BSKT is not passive. The managers attracting the most holders on our platform share a few habits:
Verify your identity first
Connect your X account and complete Human Passport verification through Gitcoin Passport. This gives you a trust tier (Bronze, Silver, or Gold) that shows up on every basket you create. Unverified managers can still deploy baskets, but holders overwhelmingly choose verified ones. It takes a few minutes and it is the single highest-ROI action you can take as a manager.
Build a verifiable track record
Every rebalance, every asset swap, and every fee collection is recorded permanently onchain. The manager leaderboard ranks baskets by performance, holder count, and TVL. Your track record is not a pitch deck you can edit. It is your transaction history. This creates a reputation system based on actual performance.
Set fees that make sense
Fees are locked at deployment. You cannot raise them later. Start competitive (1-2%) and let the track record justify the fee. Holders can see every basket's fee before they mint, so overcharging with no history just means no holders.
Use the analytics
The platform gives managers 13 technical indicators and Xerberus risk ratings (AAA to D) for every token in their basket. Good managers use these to make rebalancing decisions and share the data publicly to build trust. Holders want to see that decisions are data-driven, not vibes.
Composability as a competitive advantage
BSKTs are ERC-7621 tokens, built on ERC-721, so each basket is a unique onchain asset that can hold an unlimited number of ERC-20 tokens inside it. They can be used as collateral in lending protocols, traded on DEXs, or even included in other BSKTs. A manager could create a "BSKT of BSKTs," essentially building a fund-of-funds with zero additional overhead.
Why Onchain Beats Off-Chain
Centralized platforms can offer some of these features. Here is what they cannot replicate:
- Self-custody: Investors hold their BSKT tokens in their own wallets. No counterparty risk from exchange failures, bank runs, or corporate fraud.
- Censorship resistance: No single entity can freeze your portfolio, block your redemptions, or prevent you from trading.
- Atomic transactions: Rebalancing a BSKT happens in a single transaction. No settlement risk, no failed trades to reconcile, and no timing gaps between buying and selling.
- Auditability: The rules governing a BSKT are not buried in a 200-page prospectus. They are visible in the contract, verifiable by anyone.
- Interoperability: BSKTs work with the broader DeFi ecosystem immediately. No API integrations, no partnership agreements. Standard ERC-20 tokens inside, standard ERC-721 token outside.
Who This Is For
Crypto-native analysts who have been sharing calls on X or Discord but never had a way to monetize their insights directly. A BSKT lets them put real capital behind their thesis and earn fees from holders who trust it.
DeFi protocols looking to offer curated exposure to their ecosystem. A lending protocol could create a BSKT of all the major assets it supports, giving users diversified exposure through a single token.
DAOs managing treasuries. Instead of holding a static mix of stablecoins and governance tokens, a DAO could allocate treasury funds to BSKTs managed by proven onchain managers with verifiable track records.
Where Onchain Portfolio Management Still Falls Short
We would be dishonest if we did not mention the limitations:
- Liquidity constraints. BSKTs are only as liquid as their underlying tokens. A basket full of mid-cap tokens with thin order books will be expensive to mint and redeem. This is a real barrier for larger allocations.
- No performance guarantee. Permissionless creation means anyone can deploy a basket, including people with no strategy and no experience. The leaderboard and verification system help surface quality, but holders still need to do their own research.
- Gas costs on mainnet. Minting a basket with five underlying tokens means five ERC-20 approvals plus the mint transaction. On Ethereum mainnet during congestion, this gets expensive. L2 deployment helps, but it is not free.
- Smart contract risk. BSKTs rely on smart contracts. Contracts can have bugs. The code is audited and open source, but that does not eliminate risk entirely. This applies to every DeFi protocol, not just Alvara, but it is still a real consideration.
If you want to create your own basket token, our guide on how to create your first onchain ETF walks through the entire process.