❓FAQ

General

What is Fume, and how does it work?

Fume is a web-based platform that leverages blockchain technology to automate fund administration. It removes the need for traditional intermediaries like registrars and transfer agents by replacing them with smart contracts. Fund managers can create on-chain funds, allowing them to streamline subscriptions, redemptions, NAV calculations, and fee management, all while maintaining compliance with regulatory standards.

Why should I use Fume instead of a traditional fund administration platform?

Unlike traditional platforms that add layers of complexity, Fume simplifies fund administration by moving the entire process on-chain. This removes intermediaries, reduces costs, increases transparency, and allows for faster, more efficient operations. Fume is particularly suited for funds managing digital assets but also supports traditional asset management strategies.

Is Fume a financial intermediary?

No, Fume is not a financial intermediary. It provides a software tool to automate the administration of a fund but does not control the underlying assets. The liquidity remains in a secure, segregated custody defined by the fund manager. Fume’s role is purely administrative, and it never holds or touches the assets.

What kind of funds can I set up using Fume?

Fume supports a wide range of fund types, including but not limited to:

• Digital Asset Funds: Funds investing in cryptocurrencies, tokens, and NFTs.

• Feeder Funds: On-chain feeders that collect capital in stablecoins and convert it to fiat for investment in traditional funds.

• Money Market Funds: Low-risk, liquid strategies for conservative investors, with hybrid on-chain and off-chain subscriptions.

• Hybrid Funds: Combining both traditional financial assets and digital assets, with flexibility to manage both on-chain and off-chain assets.

Do I need a fund license?

Unless you operate below a threshold (e.g. small AUM or a few investors), you should either use an existing fund vehicle or rely on our trusted partners to set up a new investment fund.

Investments

How does Fume handle fund subscriptions and redemptions?

Fume's protocol automates fund subscriptions and redemptions using smart contracts. Investors can subscribe to a fund by sending digital assets (like USDC or USDT) or traditional fiat currency. After a Net Asset Value (NAV) calculation, tokenized fund units are issued. Redemptions are handled similarly—when investors redeem their shares, the tokenized units are burned, and the liquidity is transferred back to the investor’s wallet.

Can my fund receive in-kind subscriptions?

Absolutely. In fact, our on-chain transfer agent fully automates the subscription and redemption procedures for in-kind subscriptions (e.g. stablecoin).

Can my fund receive fiat subscriptions?

We also leave the door open for investors who are still coming from the traditional financial system. The on-chain transfer agent keeps a record of fiat subscriptions as well.

What can an on-chain fund invest in?

Although the administration is performed on-chain via smart contracts, there are no limitations on the underlying assets class. Therefore you can invest in stocks, digital assets, real estate and more.

Technical

Which blockchains does Fume support?

Fume currently supports Ethereum and Arbitrum One blockchains. While both are compatible with Fume's protocol, Arbitrum One is the preferred choice due to its lower traFume supports Ethereum and Arbitrum One for on-chain fund operations. While both chains are compatible, Arbitrum One is preferred for its lower transaction costs and faster execution times. However, the underlying assets of the fund are not limited to these blockchains. Fund managers can hold assets on any blockchain or even off-chain with traditional custodians, centralized exchanges, or brokers, depending on their investment strategy. This flexibility allows for managing a wide range of asset types, from cryptocurrencies to traditional financial instruments like stocks or private equity.

What are tokenized fund units?

Tokenized fund units are digital representations of investors' ownership in a fund, issued on the blockchain. Unlike traditional securities, these units are automatically issued, transferred, and managed via smart contracts. Fume ensures that these tokenized units remain compliant with regulatory standards, and only whitelisted wallets (those approved through KYC checks) can hold or transfer them.

What is ERC-6909, and why does Fume use it instead of ERC-20?

ERC-6909 is a minimal, gas-efficient token standard that allows Fume to manage multiple token types within a single contract. It provides a simplified alternative to the ERC-1155 multi-token standard. ERC-6909 is better suited for fund units because fund units are not always fungible due to differences in entry/exit fees, lock-up periods, and high-water marks for performance fees. This flexibility ensures fair treatment of investors.

How does Fume ensure security?

Fume’s protocol has been designed with security by design principles. Only the fund manager and whitelisted investors can interact with the smart contracts, significantly reducing the risk of unauthorized access. Additionally, all operations are logged on-chain for full transparency. The platform uses multi-signature wallet solutions, rigorous code testing (including 100% code coverage and fuzzy testing), and re-entrancy guards to protect against common vulnerabilities.

What custody solutions are supported?

Fume is flexible when it comes to custody solutions. To receive subscriptions, fund managers can connect any custody service, including self-hosted wallets (e.g., physical hardware wallets), multi-signature wallets (e.g., Safe Wallet), MPC (Multi-Party Computation) solutions, or even centralized exchanges like Kraken. As for holding and investing the assets any off-chain platform can be used. The custody of the assets is always under the control of the fund manager.