Alina: Welcome, everyone! We're excited to have Rok from Rethink.Finance with us today. Rethink.Finance is a peer-to-peer contract management system that facilitates the creation and management of on-chain investment vehicles on EVM networks. Rok, that sounds impressive and, to be honest, a bit intimidating! Could you start by explaining what Rethink.Finance is, what sets it apart from other asset management systems on the Ethereum blockchain, and how on-chain investment vehicles (OIVs) offer key benefits compared to traditional methods?

Rok: Absolutely, Alina. Rethink.Finance is an asset management solution designed to scale efficiently while minimizing the need for trust. The problem we're addressing is significant: in 2022 alone, over $20 billion was lost due to the principal-agent problem, where fund managers took excessive risks, losing investors' money. Traditional finance involves a lot of intermediaries—brokers, custodians, auditors—all of whom need to be trusted to act in the best interests of investors. Our goal is to remove these trust assumptions, making the process more transparent, easier to operate, and cost-efficient.

Unlike our predecessors in the space, such as Enzyme and dHEDGE, which have limitations like oracle dependencies and slow integration with DeFi protocols, Rethink.Finance supports all token standards, all DeFi protocols, and all EVM networks. This makes us a more scalable and versatile solution for asset management.
‍

Related Article: The Critical Role Of DeFi Insurance After Smart Contract Auditing‍

Alina: That makes a lot of sense, even for someone without a technical background like me. Is your solution more geared towards institutional or retail investors? And how do you manage to reduce operational costs while still allowing flexibility in asset management?

Rok: Great question. We're focusing on both, but our primary focus right now is on institutional use cases because the pain points there are more pronounced. However, our user experience is being developed to be simple enough for private individuals to manage assets for friends and family without major trust assumptions.

In terms of flexibility, we manage deposits and redemptions through cycles rather than automating them fully. This allows managers to ensure liquidity is available when needed. While this could be fully automated with scripts, the beauty of Rethink.Finance is that these scripts can even be run off-chain without introducing additional security concerns.

Alina: It really sounds like the future of finance! Can you elaborate on how OIVs handle various types of assets, such as liquid, illiquid, NFTs, and DeFi positions?

Rok: Sure! OIVs in Rethink.Finance are designed to support any position type—liquid, illiquid, NFTs, and composable DeFi positions. We do this by generating permissions that allow managers to interact with these assets in a secure way. Additionally, we ensure that these positions are valued correctly on-chain, so when investors enter or exit, they do so at the right price.

Alina: That’s fascinating. Could you also explain the role of managers in your system and how governance works within the Rethink protocol?

Rok: Managers are crucial in our system, and the permissions they are granted are defined during the onboarding process. We're working towards allowing anyone to create an on-chain investment vehicle by connecting their wallet and defining the assets and protocols they wish to interact with.

As for governance, we have two levels: protocol-level governance, which controls upgrades and fees, and OIV-level governance, which allows users to decide on permissions, valuation methods, and other settings. This decentralized approach ensures flexibility and security without the need for constant redeployment of contracts.
‍

More on DeFi Security: DeFi Exchange Audit. Why It's Important‍

‍

Alina: This decentralized approach really aligns with the blockchain philosophy. What challenges did you face while developing these smart contracts, and how did you overcome them?

Rok: One of the biggest challenges was building something without fully knowing what the end product would need to look like. In Web3, you can't just build fast and break things because you're dealing with real money. So, our approach has been more iterative and careful. Our CTO, Senka, did an excellent job with the MVP, and we’ve received great feedback, which has helped shape our roadmap for version two.

Alina: That’s impressive, Rok. Let’s talk about security—what measures have you implemented to ensure the safety and reliability of your platform, especially with the governance features?

Rok: Security has been a top priority. One of our main strategies was to build on top of existing, battle-tested contracts and standards, reducing the risks of introducing new vulnerabilities. We also conduct multiple audits with different firms to ensure everything is secure. We’re planning another audit soon, especially as we prepare for version two.

Alina: Speaking of audits, how did our recent audit at AuditOne impact your development process?

Rok: The audit was incredibly helpful, particularly around our net asset value calculation. Your team identified some potential overflow issues, which we’ve since addressed. We also added new features, like the ability to simulate calculations before they’re submitted for governance approval, ensuring everything works as expected.
‍

Read Next: The PenPie Hack: Understanding the September 2024 Reentrancy Exploit and the Role of Auditing in DeFi Security

Alina: I’m glad to hear that! Lastly, what’s next for Rethink.Finance? How do you plan to engage the community and continue developing your protocol?

Rok: We’re gearing up to increase our community engagement. Until now, we’ve been focused on building a product that truly solves problems, but we’re very close to achieving a strong product-market fit. Soon, we’ll be decentralizing the protocol even further, inviting the community to contribute, propose improvements, and help us continue evolving. Expect some exciting announcements in the coming months!

Alina: That sounds fantastic, Rok. We’re really looking forward to seeing what’s next for Rethink.Finance. Thank you for your time today, and best of luck with everything!

Rok: Thank you, Alina. It’s been a pleasure.