Introducing Onchain Separately Managed Accounts (Onchain SMAs)

We are excited to announce the launch of Onchain SMAs – a game-changing solution from L1 that redefines how wealth management operates by merging the best aspects of traditional finance with the flexibility and innovation of decentralized finance (DeFi) and crypto rails.

This next-generation investment vehicle introduces yield-generating, programmatically rebalanced, and 24/7-liquid separately managed accounts, giving investors and asset managers unprecedented control and efficiency over their portfolios. Designed for tax-aware active strategies, model portfolios, and direct indexing, Onchain SMAs optimize returns in ways previously inaccessible through traditional platforms.

Why Onchain SMAs Matter In Today's Market

Today’s financial system holds over $100 trillion in investable assets, yet many of these remain locked into legacy systems with limitations on access and programmability. With Onchain SMAs, L1 bridges this gap, providing the instant settlement, autonomy, and programmability that modern investors and asset managers demand.

Key features include:

1. Immediate Cost-Savings: You can save 100bps on qualified custody fees, on average, charged by traditional crypto SMA providers.
2. Yield-Generating Opportunities: Take advantage of income streams through onchain activities such as staking, lending, and market-making.
3. Programmatic Rebalancing: Automated portfolio adjustments ensure optimal allocation aligned with predefined strategies.
4. 24/7 Liquidity & Access: Manage portfolios and execute trades anytime without the constraints of traditional market hours.
5. Tax-Aware Investments: Real-time tax-loss harvesting helps keep more profits in your pocket.

Additionally, Onchain SMAs empower investors to maintain custody of their assets, which makes onchain SMAs not subject to the SEC's custody rule while enabling secure, compliant, programmatic management of investment portfolios.

Two Types of Onchain SMAs to Fit Every Strategy

L1 offers two customizable types of Onchain SMAs tailored to meet diverse investment needs:

1. Programmatic SMAs: Pre-set strategies with rebalancing triggers ideal for automated portfolios, arbitrage, and more complex models.
2. Actively Managed SMAs: Fully customizable accounts offering managers the ability to rebalance, trade, and execute transactions anytime—perfect for multi-asset portfolios and direct indexing.

Who are Onchain SMAs for?

Onchain SMAs are a flexible vehicle to fit a wide range of investor profiles. They are asset agnostic – you can allocate to any tokenized asset (crypto-native or otherwise), and build a custom, multi-asset class portfolio that fits every investor's needs. However, early users of Onchain SMAs so far include:

• Crypto-native individuals: Early investors in crypto often hold large, concentrated token positions at a low-cost basis. Onchain SMAs are a great way for these investors to diversify without triggering a tax event, as they can contribute in-kind to any strategy, index, or model portfolio through this new vehicle.
• Investors with existing crypto exposure looking for yield: Strategies that provide yield on tokens such as ETH or BTC (via cbBTC and wBTC) and others are especially popular among investors. Investors include individuals and family offices who already hold crypto at qualified custodians, centralized exchanges, or already from self-custody, and who are looking for safe ways to generate yield. Onchain SMAs allow investors to maintain full custody of their assets, in contrast to previous cycles, where yield-generating strategies were predominantly offered by centralized platforms that ultimately faced bankruptcy.

Partners Supporting Onchain SMAs

L1 has partnered with Gauntlet, Safe, and other leading onchain asset management providers (soon to be announced) to ensure the security and scalability of its solutions. These collaborations are instrumental in bringing reliable onchain services to financial professionals worldwide.

To learn more about Onchain Separately Managed Accounts (Onchain SMAs) visit https://l1.co/onchain-smas