Structured Investment: A New Choice for High-Net-Worth Investors in Web3

As restrictions on access to the secondary market tighten, along with factors such as high thresholds and long cycles for incubated investments, a more flexible and customizable investment approach is gradually becoming the focus of high-net-worth investors: structured products.

Structured investments are not a new concept unique to Web3, but rather a mature practice originating from traditional financial markets. In traditional markets, investment banks often bundle a basket of assets and layer them: the high-risk layer targets investors seeking high returns, while the low-risk layer attracts conservative funds through mechanisms such as priority repayment and capital protection. This concept has now been introduced into the Web3 space and has gained stronger programmability and composability due to the flexibility of smart contracts and token mechanisms.

Main Types of Structured Investments in Web3

fixed income products

This is the most common type of structured product. The project party or platform packages future partial rights to earnings (such as staking rewards, DeFi interest rates, protocol fee sharing, etc.) and sells them in the form of fixed annual returns to attract conservative funds. Some DeFi platforms also tokenize and split the rights to earnings, forming a "YT (Yield Token) + PT (Principal Token)" structure to meet different risk preferences.

convertible bonds/income certificate products

These types of products are commonly seen in primary investments or project collaborations, utilizing a strategy of "debt precedence + token conversion at opportune times." Investors obtain the right to purchase project tokens in the future by signing a SAFT or token subscription agreement, while also enjoying fixed returns, balancing conservatism and speculation.

Risk Layering Fund

This type of product packages a basket of assets and divides them into different risk levels, typically categorized into Junior and Senior layers. The Junior layer bears the main risks but offers higher returns, while the Senior layer enjoys preferential profit sharing and principal protection. This structure caters to the risk preferences of different investors while optimizing capital allocation.

platform-type structure product

Recently, structured investments are gradually transitioning from protocol-level peer-to-peer asset packaging to a platform and product-oriented approach. Exchanges, wallets, or third-party investment platforms dominate the completion of the "design-packaging-sales" closed loop, providing convenience for users who lack complex strategy capabilities but wish to obtain structured returns.

Legal Boundaries and Compliance Challenges

Participating in structured investments faces several key compliance issues:

1. Investor Qualifications: Many structured products are only available to qualified investors, and retail participation may pose legal risks.

2. Capital flow: The inflow and outflow of funds involves multiple regulatory requirements such as foreign exchange management and tax declaration.

3. Product Awareness: Investors must fully understand the product structure and risks, otherwise they may face legal liabilities.

4. Platform qualifications: It is also crucial to determine whether the platform has the corresponding qualifications for selling financial products.

Compliance Participation Recommendations

To reduce compliance risks, it is recommended to take the following measures:

1. Establish a clear identity structure, such as offshore SPVs, Hong Kong family offices, or Singapore exempt funds.

2. Ensure that the flow of funds is compliant, using bank accounts that match the identity structure, and complete foreign exchange and settlement through licensed institutions.

3. Carefully choose a platform and pay attention to its financial product sales qualifications, underlying asset disclosures, and dispute resolution mechanisms.

Structured investments provide high-net-worth investors with a "controllable entry" into Web3. It does not rely on market cycles and does not require in-depth technical understanding, but instead offers investors personalized risk/reward balance points through financial mechanisms. However, this investment approach also requires investors to have certain financial structuring capabilities, a stable identity structure, and funding channels, as well as a deep understanding of product logic.