The Case for Separately Managed Accounts in Crypto

— Brian Huang, Co-founder at Glider

One of the biggest opportunities in crypto is that we can rethink financial products from first principles.

Too often, though, we do the opposite. We take structures from traditional finance, wrap them in smart contracts, and call them innovation.

Managed vaults are a good example. Vaults were an important early primitive in DeFi. They made it easier for users to access strategies, automate yield, and participate in onchain markets without manually managing every position. But as the space matures, it is worth asking a harder question:
Are vaults actually the right long-term model for onchain investing?

Over the past few months, we’ve seen curators lose user funds for a multitude of reasons. Even the seasoned curators, without naming names, have not been spared.

Vaults have risk and users should be compensated for that risk. However, ultimately, the long tail risk is not well understood or compensated for. What that leads to is remarks like “vault curators have lost more user funds than they have created in returns.” Again, without naming names.

We’ve heard more about TradFi institutions coming onchain to become curators. “TradFi institutions like BlackRock will be better at curating risk. They’ve been doing it for decades.”

I don’t buy that argument. TradFi is far less knowledgeable when it comes to onchain risks. I don’t think they will be able to curate better than the incumbents, at least not with our current primitives. Nor will they ever want to risk client funds in vaults they don’t truly understand or control. Vaults are not the right primitive for institutions to get on chain.

And that’s what leads me to believe there is a better alternative.In the onchain world, where you should always have full control and access to your assets, separately managed accounts (SMAs) is a much better paradigm.

Let’s get into it.

What onchain SMAs actually are

In traditional finance, separately managed accounts ensure user funds are never commingled. If both Alice and Bob have accounts with Charlie, a wealth manager, those accounts may execute the same strategy, but are ultimately kept entirely segregated. Alice’s money stays in her account and Bob’s money stays in his account. Charlie, as their wealth manager, has permission to trade on behalf of Alice and Bob.

The same structure can exist in DeFi. Both Alice and Bob have smart wallets each owned by their EOAs. Charlie, now an agentic wealth manager, is granted permissions to do things with the funds in these smart wallets. The system can even be set up such that Alice or Bob has to approve of changes Charlie makes before they hit their accounts. Importantly, Charlie also never has access to the private keys of either Alice or Bob.

Charlie curates the strategy, but Alice and Bob retain full control over their assets. They can change the asset composition whenever they want and they can also revoke Charlie’s permissions at any time. And lastly, Alice and Bob never put their funds into a single place.

This system is onchain SMAs.

Now, back to why managed vaults are a poor choice:

Managed vaults concentrate risk

The most obvious issue with managed vaults is smart contract risk.

When a vault pools large amounts of user capital into a single contract, it creates an attractive target. If that contract has a bug, a faulty integration, bad assumptions, or exploitable logic, every depositor is exposed at once.

DeFi has seen this movie many times. Shared contracts become honeypots. One exploit can wipe out an entire pool of users.

This is not just about whether a given team writes good code. It is structural. When you aggregate funds into one place, you aggregate risk into one place too.

Separately managed accounts reduce that risk profile in an important way. They avoid forcing everyone into the same pool and eliminate the need for a giant shared vault contract as the center of gravity. There is no single omnibus vehicle sitting in between the user and the market.

That does not mean risk disappears. Nothing in finance is risk-free. But it does mean the model is fundamentally more aligned with how crypto should minimize unnecessary trust and concentration.

Better transparency, better user experience

Separately managed accounts are more transparent.

In a vault model, users often deposit assets and receive some representation of their position in return. What they actually own, what the vault is doing, and where risk sits can become harder to understand. The abstraction might be convenient, but it comes at the cost of clarity.

In an SMA model, the user can see the account, the assets, and the actions being taken. The portfolio is theirs. The wealth manager or agent is managing their assets, yet not replacing them with an opaque pooled structure.

That directness matters.

Crypto should not make ownership feel more abstract than traditional finance. Everything a user owns should be obvious and accessible 24/7.

Investing should be personalized, not one-size-fits-all

There is another important limitation to managed vaults: they are inherently standardized.

A vault is typically one strategy for many users. Everyone gets the same exposure, the same rebalance logic, the same risk profile, and the same constraints. That can work for simple products, but it is not how real investing works.

Investing is personal.

Different users have different goals. Different risk tolerances. Different time horizons. Different preferences around liquidity, yield, asset selection, and tax considerations. Some want broad exposure. Some want capital preservation. Some want a rules-based portfolio. Some want to exclude certain assets or protocols entirely.

Vaults are not well-designed for that world. Separately managed accounts are.

With SMAs, each portfolio can be tailored to the account owner. The mandate can be personalized. The rules can be specific. The automation can be customized. You preserve the benefits of intelligent portfolio management without flattening everyone into the same pooled product.

In the era of AI, SMAs are a much better fit for where wealth management is going: more programmable, more personalized, and more aligned with the user.

There should be nothing between you and your assets

One of the most important ideas in crypto is direct ownership.

Not exposure through a wrapper. Not a claim on a pooled vehicle. Not dependence on an intermediary holding the assets on your behalf.

Ownership.

That is what makes this technology powerful. Assets can live in an account the user controls, and software can operate around that account without requiring the user to hand everything over to a central manager or pooled contract. We should be cutting out rent-extracting middlemen.

This is why separately managed accounts are so compelling.

In an SMA model, each user keeps assets in their own account. The portfolio is managed according to that user’s strategy, preferences, and constraints, but the assets do not need to be commingled into a shared vault. Management happens at the account level, not through a pooled structure.

Full self-custody is finally here. Why have we decided to relinquish control of our assets to a curator?

The future of onchain investing

The long-term opportunity in crypto is not just to rebuild existing financial wrappers onchain. It is to create better models entirely.

The best version of onchain investing should be:

• Non-custodial
• Automated
• Hyper-personalized
• Transparent
• Directly owned

Managed vaults gave the ecosystem a useful starting point. But they are not the end state.

Separately managed accounts point toward something better: a world where users do not have to choose between intelligent management and direct ownership. They can have both.

That, to me, is the more important promise of crypto.

Not just better access to financial products, but better financial architecture.

Our view at Glider

At Glider, we believe the right model is simple:

There should be nothing between users and their assets.

We've modeled our architecture after SMAs to give users access to automation and agents without compromising on custody or control. Our users never pool their assets together, even when sharing the same strategy.

Portfolio management should happen at the account level, not by forcing users into pooled vehicles. The future of investing onchain should preserve direct ownership while making execution, rebalancing, and portfolio management dramatically easier.

Crypto gives us the chance to move beyond the inherited structures of traditional finance.

We should take it.