What Happened: Bitwise Asset Management announced yesterday the launch of the world’s first DeFi (decentralized finance) crypto index fund.
Bitwise is the creator of the largest crypto index fund – the Bitwise 10 Crypto Index Fund (OTCQX: BITW) with over $800 million in AUM.
Like the Bitwise 10 Crypto Index Fund, Bitwise’s DeFi Index fund will track the value of the tokens included in the index, offering investors indirect exposure to the DeFi market.
Why It Matters: While the current crypto rally has far exceeded 2017 levels, sending Bitcoin (BTC) and Ethereum (ETH) to new all-time highs, the biggest gainers weren’t the market-leading cryptocurrencies.
The largest gains belonged to certain DeFi tokens with strong fundamentals, with some returning over 300% since the beginning of the year.
Decentralized finance (“DeFi”) refers to the emerging category of digital, peer-to-peer financial services technologies that enable trading, loans, interest accounts, and more.
Essentially, DeFi services aim to cut out traditional Wall Street intermediaries using public blockchains and crypto assets as opposed to legacy systems.
Traditional Finance – Opaque, Siloed, Regional, Rent Seeking, Hierarchical
Decentralized Finance – Transparent, Open, Global, Neutral, Grassroots
Pick your future.
— Ryan Watkins (@RyanWatkins_) February 18, 2021
“DeFi is the story of 2021,” said Matt Hougan, chief investment officer for Bitwise Asset Management.
“Today there are decentralized trading venues handling over $30 billion in volume per month; automated lending programs making individual loans as large as $200 million; and the total estimated value of funds currently locked into DeFi-related contracts recently crossed $40 billion.”, he says.
The new fund holds a portfolio of DeFi tokens that power these services, including Uniswap (UNI), Aave (AAVE), SNX, and MKR, which make up over 70% of the index.
What Else: Anchorage Digital Bank, which became the first federally chartered digital asset bank in the U.S this January, will serve as the Fund’s custodian.
The fund is available to accredited investors as a private placement and will reportedly seek approvals to be publicly traded like BITW and GBTC (OTCMKTS: GBTC).
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