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The concept of an exchange traded fund (ETF) was first introduced to the financial market in the early 1990s. Since then, ETFs have served as baskets of individual securities tracking an index of top stocks, commodities, bonds, or another basket of assets. Investors turn to ETFs because, in addition to providing portfolio diversification and risk management, it offers flexible trading options at lower costs.
ETFs offer convenient exposure to flexible investment strategies in traditional finance but what about exposure to some of the leading cryptocurrencies? As much as the crypto industry has taken central elements from the financial world and applied them to a decentralized environment, there hasn’t been an S&P 500-like ETF or index tracking the performance of the largest coins.
Until now.
Crypto Index, the self-described S&P of crypto, recently launched its first tokenized ETF: the i20 token. The i20 token represents an equal distribution of investments in the top 20 cryptocurrencies based on market capitalization, excluding stablecoins.
As the crypto market begins to recover from a global market downturn, current trends point to rising demand from retail and institutional investors. However, many potential investors struggle to manage and diversify their portfolios across the still vastly complex cryptocurrency landscape. The i20 token addresses this common obstacle to crypto investing by serving as a single cryptocurrency through which every investor can purchase a stake in the value of the top 20 global cryptocurrencies, excluding stablecoins, securely and with minimal overhead risk.
“We are witnessing an incredible demand for diversified investment opportunities within the crypto space,” says Adiel Barzel, Co-Founder of Crypto Index. “At Crypto Index, we see our launch as a pivotal milestone for the industry because it provides users with a one-stop-shop for exposure to the top 20 cryptocurrencies at any given time. The i20 token is flexible, transparent, and provides both experienced and inexperienced crypto investors with a convenient solution to diversified long-term investing across a wide range of currencies. We are excited to start this journey, and look forward to additional token launches, exchange listings, multisig-wallets, and more.”
As a token modeled after common ETFs traded on global stock exchanges, each investment into the token’s fund is equally distributed across the top 20 currencies (5% each), fully backing the token by the corresponding amount of each coin. The top 20 index updates on a bi-weekly basis, adjusting accordingly to any market cap fluctuations in top 20 currencies, with the profits going into the fund.
As done in traditional finance markets, Crypto Index provides a measurement and market tracking system for all the various cryptocurrencies that can be used to determine which coins will be included in the top 20 for a given two-week period. With this diversified system, the company provides a convenient onboarding process for the mass of retail investors by simplifying and maintaining the portfolio-building process with automatic rebalancing.
Crypto Index plans in the near future to establish a “Core Analyst Committee” of five expert analysts to conduct regular market analyses. In the event a top 20 crypto faces a freefall, the committee can vote with a four-fifths majority to remove the specific currency from the index, boosting the token’s transparency and security. In this scenario, the next currency on the list would be added to the i20 index.
