Bitwise has launched the world’s first DeFi index fund today, simply named the “Bitwise DeFi Crypto Index Fund”. It will hold a basket of the largest DeFi assets, which will be tweaked on a monthly basis. The moves comes less than three weeks after their addition of UNI and AAVE to their 10 Large Cap Crypto Index Fund, which tracks the top-10 cryptocurrencies by market cap.
The company is bridging the gap between investors and the fast-paced DeFi ecosystem, which until now has been difficult for institutions to access.
The Bitwise DeFi crypto index fund
In its initial form, the fund will contain 9 major DeFi assets: UNI, AAVE, SNX MKR, COMP, UMA, YFI, ZRX, and LRC. Uniswap and Aave currently have the largest weightings, each accounting for almost a quarter of the fund’s total size.
The index will be re-balanced every month, according to a public set of rules which account for factors such as a coin’s market cap, trading volume, custody support, exploit risk and more.
Assets backing the index fund will be held by Anchorage, a digital asset bank based in San Francisco, California. Anchorage is both federally regulated and insured, protecting investors from custodial risk.
The minimum investment in the fund is set at $25,000, currently only catering to accredited investors. No performance fees will be charged, however a 2.5% expense ratio applies which includes everything from a management fee to custody costs.
Bitwise has also assembled a DeFi Advisory Council, who will consult the index committee without any influence on the fund.
This consists of five members including Michael Anderson of Framework Ventures, Ben Forman of ParaFi Capital, Avichal Garg of Electric Capital, Aleks Larsen of Blockchain Capital and Scott Lewis of DeFiPulse.
The DeFi fund will seek approval to trade publicly in the near future, in the same way as the Bitwise 10 Crypto Index Fund (BITW) and Grayscale’s Bitcoin Trust (GBTC).