CoinShares Launches DeFi Index Targeting Institutional Investors

Key facts:

The index includes crypto assets collateralized with bitcoin, ether, and gold.

The platform is an update of the CGCI index launched in May 2020.

The London firm for the management of funds in digital assets, CoinShares, announced this Monday, February 22, the launch of a new index related to decentralized finance (DeFi). The service was built on top of the Ethereum network and will be available to institutional investors.

Named as CoinShares Gold and Cryptoassets Index Lite (CGI) token, the index will track a basket of collateralized assets with bitcoin, ether and gold. It is an update of the CGCI index launched in May last year.

The tokens that the index will track are: wBTC for bitcoin, wETH for the cryptocurrency of the Ethereum network and wDGLD, a token of the company adjusted to the prices of gold. Danny Masters, president of CoinShares, highlighted that the service seeks to address a growing need among investors.

‘Indices bring legitimacy and ease of access to new asset classes. When institutional investors came to the commodities space, they wanted an index. History is likely to repeat itself with digital assets, ”Masters said in an interview with Coindesk.

Diversification to minimize volatility

According to the service presentation document, the index uses the Shannon’s Demon portfolio methodology, according to which asset holding is divided into two: volatile assets (tokens and cryptocurrencies) and non-volatile assets (gold).

The portfolio balances on an established schedule, according to the original weightings, regardless of what happens to the market. Per the specs, the index only tracks ERC-20 tokens.

CoinShares noted that while volatility can pose challenges and uncertainty among investors, it also benefits can be obtained with proper management. The keyword would be diversification.

“The CGI is designed with the objective of providing a diversified exposure to the alternative asset space, so as to obtain a risk-return profile superior to that of holding such assets in isolation,” the document reads.

The DeFi market is also in boiling like that of cryptocurrencies. CriptoNoticias recently reported that this market kept about $ 37 billion blocked on its various platforms.

In January CoinShares expanded its radius of action in relation to cryptocurrencies. The institution launched a new exchange-traded bitcoin product (ETP) for its institutional clients. The ETP is physically backed, that is, the BTCs are available in collateralized form.