By
Steve Muchoki
April 4th, 2024
The new index will keep a check on nine DeFi tokens for starters, and work as the basis for Galaxy’s passively managed fund.
Manhattan-based media company Bloomberg, in collaboration with Galaxy Digital, has announced a project that involves diversification of its crypto offering via the inauguration of the Bloomberg Galaxy DeFi index.
In a declaration made today, both the companies announced an index launch. Galaxy Digital introduced its latest fund called Galaxy DeFi Index Fund, which will target the expanding institutional investment interest for a better understanding of DeFi projects.
The project is built to quantitatively predict the ability of the biggest Decentralized Finance (DeFi) protocols by market value that furnish their users with financial service without a middleman, such as brokers or banks. The new index will keep a check on nine DeFi tokens for starters, and work as the basis for Galaxy’s passively managed fund. Some of the assets in the index include Uniswap, Aave, Maker, Compound, Yearn, and Sushi.
A few years ago in 2018, Bloomberg and Galaxy disclosed the Bloomberg Crypto Index, which consisted of tokens like Bitcoin and Ether. The launch of this new index comes after the inauguration of a competitor index managed by Bitwise, which was disclosed in February.
DeFi is one of the steepest growing sectors of digital assets that mirror financial services like loans and trading. According to Alan Campbell, head of Product Management for Bloomberg’s Multi-Asset Index business, Decentralized Finance is materializing as one of the most significant investment themes in crypto. Campbell addresses the rising importance of liquidity and institutional custody solutions, and how DeFi networks have become the go-to choice for institutional investors around the world.
Steve Kurz, partner and head of Asset Management at Galaxy Digital, says that as a company, Galaxy is always looking for institutions that are curious enough to include crypto ecosystems in their natural way of functioning. Elaborating on the DeFi systems, Kurz says that the Blockchain-based infrastructure behind DeFi is evolving at a heightened pace that could potentially take over the existing traditional financial systems. This particular association with Bloomberg and their DeFi index entails calculated and processed data that will unveil the future of financial services.
The components reflected in the DeFi are shortlisted according to institutional trading and custody readiness, along with the pricing. No component can possess more than 40% of the index and less than 1% of the benchmark’s total estimate. The appending of the list of DeFi protocols will take place after every month. There can also be cases of removal of protocols from the current list.