CoinShares Introduces DeFi Index Token for Institutional Investors

| Updated
by Darya Rudz · 3 min read
CoinShares Introduces DeFi Index Token for Institutional Investors
Photo: Depositphotos

The DeFi Index token consists of wrapped assets – the company’s gold token DGLD (wDGLD), Bitcoin (wBTC), and Ethereum (wETH). 

CoinShares, the world’s first digital asset investor to launch a regulated Bitcoin (BTC) investment fund, has released decentralized finance (DeFi) Index Token to target institutional investors. Named CoinShares Gold and Cryptoassets Index Lite (CGI) token, it was built on the Ethereum (ETH) blockchain.

According to CoinShares, the DeFi Index token is an adaptation of the CoinShares Gold and Cryptoassets Index (CGCI) the company launched back in May 2020. It consists of wrapped assets – the company’s gold token DGLD (wDGLD), Bitcoin (wBTC), and Ethereum (wETH).

As for the index, it utilizes the concept of volatility harvesting by forming a basket of crypto assets and combining it with gold using weighted-risk contribution as a rebalancing mechanism. According to CoinShares’ document, CGCI aims to reduce volatility as well as yield superior risk-adjusted returns in contrast with a number of alternative strategies like holding crypto assets or gold alone.

CoinShares Chairman Danny Masters stated:

“When [institutional investors] came to the commodity space, they wanted an index.”

Further, Masters added that the same story will take place with digital assets.

CoinShares’ Vision of Bitcoin’s Future

CoinShares is one of the public companies with the largest Bitcoin portfolios. The company believes that Bitcoin and blockchain networks are “landmark innovations that will fundamentally reshape the global financial system, and investors should be able to participate in this transformation.” Besides, CoinShares executive chairman Daniel Masters is sure that those portfolio managers who don’t invest in Bitcoin are taking a career risk. Previously, he said that not having it in your portfolio could now get you fired. 

Last month, CoinShares even launched its physically-backed Bitcoin Exchange Traded Product (ETP), CoinShares Physical Bitcoin (BITC). Initially, BITC appeared on the regulated SIX Swiss Exchange and had a base fee of 0.98%. It launched with approximately $200mn in AUM, a level that allows BITC to meet institutions and corporates’ baseline for investment consideration.

According to CoinShares analysts, Bitcoin portion in a 60% stock and 40% bond portfolio should total 4%.

Meltem Demirors, CoinShares chief strategy officer, explained:

“Our research has found that in a traditional 60-40 portfolio, a 4% allocation to bitcoin balances the reward as well as the risk of drawdowns.”

Besides, Demirors believes that regulatory issues will unlikely be a problem for Bitcoin. She said:

“The regulatory issues have been around for a long time, we’ve been dispelling them for a long time. At this point, our belief is: Bitcoin is not a question of if, but when. We certainly believe, you know, the best time to invest in bitcoin was yesterday – the second best time to allocate is today.”

While Demirors is warning investors should not allocate much to Bitcoin, the currency is hitting new records. Last week, its market cap surpassed $1 trillion. Besides, it soared to a new all-time high (ATH) at $56,421.14 on Friday.

Bitcoin News, Blockchain News, Cryptocurrency News, Currencies, Ethereum News
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