Introducing iTHINK Portfolios and the DeFi Crypto 8 Index (DEFI8)

iTHINK Portfolios

In recent years, the crypto ecosystem has rapidly increased in users, value, and the number of assets, which led to many new investors entering the space in hopes of participating in this growing market. As with any financial markets, the optimal investing strategy for an investor is to diversify through a range of different assets. An excellent way to do so is with an index product like an ETF (Exchange-Traded Fund) or index fund. Indexing is a popular strategy in traditional investments because they can easily capture a specific market exposure in a single asset; they consistently outperform actively managed funds and most individual stocks in the long run; and it takes the emotion out of investing by following a set of predetermined rules which prevents the biggest pitfall of most active strategies.

While there are crypto funds and portfolios available for investors, few are focused on utilizing index strategies. iTHINK Portfolios was created to serve this purpose. It was founded by a group of crypto enthusiasts with professional backgrounds in the ETFs industry. We aim to build a suite of thematic crypto index portfolios that are completely rules-based. Our goal is to provide products that can help investors seamlessly diversify and take the guesswork out of crypto investing.

Tokenized Funds

We believe the way digital currencies are traded and stored with every transaction recorded on the blockchain will become the future norm of our investing system. To adopt this new technology, our crypto portfolios will be tokens or “Tokenized Funds” that can trade and transfer on the blockchain, unlike the traditional investment management structures.

We build our token products on TokenSets, a leading asset management protocol that allows the bundling of multiple crypto-assets into a fully collateralized basket which is represented as an ERC-20 token on the Polygon network (Polygon is a layer 2 scaling solution for Ethereum-compatible blockchain networks that enables faster transactions at near-zero cost). By using this infrastructure, we created our first token product, the DeFi Crypto 8 Index (DEFI8).

The DeFi Crypto 8 Index (DEFI8)

DeFi Crypto 8 Index (DEFI8) is an equal-weighted index strategy that tracks the performance of the eight largest tokens in the decentralized financial industry.

Decentralized finance is one of the fastest growing segments in the crypto ecosystem. There are literally hundreds of DeFi tokens for investors to choose from in the market. However, all these choices can add cost and complexity when making decisions. DEFI8 can eliminate this complexity and ease the process for crypto investors. It provides a way to track the performance of the decentralized finance market as a whole by holding a single token.

Index Strategy & Maintenance

We use a rules based, systematic approach to screen tokens that meets the following criteria:

• Associated with a decentralized finance infrastructure or protocol such as payment, data, swap, staking, lending & borrowing.
• The token must be available on the Ethereum blockchain.
• Not a stable coin or cannot be fiat-pegged.
• Sufficient liquidity on the Polygon network.

After screening, select the top eight tokens based on market-capitalization (circulating supply number x price) and allocate equally in the index.

The index is maintained monthly in two phases. The first phase takes place during the last week of the month, which is to determine any tokens addition or deletion based on the index screening and selection strategy. The second phase takes place on the first business day of the month, which is to reconstitute and rebalance the index. During the second phase, additions or deletions determined from the first phase are incorporated into the index and all the holdings are readjust to equal weight.

Product Characteristics

• Number of underlying tokens: 8
• Format: ERC-20
• Network: Polygon
• Allocations: Equal-Weighted
• Rebalance frequency: Monthly
• Fee: 1% annually — scales linearly up from 0 over the duration of 365 days
• Contract Address: 0x2224a419FBb1Bf9635799e09fBD6dB39bB1e5D98
• Where to buy: TokenSets.com

Constituents and weightings as of December 23rd, 2021

Conclusion

We’re very excited to have our first token product launched and will continue to work on building other theme-based crypto index portfolios. We look forward to offering a suite of token products that can provide a simple, easy, and efficient way for investors to participate in the crypto industry as it continues to grow. If you have any questions or feedback, we would love to hear from you.

To learn more, please visit our website and be sure to follow us on Twitter and Instagram for updates on our index and upcoming products!