Crypto Traded Indices, cryptocurrency investing made simple
Crypto Traded Indices (CTIs), are marketable asset-backed tokens that track the performance of crypto underlings, which can be an index (e.g. top 20 cryptos by market cap, top 10 privacy coins), a short crypto (e.g. inverse BTC), or a levered crypto (e.g. levered ETH). Unlike mutual funds, a Crypto Traded Indices trades like a common cryptocurrency. CTIs experience price changes throughout the day as they are bought and sold. Typically, as ETFs, they offer higher daily liquidity and lower fees than mutual fund shares, making them an attractive alternative for individual and institutional investors. Each crypto indice is an ERC20 token, backed by verified and audited reserves that match its Net Asset Value.
Inspired by the traditional financial markets
Just as CTIs, ETFs are tradable securities that track an index, commodity, bond or a basket of assets like an index fund. It is a type of fund that owns the underlying assets and divides the ownership of those assets into shares. In the traditional financial markets, ETFs have continued to defy gravity: according to Ernst & Young, global ETFs net assets have grown from $0.7 trillion in 2008 to reach an estimated value of $4.4 trillion in 2017 (a cumulative average growth rate of 20.2% over the period), and are forecasted to grow at a similar pace and reach $7.6 trillion in 2020. At Trakx, our view is that there is still significant potential to be unlocked in the crypto markets, and hence our mission to develop a one-stop shop for Crypto Traded Indices.
Why we believe that CTIs are great
· Instant diversification: Basket Crypto Indices allow investors to quickly gain portfolio exposure to specific cryptocurrencies and sectors (e.g. top 10 largest cryptocurrencies by market capitalization, top 10 largest social media Dapps). It also avoids users a constant rebalancing of their portfolio.
· Security: Trading cryptocurrencies might require accounts on multiple exchanges. Trading CTIs enable users to only have an account on Trakx.io to gain exposure to a diversified portfolio. The vast majority of each of the cryptocurrencies composing the index will be stored offline in cold wallets.
· Low cost: Investing in CTIs will be cheaper than open-end mutual funds or even individually buying multiple cryptocurrencies. Being passively managed, their fees will be cheaper than other cryptocurrencies mutual funds.
· Passive management: Designed to track an index, CTIs limit actively buying and selling securities. While there are advantages to active strategies, passive strategies tend to outperform active strategies on a historical basis and can provide better returns based on cost savings alone.
· Single access point: Trakx.io aims to become the one-stop shop for Crypto Traded Indices, providing CTIs for all kind of strategies (Long, Leveraged, Inverse, Basket). We simplify the user experience and avoid them the hassle of registering on several platforms with multiple KYCs.
· Trading flexibility: CTIs will be traded 24/7 on our platform and hence can be bought or sold at any time, with market makers ensuring liquidity and fair value pricing at their Net Asset Value. The pricing of CTIs is continuous during the day, and prices vary based on the underlying assets. CTIs investors know within moments how much they paid and how much they received after selling. Trakx.io will make investing in CTIs a seamless and straightforward experience: if a trader is bullish or bearish on a particular cryptocurrency or basket of cryptocurrencies, she or he will simply buy the corresponding Crypto Traded Index. To unwind the position, she/he simply needs to sell the same Crypto Traded Index.
· Transparency: CTIs will track a third-party index, thus limiting potential conflicts of interest. Plus, our underlying reserves will be constantly checked by a Big 4 Audit firm and our holdings will be published periodically. Users will be able to check what investment their CTI holds, their relative weighting in the structure and if the Crypto Traded Index has changed its position in any particular investment.
Trakx is building a one-stop shop for Crypto Traded Indices. Discover more about our project on our website and social media channels, such as Telegram http://t.me/trakx_io.
