Deftify Indexes 📊

Exploring our powerful tools for portfolio diversification ✨

Managing an investment portfolio isn’t easy. When you’ve got more than one asset to think about, knowing when to buy, when to sell, what charts to watch and what events to pay attention to requires dedication and hard work. For all but full-time professional investors, there just isn’t enough time in the day.

But what if there were an easy way to invest in multiple assets? One where the typical hassles are mitigated, and the risks are minimized?

Welcome to the exciting world of index funds.

In this article we look at what index funds are, how they can help your portfolio, and then dive straight into Deftify Indexes — our very own index fund tokens which are industry-firsts on several promising blockchains.

What is an index fund?

Index funds are investment vehicles that get their value from various assets within the fund. Generally speaking, the underlying assets will relate to a core idea or methodology which guides the index fund. A good example are S&P 500 index funds, which track the performance of 500 of the largest companies listed on US stock exchanges. The value of these index funds is derived from the underlying share value of all of the companies in the index — if one company moves drastically but the remainder don’t, the overall index price remains stable. If the entire market moves in a particular direction, the index fund is likely to follow.

These funds exist in both traditional and crypto markets, and are a good way to reduce risk when diversifying one’s portfolio.

While the mathematics behind calculating the value of an index fund can be a little complicated, the concept is actually very simple.

For example, imagine Bob wants to create an index fund called Crypto Index A. This index fund is designed to track the performance of crypto in general by following three of the largest crypto tokens. Bob buys 1 BTC, 10 ETH and 100 BNB, and puts them all into a secure wallet. Bob then issues Crypto Index A tokens to sell, the value of which is derived from the value of the underlying assets. If prices go up, so does the token. If they go down, the token goes down as well.

Why choose an index fund?

There are several reasons why someone might choose an index fund, and of course it ultimately comes down to your own financial decisions as well as your risk tolerance. Still, the arguments in their favor are convincing.

Less fees

Imagine our friend Bob from before buying BTC, ETH and BNB. This involves three separate transactions, and therefore fees at least three different times. Now imagine buying shares in the companies listed in the S&P 500–500 separate transactions, all demanding fees on every purchase. It can add up quite quickly.

As an index fund is a single asset representing many others, only one transaction is needed to gain exposure. Instead of buying BTC, ETH and BNB and having three transactions, buying Bob’s Crypto Index A would only require 1 transaction — and the outcome would be almost exactly the same. Index funds allow you to gain exposure to many different assets, but without the headache and expense of buying them all individually.

Reduced risk

Because index funds derive their value from all of their underlying assets, risk is reduced through price averaging. Imagine as an example Sally and John, who are interested in investing in crypto. Sally invests $100 into Crypto Index A, while John buys $100 worth of BNB on an exchange. The next day, BNB takes a massive hit and loses half of its value, leaving John majorly out of pocket. Sally, instead, loses much less — because BTC and ETH maintained a stable price, the value of Crypto Index A dropped less significantly. The price went down, but the average of the other assets kept it relatively high.

In highly volatile markets, index funds are a great way to gain exposure while reducing overall risk. If you believe in the long-term prospects of a particular market area, they can help you gain exposure without having to bet on individual projects which may or may not have a future. Sure, you might not catch the 100 baggers everyone dreams of, but you’re also less likely to lose everything if a project fails.

Excellent performance

Face it — investing is difficult. Rags-to-riches stories hide the fact that a significant number of people end up losing money in markets rather than making it. It might seem easy on Twitter and YouTube, but the market’s invisible hand is doing its best to make it as difficult as possible for us.

Index funds take a lot of the guesswork out of this. People make mistakes when they invest, but the market is never wrong — and an index fund is betting on the market. Warren Buffet once famously observed that:

“A low-cost index fund is the most sensible equity investment for the great majority of investors. By periodically investing in an index fund, the know-nothing investor can actually out-perform most investment professionals.”

And he’s right — over a 10-year period, index funds have historically outperformed actively managed hedge funds by a significant margin. If you don’t have the time to become a trading master, index funds might help you get ahead.

Introducing Deftify Indexes

Deftify Indexes are a core feature of our comprehensive investment ecosystem. Like every other index fund out there, they allow you to diversify your portfolio quickly and easily by gaining exposure to baskets of underlying assets in particular markets. But there’s one thing that makes our index funds different.

On Ethereum, index funds are a dime a dozen. But on other chains, they’re basically non-existent. Particularly with the explosion in the DeFi ecosystems of Fantom, Solana, Polygon and Avalanche, this is a serious missed opportunity for investors looking to gain exposure in these markets. With Deftify Indexes, we aim to be one of the first protocols bringing index funds to these exciting chains.

Deftify Indexes also serve our core mission of helping accelerate blockchain adoption and bringing the benefits of Web3 to the world. By providing an easy way to gain exposure to otherwise complicated markets, even rookie investors can benefit from growth in these exciting sectors. With Deftify Indexes, we’re helping to build a decentralized future based on fair finance.

Deftify Indexes are just one part of our exciting investment suite. If you’d like to know more about our other innovative products, head to our website and check out our whitepaper. And make sure you’re following all of our social channels as we get ready to launch later this year 🚀

The Deftify Team ⛰

About Deftify

Deftify is the world’s first Africa-focused crypto incubator and launchpad offering investors private round access to cutting-edge African innovation. In addition, our diverse index funds and integrated portfolio management tools give investors an edge not available on other launchpads.

Our platform is underpinned by the powerful DFTY token which investors need to stake to participate in private rounds. DFTY also unlocks a wealth of other benefits in Deftify and our partners, including Metacurse: an innovative P2E metaverse game currently in incubation.

Deftify offers streamlined crypto investing without compromising profitability.

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