Galaxy Digital, the listed cryptocurrency trading firm run by Mike Novogratz, has launched a decentralized finance (DeFi) index fund, a passively managed vehicle that tracks the performance of the newly-launched Bloomberg Galaxy DeFi Index.
Announced Thursday, the Galaxy DeFi Index Fund seeks to provide institutional investors access to returns based on the performance of DeFi tokens. It offers exposure to major decentralized lending and exchange platforms like Uniswap, Aave, Maker, Yearn and others.
The fund is seeded by NZ Funds, a wealth management firm that manages over $2 billion of New Zealanders’ savings. (The amount being contributed to the DeFi index fund was not made public.)
Institutional DeFi?
Explosive yields being created on cryptocurrencies and stablecoins placed on decentralized lending platforms have caught the attention of institutions, but many are unsure or skittish about getting direct exposure to the experimental DeFi world.
As such, an index fund tracking a benchmark backed by heavyweight names like Galaxy Digital and Bloomberg is an attractive proposition.
The constituents represented in the Bloomberg Galaxy DeFi Index are selected based on institutional trading and custody readiness in the United States, as well as quality of pricing, according to a press statement.
Each constituent will represent no more than 40% of the index and no less than 1% of the overall value. DeFi protocols will be considered for addition or removal on a monthly basis, according to investor documents.
As of Aug. 1, 2021, the index consisted of the following assets and weightings:
- 40% UNI
- 18% AAVE
- 12.7% MKR
- 10% COMP
- 5.4% YFI
- 5% SNX
- 4.3% SUSHI
- 1.8% UMA
“The blockchain-based infrastructure behind DeFi is maturing at an accelerating rate and clear examples of how this new technology can disrupt financial services are emerging in real-time,” said Steve Kurz, Galaxy Digital’s head of asset management. “Our unique DeFi Index Fund provides investors with institutional-grade exposure to the future of financial services.”