Bitwise Asset Management launched a decentralized finance sibling to its $800 million Bitwise 10 Crypto Index Fund on Feb. 17.
The new Bitwise DeFi Crypto Index Fund seeks to take advantage of the rapidly growing DeFi market, which is increasingly seen as a viable alternative to traditional finance, offering peer-to-peer financial services like loans and lending, decentralized exchanges, and derivatives.
Like the broader DeFi industry, the nine tokens in the Bitwise DeFi Crypto Index Fund have been on fire lately, with and Uniswap up nearly 300% in its six-month life, Aave up 800% since October, and Synthetix up more than 50x its launch price in about a year. The vast majority of those gains came this year.
“DeFi is the story of 2021,” said Matt Hougan, chief investment officer for Bitwise Asset Management, in a release. “The growth and activity in the market is incredible. Today there are decentralized trading venues handling over $30 billion in volume per month; automated lending programs making individual loans as large as $200 million; and the total estimated value of funds currently locked into DeFi-related contracts recently crossed $40 billion.”
The DeFi tokens in the fund are screened for risks and weighted by market capitalization, with balances updated monthly, the company said.
At launch, the Bitwise DeFi Crypto Index Fund holds nine tokens: about 25% in Uniswap (UNI), 23% in Aave (AAVE), 12% in Synthetix (SNX), 11% in Maker (MKR), and 9% in Compound (COMP). UMA, Yearn.Finance (YFI), 0x (ZRX), and Loopring (LRC) each comprise roughly 6% to 3.5%.
The fund is currently open only to accredited investors—meaning rich—and charges a 2.5% fee.
The fund’s custodian is Anchorage Digital Bank, which became the first federally chartered digital bank in the U.S. in January.
“DeFi is happening now, every day, and the growth is exponential,” said Diogo Mónica, president and co-founder of Anchorage Digital. “As the first national digital bank, we’re here to enable its broader adoption as a qualified custodian. We’re happy to enable more DeFi participation through Bitwise’s new fund.”