New DeFi Index Targets ‘Proven’ Blue-chip Assets

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  • Phuture’s head of growth expects the next tens of mil­lions of cryp­to users to want “sim­ple expo­sure” to decen­tral­ized finance
  • Top assets in the index include Uniswap, Aave, Lido DAO Token and Compound

Decen­tral­ized cryp­to index plat­form Phuture has launched its first prod­uct as the com­pa­ny looks to sat­is­fy demand from investors seek­ing expo­sure to “blue-chip” DeFi assets.

The Phuture DeFi Index (PDI), avail­able on the Phuture app and Ban­cor pools, is designed for those who have dab­bled in bit­coin and ethereum and are now look­ing to invest beyond crypto’s two largest assets.

Phuture Head of Growth Charles Stor­ry called the cryp­to index space a nascent seg­ment with no clear win­ner. Though rough­ly 18% of the glob­al stock mar­ket is held in indices, he added, less than 1% of the total val­ue locked in decen­tral­ized finance (DeFi) are held in index prod­ucts today. 

“We believe that the next mil­lion of the next tens of mil­lions of users com­ing into the space will want to do so via sim­ple expo­sure and won’t be look­ing to man­age that them­selves,” Stor­ry told Block­works. “We think that’s insane.”

The com­pa­ny con­sid­ers a range of token char­ac­ter­is­tics when choos­ing the index con­stituents, such as its use­ful­ness, its role with­in cryp­to infra­struc­ture, how long it’s been oper­a­tional and its liquidity. 

Man­aged by code, the index is auto­mat­i­cal­ly rebal­anced month­ly. No one asset can account for more than 30% of the index.

PDI ini­tial­ly invests in sev­en assets, with the largest allo­ca­tions — about 30% each — going to Uniswap (UNI) and Aave (AAVE), fol­lowed by Lido DAO Token (LDO) and Com­pound (COMP). Oth­er assets include Yearn.finance (YFI), SushiSwap (SUSHI) and Alchemix (ALCX).

The launch comes as the num­ber of DeFi users has grown about 25 times from two years ago, accord­ing to cryp­to data firm Dune Ana­lyt­ics, reach­ing more than 4.7 mil­lion. Total val­ue locked (TVL) in the space stands at $112 bil­lion, Defi Lla­ma data show.

The lead­ing DeFi Index by mar­ket­cap is the DeFi Pulse Index (DPI), with $47 mil­lion in TVL. The index, which launched in Sep­tem­ber 2020, cur­rent­ly has as its top assets, Uniswap (UNI), Aave (AAVE), Mak­er (MKR), Loopring (LRC) and Syn­thetix (SNX), mak­ing up about 76% of over­all assets.

The crash of algo­rith­mic sta­ble­coin Ter­raUSD (UST) ear­li­er this month has shift­ed investor mind­sets, accord­ing to Phuture Head of Prod­uct Oliv­er Mehr, say­ing “safe­ty is becom­ing cool again.”

“There is a flight to qual­i­ty,” Mehr said. “They’re look­ing for assets that have stood the test of time, that are non-exper­i­men­tal, that have rev­enue and users and are real businesses.”

As a result, Phuture has exclud­ed gov­er­nance tokens of algo­rith­mic sta­ble­coins until the firm sees more evi­dence that they can sur­vive mul­ti­ple cycles of investor apa­thy and dis­tress, he said. 

Despite the growth of DeFi, the index launch comes as token prices have declined in recent months. UNI trad­ed at $5.52 on Wednes­day after­noon — down about 37% in the last month and 78% from a year ago.

“We think it’s an even bet­ter time to be invest­ing into these blue-chip assets due to the dis­lo­ca­tion between the under­ly­ing busi­ness mod­els and the price,” Mehr said. 

Found­ed in 2019, Phuture intends for PDI to be the first in a suite of index prod­ucts, expect­ing con­tin­ued growth in DeFi and Game­Fi with­in the next cou­ple of years.

The com­pa­ny said in April that it was part­ner­ing with Colony­lab to launch the Colony Avalanche Ecosys­tem Index, which will fol­low the PDI launch.


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  • Ben Strack
    Ben Strack is a Den­ver-based reporter cov­er­ing macro and cryp­to-native funds, finan­cial advi­sors, struc­tured prod­ucts, and the inte­gra­tion of dig­i­tal assets and decen­tral­ized finance (DeFi) into tra­di­tion­al finance. Pri­or to join­ing Block­works, he cov­ered the asset man­age­ment indus­try for Fund Intel­li­gence and was a reporter and edi­tor for var­i­ous local news­pa­pers on Long Island. He grad­u­at­ed from the Uni­ver­si­ty of Mary­land with a degree in journalism.

    Con­tact Ben via email at [email pro­tect­ed]

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