The new index tracks the performance of the biggest protocols in decentralised finance, such as Uniswap and Aave
Bloomberg announced yesterday that it was launching a benchmark for decentralised finance (DeFi) through a collaboration with digital asset financial services and investment management company Galaxy Digital.
The Bloomberg Galaxy DeFi Index has the ticker DEFI and is being launched along with a passively managed fund that tracks its performance called the Galaxy DeFi Index Fund, which is available on the Galaxy Fund Management platform.
Head of Product Management for Bloomberg’s Multi-Asset Index business, Alan Campbell, explained, “Decentralised finance is growing as the next major investment theme within crypto. As liquidity and institutional custody solutions continue to grow, DeFi has become an increasingly compelling option for institutional investors, and we'll continue working with Galaxy to expand our crypto index offering.”
Co-branded with Galaxy, the benchmark is administered by Bloomberg Index Services and will track the performance of the largest protocols in DeFi by market value. Quality of pricing, institutional trading and readiness for custody in the US were all factors considered in the selection process for protocols to be included in DEFI.
Galaxy Digital Partner and Head of Asset Management, Steve Kurz, added, “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. This partnership with Bloomberg and our DeFi Index Fund provides investors with data and tools that deliver calculated exposure to the future of financial services.”
As of the start of this month, the index comprises 40% Uniswap (UNI), 18% Aave (AAVE), 12.7% Maker (MKR), 10% Compound (COMP), 5.4% Yearn Finance (YFI), 5% Synthetix (SNX), 4.3% SushiSwap (SUSHI), 2.8% 0x (ZRX) and 1.8% UMA (UMA).
The addition and removal of DeFi protocols to and from the index will be considered each month.
The explosive growth of DeFi has seen more and more investors hankering for exposure to it. In fact, just last month, Grayscale announced the launch of its own DeFi investment product which tracks the CoinDesk DeFi Index.
The Grayscale DeFi Fund has a similar make-up to the Bloomberg Galaxy DeFi Index, except it has the addition of Curve (CRV) and Bancor Network Token (BNT), and is missing 0x.