The growing strides of Decentralized Finance (DeFi), a fast-growing offshoot of blockchain technology, has yet gained a boost as Bloomberg and Galaxy Digital joins forces to launch the Bloomberg Galaxy DeFi Index (ticker: DEFI).
Targets of the New Benchmark
The Bloomberg Galaxy DeFi Index is a benchmark designed to measure the performance of the largest decentralized finance (DeFi) protocols by market value that independently offer financial services. These protocols are governed by a uniquely designed smart contract and have no interference with a central financial intermediary, such as brokerages, exchanges, or banks.
The index fund is owned by Bloomberg, with co-branding with Galaxy Digital. The fund constituents are designed to take a minimum holding of 1% and a maximum of 40%. As of August 1, only Uniswap (UNI), the Automated Market Maker (AMM) powered decentralized exchange is the only constituent with 40% weighting.
The other constituents of the fund includes; AAVE (AAVE) 18.0%, Maker (MKR) 12.7%, Compound (COMP) 10.0%, Yearn.Finance (YFI) 5.4%, Synthetix (SNX) 5.0%, SushiSwap (SUSHI) 4.3%, 0x (ZXR) 2.8%, and UMA (UMA) 1.8%. Neither of these constituents is occupying a permanent position, the index will be reviewed month with possible additions or subtractions.
A New Tool to Monitor the Growth in DeFi
The world of DeFi has seen massive growth thus far this year. The total value locked by DeFi protocols grew from $20 billion as of December 2020 to $79.49 billion at the time of writing, according to DeFi Pulse. The Bloomberg Galaxy DeFi Index will further help keep track of this fast-growing market niche.
“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,” said Steve Kurz, Partner and Head of Asset Management at Galaxy Digital.
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