The new index tracks the performance of major protocols in decentralized finance, such as Uniswap and Aave
Bloomberg announced yesterday that it was launching a benchmark for decentralized finance (DeFi) through a collaboration with digital asset financial services and investment management firm Galaxy Digital.
The Bloomberg Galaxy DeFi Index has the ticker DEFI and is being launched alongside a passively managed fund that tracks its performance, called the Galaxy DeFi Index Fund, which is available on the Galaxy Fund Management platform.
The head of product management for Bloomberg’s multi-asset index division, Alan Campbell, explained: “Decentralized finance is growing as the next big investment theme within the cryptocurrency. As institutional custody and liquidity solutions continue to grow, DeFi has become an increasingly attractive option for institutional investors, and we will continue to work with Galaxy to expand our cryptocurrency index offering.”
Co-branded with Galaxy, the benchmark is managed by Bloomberg Index Services and tracks the performance of the largest DeFi protocols by market value. Pricing quality, institutional negotiation, and custody readiness in the United States were all factors considered in the process of selecting 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 a fast pace 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 provide calculated exposure to the future of financial services.”
Earlier this month, the index comprised 40% Uniswap (UNI), 18% Aave (AAVE), 12.7% Maker (MKR), 10% Composite (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.
DeFi’s explosive growth has seen more and more investors yearn for exposure to it. In fact, last month, Grayscale announced the launch of its own DeFi investment product, which tracks the CoinDesk DeFi index.
The Grayscale DeFi Fund is similar in composition to the Bloomberg Galaxy DeFi Index, except that it has the addition of Curve (CRV) and Bancor Network Token (BNT), and does not contain 0x.