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Investing through index funds
What is an index fund?
Antraditional index fund is made up of stocks/ bonds and is designed toreflect a market index. Index funds usually invest in thecomponents that make up the index theytrack. Well-known index funds include the S&P 500 or the DowJones Industrial Average.
Acryptocurrency index fund follows the same model, but tracks digitalassets rather than stocks and bonds.
Why would you want to invest inan index fund?
Simplicity: For those who don’t have time to closelymonitor the crypto market, investing in an index is often seen as oneof the simplest ways to diversify an investment portfolio. Anyone can investtheir funds in an index, gain exposure to a diverse array of assets, andaccess competitive performance. Investors also need little experience to investin an index.
Cost-efficiency: Investing in an index can also be morecost-efficient compared to buying each asset separately.
What are the risks?
As with all investments,investing in an index fund is not without risk.The index will fluctuate in value as tokens are bought and sold. So,it’s important to be aware that you could potentially lose your initialinvestment.
Also, note that it is possibleto over-diversify. If your portfolio is over-diversified you may not get thefull upswing. If one asset increases by 10X and the others don’t, you won’t getthe 10X return you’d receive if you’d made an individual pick.
You can get overall greaterreturns with individual investments, however, indexes do tend tooutperform the overall market.
Crypto Index Funds
Metaverse Index (MVI)
TheMetaverse Index (MVI) is an index created by Index Coop andis a portfolio of tokens designed to reflect the movement of business andcultural fields toward a virtual, metaverse environment.
The top crypto exchanges for investingin Metaverse Index Stocks include Uniswap (V3), Uniswap(V2), and Hoo.
The MVI currently holds thefollowing tokens:
Illuvium (ILV): is creating what is thought to be the first AAAgame built on the Ethereum blockchain.
Axie Infinity Shards (AXS): is the governance token of Axie Infinity, theleading play-to-earn game.
Enjin (ENJ): is the token that powers Enjin’s NFT ecosystem,which allows businesses to develop, monetise and trade gaming NFTs.
Decentraland (MANA): the native currency of Decentraland, thedecentralised metaverse world.
The Sandbox (SAND): the token behind The Sandbox, the platform thatallows players to create and monetise on-chain games.
WAXE (WAXE): a dedicated e-commerce blockchain that enables NFTvalue transfer for major gaming studio partnerships.
Audius (AUDIO): Audius is a music streaming protocol that linkscontent creators and their fans.
Ethernity Chain (ERN): the token used by collectors to farm rare NFTs onthe Ethernity Chain platform.
NFTX (NFTX): a protocol used to create ERC-20 tokens backed byNFT collectibles to unlock liquidity.
Terra Virtua (TVK): Terra Virtua is a platform that facilitates thetrading of digital collectibles/
Rarible (RARI): Rarible is an NFT marketplace where users canmint, buy, and sell digital items and collectibles.
WHALE (WHALE): WHALE is a currency underpinned by rare NFTs heldin the WHALE Vault.
Decentral Games (DG): is a Metaverse Casino in Decentraland.
REVV (REVV): an ERC20 token that supports play-to-earnmotorsport blockchain games created by Animoca Brands.
Muse (MUSE): the protocol NFT20’s governance token thatenables the tokenisation of NFT assets, allowing them to be traded ondecentralised exchanges.
Meme (MEME): a meme coin that’s become a decentralisedprotocol for farming NFTs.
DeFiPulse Index (DPI)
The top crypto exchanges forinvesting in the DeFi Pule Index include UniSwap (V3), UniSwap(V2), KuCoin, AEX, and CoinW.
The DeFiPulse Index is an index that follows the performance ofDeFi assets across the market. The index is weighted in proportion tothe value of each token’s circulating supply.
The DPI currently holds thefollowing tokens:
Uniswap (UNI): a popular decentralised trading protocol thatfacilitates the automated trading of DeFi tokens.
Aave (AAVE): a DeFi protocol that enables the lending andborrowing of crypto.
Loopring (LRC): an Ethereum-based token designed to facilitatethe building of decentralised crypto exchanges.
Maker (MKR): the governance token of MakerDAO (decentralisedorganisation) and Maker Protocol (software platform).
SushiSwap (SUSHI): a decentralised exchange that utilizes smartcontracts.
Compound (COMP): a DeFi lending protocol that enables users toearn interest on their crypto.
Synthetic (SNX): a DeFi protocol that offers on-chain exposure toa range of assets.
Yearn.Finance (YFI): a DeFi service that allows users to maximiseprofits through yield farming.
Ren (REN): a protocol designed to provide interoperabilitybetween different blockchain platforms.
Rari Governance Token (RGT): the governance token of Rari Capital, a DeFirobo-advisor that autonomously earns yield.
Balancer (BAL): an automated market maker (AMM) developed onEthereum.
Badger DAO (BADGER): a decentralised automated organisation thatbuilds products to simplify the use of Bitcoin as collateral.
Kyber Network Crystal V2 (KNC): a hub of liquidity protocols designed to offereasy access to liquidity pools at the best rates.
Harvest Finance (FARM): a platform that automatically farms the highestavailable yield from new DeFi protocols.
Instadapp (INST): a platform that enables users to manage and buildtheir DeFi portfolio.
Vesper (VSP): A DeFi platform that offers access to high yieldopportunities.
mStable Governance Token: Meta(MTA): a stablecoin infrastructureon which DeFi applications can be built.
