As the DeFi sector continues its exponential growth, a new index from BTSE and BNC frees investors from the pressure of picking individual winners - and offers them exposure to 10 of the most popular DeFi tokens in a single index.
BTSE in association with crypto index builders Brave New Coin has today launched the BBDX DeFi index available as a perpetual swap contract. The index tracks a basket of the 10 largest DeFi assets by market cap, across a range of pricing sources, and at sub-second frequency.
Fig 1. BBDX index – Constituent Tokens
Picking winners in the DeFi space is problematic for traders and investors, as the sector is growing rapidly – with a constant stream of new products and innovation. Cryptocurrency exchanges have faced challenges in keeping up with the host of new DeFi tokens, frequently listing assets that are brand new, unaudited and largely illiquid. This can cause chaos in the markets on the first few days and weeks of trading, while bugs in smart contracts are identified and a healthy market structure is created.
In contrast, an index-based product allows investors and speculators to take a long or short position on the whole trend and to avoid the pitfalls of rushing into any single speculative new asset.
At BNC, CEO Fran Strajnar says the market demand for sophisticated and well-designed products giving exposure to the DeFi sector “is truly exponential.” He says that the rapid rise of the industry has seen some DeFi indices rushed to market, but that BNC took its time developing the BBDX. “Our aim was to design a solid methodology with sufficient transparency to be replicated and understood, and better longevity than the current DeFi indices that have released by various exchange operators. We’re pleased to see our DeFi index power perpetual swaps on BTSE and, as they aim to cater to institutional traders, we believe this product will be well received.”
At BTSE, CPO Brian Wong says safe product design is critical when it comes to derivatives. “By partnering with Brave New Coin, we give our users more transparency in the benchmark methodology and instrument design process as well as a greatly expedited product roadmap. It’s our goal to bring the best practices of capital markets into the DeFi space, thus attracting new institutions who wouldn’t trade anywhere with vague rules.” The BNC-BTSE DeFi Index methodology is available on both the BNC website and BTSE website.
Brave New Coin’s third-generation crypto index infrastructure has been in high demand since its launch in early 2020 from organizations including BTSE, the Toronto Futures Options and Swaps Exchange (tFOSE), and the Leverj exchange.