Introduction

ETFX is a decentralised ETF built on blockchain technology, offering a secure and easy way to invest in diversified cryptocurrency portfolios. The ETFX project is not planning to become yet another cryptocurrency exchange. Instead, it aims to benefit the ecosystem by offering a performant, transparent, and easy-to-manage decentralised financial instrument.

The Problem

Investing in individual cryptocurrencies can be complex and risky. There's a need for a simplified and secure way to invest in a diversified portfolio of cryptocurrencies.

What is an ETF?

An Exchange-Traded Fund (ETF) is an investment fund that is traded on stock exchanges, much like stocks. An ETF holds assets such as stocks, commodities, or bonds and generally operates with an arbitrage mechanism designed to keep it trading close to its net asset value, though deviations can occasionally occur.

Active vs. Passive ETFs

• Active ETFs: These are managed by a team of professionals who make decisions about how to allocate assets in order to outperform the market. Active ETFs typically have higher fees due to the active management involved.
• Passive ETFs: These track a specific index or benchmark (e.g., S&P 500) and aim to replicate its performance. Passive ETFs generally have lower fees since there is less active management involved.

Benefits of Traditional ETFs

• Diversification: ETFs typically hold a variety of assets, which helps in spreading risk.
• Liquidity: ETFs are traded on exchanges, providing high liquidity and ease of trading.
• Cost Efficiency: Lower expense ratios compared to mutual funds, especially for passive ETFs.
• Transparency: Holdings of ETFs are usually disclosed daily, providing transparency to investors.
• Flexibility: ETFs can be bought and sold throughout the trading day at market prices.

Our Solution

ETFX offers decentralised ETFs (ETFXs) such as ETFX:MEME and ETFX:SMART, tracking top cryptocurrencies in different categories. The initial product launch will focus on the passive decentralised ETF launch.

Key Features

• Easy Portfolio Management: Simplifies the investment process.
• Diversified Investment: Reduces risk through diversified portfolios.
• Enhanced Security: Utilizes blockchain technology for enhanced security.

Passive ETFX: Our decentralised Solution

Our passive decentralised ETFs aim to simplify cryptocurrency investments by providing a diversified and secure portfolio. Each purchase of our decentralised token, such as ETFX:MEME, will back its value with the underlying securities.

How It Works

• Token Purchase: When an investor purchases a ETFX:MEME token, the corresponding amount of funds is used to purchase a basket of cryptocurrencies.
• Tracking Indexes: ETFX:MEME tracks a specific group of indexes, namely the top 5 meme coins by market cap.
• Included Cryptocurrencies: The ETFX:MEME token includes Dogecoin (DOGE), Shiba Inu (SHIB), Pepe (PEPE), DogeWifhat (WIF), and Floki (FLOKI).
• Market Share Calculation: We calculate the market share of each included cryptocurrency and allocate the correct percentage towards each token.
• Value Allocation: This boosts the underlying value of ETFX:MEME by ensuring it accurately reflects the performance and market cap of the top 5 meme coins.

Token Offerings

ETFX:TOP

Tracks as the index of the top 5 (by market cap) cryptocurrencies.

ETFX:SMART

Tracks the top 5 smart contract cryptocurrencies (by market cap).

ETFX:MEME

Tracks the top 5 meme coins (by market cap).

Benefits of ETFXs

• Accessibility: Easy for users to invest without needing to pick individual cryptocurrencies.
• Security: Enhanced security through decentralised technology.
• Efficiency: Streamlined management of investments.

Technology

The ETFX platform is built on blockchain technology, providing transparency and security. Our team includes an ex-JP Morgan employee specializing in global ETF product launches.

Roadmap

1. Q3 2024: Initial Token Offering (ITO) for ETFX:MEME and ETFX:SMART.
2. Q4 2024: Platform launch and user onboarding.
3. Q1 2025: Launch of Active ETFX offering.
4. Q2 2025: Launch of ETFX:TOP passive ETFX product.
5. 2025: Expansion of ETFX offerings and continuous development.

The Big Picture

The launch of ETFX represents a scalable bridge from traditional finance into diversified cryptocurrency portfolios, helping to broaden access to cryptocurrencies for mainstream investors. This is quite an evolution from the early days of cryptocurrencies as a niche technology. But how did we get to this point? What has changed in the cryptocurrency and traditional finance worlds to enable cryptocurrencies' inclusion in the ETF wrapper?

Cryptocurrency's Big Leap

Cryptocurrencies, led by Bitcoin, have been on a journey since their inception, rising in terms of access, use cases, and market value. Bitcoin, for example, is the most widely adopted digital asset, holding over 50% of the $1.7 trillion market capitalization. Since its launch in 2009, several factors have driven Bitcoin adoption, including its potential to reimagine money for a global audience, even while it has exhibited volatility.

Among factors increasing adoption:

• Global Transactions: Cryptocurrencies can transact across jurisdictions, creating a potential “global internet of value” that allows assets to move frictionlessly at low cost and in near real-time across borders.
• Scarcity and Decentralization: Cryptocurrencies like Bitcoin are scarce assets, with a supply fixed in their code (e.g., Bitcoin's 21 million units). They are also decentralised and not subject to inflation.
• Accessibility: Cryptocurrencies are available to anyone with a mobile phone and an internet connection, meaning they can help more people to participate in the global financial system.

Three Big Shifts

A new era of access to cryptocurrencies through ETFX is now unfolding. Three significant shifts have taken place to create the conditions for this moment.

1. Global Forces Accelerate Investor Interest: The post-COVID-19 era has seen a rise in global inflation, geopolitical fragmentation, and banking and fiscal concerns. The future of finance is changing how households and companies use cash, borrow, transact, and seek returns. The growth of younger populations and the middle class means more people are used to living their lives virtually, which makes cryptocurrencies appealing.
2. Development of Ecosystem Infrastructure: There has been significant investment in crypto and digital assets more broadly, along with an inflow of human capital. Cryptocurrency trading infrastructure has improved significantly to better meet the needs of institutional players. The funding and infrastructure improvements have helped bolster custody, transparency, and security—critical infrastructure given the unique security challenges associated with digitally native bearer assets.
3. Regulatory Evolution: Policymakers have been assessing their existing financial regulatory frameworks to determine whether they provide adequate oversight of digital assets to ensure robust market participant protections while also allowing for growth and development of the asset class. This assessment has led some jurisdictions to develop new or modified regulatory frameworks for digital assets to address the unique way the assets are issued, custodied, and traded.

New Era of Access

Cryptocurrencies have arrived at this moment of expanded access through the launch of decentralised ETFs like ETFX. We believe that for many investors, ETFX could represent the preferred holding vehicle for diversified cryptocurrency portfolios, and that this launch represents a new era characterized by more access, choice, and convenience, all of which may benefit investors:

Access

ETFX provides investors efficient access in one standard wrapper to various cryptocurrencies. ETFX can help to reduce the complexities and operational burdens involved in owning individual cryptocurrencies outright. ETFX also means more types of accounts can hold the investment, from individual retirement brokerages to large institutional accounts, allowing investors to view their asset allocations and risk holistically.

Transparency & Liquidity

ETFX, over time, can improve markets by increasing price transparency to the underlying asset classes and adding a new avenue of liquidity through trading on traditional exchanges.

Monetization Strategy

ETFX aims to ensure long-term sustainability and growth through a diversified monetization strategy. Our approach includes:

Management Fees

A small annual management fee will be charged on the assets under management (AUM) for the ETFX tokens. This fee will be automatically deducted from the holdings, similar to traditional ETFs.

Transaction Fees

Minimal transaction fees will be implemented for buying and selling ETFX tokens. These fees will encourage trading while generating significant revenue over time due to the volume.

Staking and Yield Farming

ETFX will offer staking and yield farming opportunities where users can lock their ETFX tokens to earn rewards. A percentage of the rewards will be taken as a fee.

Premium Services

Premium services will be available for institutional investors or users seeking additional features such as advanced analytics, personalized portfolio management, and priority customer support. These services will be offered on a subscription basis.

Listing Fees

New tokens or cryptocurrencies seeking inclusion in the ETFX portfolios may be charged listing fees, providing exposure to a wider audience.

Partnership Programs

Partnerships with exchanges, wallets, and other crypto service providers will be developed to receive commissions or referral fees for directing traffic or integrating services.

Advertising and Sponsorships

With a substantial user base, ETFX will monetize through targeted advertising and sponsorships from related financial and crypto services.

Data Services

Aggregated and anonymized user data will be provided to institutional investors, research firms, and other interested parties for a fee, offering market insights and analytics.

Token Burn Mechanism

A token burn mechanism will be implemented where a portion of the fees collected are used to buy back and burn ETFX tokens, reducing supply and potentially increasing the value of the remaining tokens.

Educational Content and Workshops

Paid educational content, webinars, and workshops on cryptocurrency investment, blockchain technology, and decentralised finance (DeFi) will be offered.

This diversified monetization strategy ensures ETFX’s long-term sustainability and growth while providing value to its users and investors.

Conclusion

ETFX is set to revolutionize cryptocurrency investment by providing a secure, diversified, and user-friendly decentralised financial instrument. Projected to be a pioneering token in its class, ETFX aims to enhance the ecosystem by generating value rather than merely storing it.

For more information, visit https://etfx.cc.