21Shares unveils two DeFi multi-crypto ETPs

May 18th, 2022 | By | Category: Alternatives / Multi-Asset

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21Shares has launched two new directly backed crypto asset ETPs in Switzerland, each providing exposure to a basket of leading tokens within the decentralized finance (DeFi) industry.

Ophelia Snyder, co-Founder and President of 21Shares

Ophelia Snyder, co-Founder and President of 21Shares.

The 21Shares Layer 1 ETP (LAY1 SW) and 21Shares DeFi 10 Infrastructure ETP (DEFII SW) have been listed on SIX Swiss Exchange and BX Swiss Exchange, respectively.

LAY1 provides exposure to some of the largest crypto assets powering so-called Layer 1 blockchains – primary networks that can validate and finalize transactions without the need for another blockchain.

Layer 1 blockchains form the technical foundation of the DeFi universe upon which DeFi applications (known as dApps) are built.

Bitcoin, by far the world’s most well-known cryptocurrency, runs off a Layer 1 blockchain; however, the Bitcoin network contains a significant scalability problem that limits its capability to handle large amounts of transaction data in a short span of time. Due to Bitcoin’s issues with scalability and adaptability, its blockchain has not been favoured by dApp developers.

DEFII, meanwhile, also invests in a basket of leading Layer 1 blockchain assets, as well as the largest tokens powering the most popular dApps, thereby providing a more rounded exposure to the DeFi ecosystem.

Both ETPs adhere to a full ‘physical’ replication approach whereby each ETP share is 100% collateralized by a proportional investment in its underlying crypto assets which are stored using an institutional-grade custody solution provided by Copper.

Each ETP comes with an expense ratio of 2.50%.

Ophelia Snyder, co-Founder and President of 21Shares, said: “Our financial system is at the beginning of a paradigm shift. A plethora of new blockchain-based applications around DeFi and Web3 are already under development and making enormous progress. They are the components of a completely new, democratic, and inclusive financial system.

“With our new thematic crypto ETPs, we’re providing investors with two broadly diversified investment vehicles at the ideal time to participate in this revolution.”

Layer 1

The 21Shares Layer 1 ETP is linked to the Vinter 21Shares Crypto Layer 1 Index which was developed by European digital assets index provider Vinter in partnership with 21Shares.

From an initial universe of the largest 15 crypto assets, the index selects up to ten of the largest Layer 1 blockchain assets based on 90-day average market capitalizations. Constituents are weighted by market capitalization subject to an individual cap of 30% to promote diversification. Rebalancing occurs quarterly.

As of 18 May, the index contained five assets: Binance Coin (32.0%), Ethereum (27.8%), Solana (16.1%), Cardano (15.4%), and Avalanche (8.7%).

DeFi 10 Infrastructure

The 21Shares DeFi 10 Infrastructure ETP, meanwhile, tracks the Vinter 21Shares DeFi 10 Infrastructure Index which selects up to five Layer 1 blockchain assets as well as up to five dApps, choosing those with the largest 90-day average market capitalizations.

The index weight of each category (Layer 1 and dApps) is set at 50%. Within each category, assets are weighted by market capitalization. Rebalancing also occurs quarterly.

As of 18 May, the index contained seven assets: Ethereum (37.3%), Uniswap (22.0%), Chainlink (21.5%), Binance Coin (7.6%), Aave (7.5%), Solana (2.7%), and Avalanche (1.4%).

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