Just a quick revisit here, after some recent re-thinking… Taking a look at the largest Indexes out there in the tradfi world I still believe there is a market here we are missing that could potentially be relatively easy to tap into.
A quick look at the top 2 largest tradfi crypto products shows the following.
- AUM: ~$1B
- Methodology: Market cap, monthly rebalance
- Holdings:
- Expense ratio (Streaming fee): 2.5%
- NAV: Historic average = somewhere between 10% premium and wtaf (seriously, take a look on the link^)
- Not permissionless: Imagine taking 2-5 business days to mint DPI! Using… PAPERWORK?!
Grayscale® Digital Large Cap Fund
- AUM: ~$500m
- Holdings:
- Expense ratio: 2.5%
- NAV premium: MAX PAIN (see link)
- Not permissionless:
WHUT?
Also this…
Index Coop Crypto Index (ICCI)
As you can see there is much of these products we can easily create and maintain with the potential to attract demonstratively large TVL.
Illustrative example:
- 62.5% WBTC
- 32.5% ETH
- 2% LINK
- 2% UNI
- 1% MATIC
@ 0.95%, market cap weighted, monthly rebal
Capturing just 1% of this market segment would net $15m TVL equating to $142,500 revenue pa.
I believe the business case here is pretty simple. PMF and TAM are evident. We can easily compete on fees, competency, performance and trade-ability. Not to mention its flippening proof.
How many small institutional investors are currently underserved due to being locked out of these substandard products? How many large institutional investors are unhappy or avoiding them due to their poor performance?
From a growth perspective, I believe products such as these can act as a gateway to our additional product lineup over time. If we look beyond what we would hold in our own personal wallets, to me there is clearly demand out there waiting to be supplied…