The new fund will enable accredited investors and financial advisors to gain exposure to decentralized finance (DeFi) applications and assets.
The launch of the fund follows the success of Bitwise’s 10 Crypto Index Fund (OTCQX: BITW), which currently has $800 million in assets under management. Bitwise’s DeFi fund will hold a portfolio of assets that power the most popular DeFi services. According to the company’s press release, the fund’s holdings will be screened for important risks, weighted by market capitalization, and rebalanced each month.
Bitwise’s Crypto Index Committee, supported by the Bitwise Decentralized Finance Advisory Council, will oversee and adjust the formal index methodology behind the fund.
Initial constituents of the index are Uniswap, Aave, Synthetix, Maker, Compound, UMA, Yearn.Finance, 0x, and Loopring. Uniswap and Aave will hold the most weight in the index, with 25.14% and 23.37% respectively.
Anchorage, the first federally-chartered digital asset bank in the U.S., will act as the fund’s custodian.
The company has set the fund’s expense ratio at 2.5% to cover costs related to custody, tax, accounting, and management fees. In the future, the fund may also seed to facilitate public trading of shares in secondary markets.