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Brief Introduction to Crypto ETF.
Since the first American Exchange Traded Fund (ETF) was launched in 1993, the development of ETF has come a long way. Nowadays, investors are generally aware that ETF is an indispensable financial tool. As of the end of October 2020, the amount of index products worldwide is about $10 trillion, and it is estimated that it will exceed $12 trillion by 2023.
In contrast, the development of ETF in cryptocurrency market is still in an embryonic stage, and it began to taken shape with the rise of DeFi.
In 2020, the cryptocurrency market has a new development opportunity. With the rise of DeFi projects represented by COMP, YFI, UNI and AAVE, the value of Token has been improved by means of Mining, AMM, Farming and Aggregators. It makes the cryptocurrency market is no longer a single spot trading stage and gradually forms the base currency represented by BTC and ETH, public chain ecology represented by ETH, BSC and SOL, DeFi ecology represented by COMP, YFI, UNI, AAVE and Sushi, and NFT ecology represented by Flow, MANA, ENJ and CHR, the whole market and ecology are gradually getting matured.
The cryptocurrency market has transitted from the spot trading and mining stage to the DeFi + Farming stage, and the crypto ETF has come out.
With the boom of DeFi, an increasing number of investors start to tune in to the cryptocurrency market. But for those newcomers, the market is not so friendly. Investors need to not only screen out potential and valuable targets from many projects, but also face various complicated processes such as wallet use, intelligent contract screening, high gas handling fee, etc.
For ordinary investors, the simpler the investment, the better. They have the opportunity to invest without being proficient in the complex operations. Therefore, the value of ETF index investment gradually appears.
In fact, index investment does not need investors to know too much about specific assets, but an overall understanding of the industry is needed. Anyone can allocate their assets to the index products, such as ETF or mutual fund, so as to obtain the investment exposure of a variety of asset portfolios and gain larger profits. This is undoubtedly a "HODL".
Despite crypto index products may be few in number and the differences between them are small, the index products of DeFi have been emerging in the past few months. In the meantime, with the rise of liquidity mining, many token indexes provide additional benefits for liquidity providers (LP). Therefore, by becoming the LP of the DeFi index, the investor's portfolio will obtain higher passive returns while holding DeFi tokens. This makes crypto index one of the most attractive investment opportunities in DeFi.
In the traditional financial market, the amount of ETF products is dozens of times that of the stock market. We strongly believe that with the development of the cryptocurrency market, the crypto ETFs will grow up and become the mainstay of the cryptocurrency market.