Gauthier Le Meur

Understanding the Indexes

Covering the basics

1. What's an index?

An index is a portfolio constructed to track the perfomance of the underlying components. Similarly to how the S&P500 tracks the top 500 largest publicly traded companies in the U.S, Alongside indexes track performance of batches of cryptoassets (which we'll cover in more detail in this article). Index funds are generally considered ideal core portfolio holdings for long term, passive exposure. Rather than picking out individual cryptoassets, investors can buy the market or themes.

2. What is rebalancing?

Alongside indexes perform automatic periodic rebalancing, without you needing to make any changes to your investments. Rebalancing is the process of realigning the weightings of the underlying components of the index. This means periodically buying or selling the assets within the index to maintain the desired level of allocation within each asset, and properly track the changes in the market.

3. How does buying/selling work?

When investing in the index, the Alongside platform goes out to purchase all of the underlying components in the index with their respective proportions. In a simple index example with 50% Bitcoin and 50% Ethereum, buying $100 of the index means Alongside purchases $50 worth of Bitcoin and $50 worth of Ethereum. The inverse happens when you decide to sell your index for the proceeds. This ensures that all funds invested into our indexes are backed one to one with the underlying assets at all times.

The Alongside Indexes

The DeFi index ($DEFI)

DeFi, or Decentralized Finance, is a set of protocols which utilize the blockchain to replicate traditional banking services in a programmatic way. Rather than a company or entity making decisions on which services can be provided to whom as in traditional finance (TradFi), these decisions are built into code and executed programmatically.

The DeFi index combines a set of nine blue chip protocols central to the DeFi ecosystem. These protocols are picked based on adoption and usage by the users. Additionally, this index incorporates Ethereum exposure to balance out the volatility of the other nine components.

Methodology: Three core signals — project revenue, total value locked, marketcap

Number of assets: 10

Yearly Fee: 0.95%

Rebalancing: Monthly

The Alongside Crypto Market Index ($AMKT) (coming soon!)

The Alongside Crypto Market Index aims to be the most diversified way to invest in the crypto market for the long term. Alongside is creating a cross-chain index allowing a single purchase to buy all the top assets in the space. This index optimizes for capturing broad exposure, without focusing on a specific theme, and instead captures the most adopted projects across all of the crypto ecosystem.

Methodology: Circulating marketcap weights

Number of assets: TBD

Yearly fee: 0.95%

Rebalancing: Quarterly

The NFT Index (coming soon!)

NFTs (non-fungible tokens) are one-of-a-kind assets generally considered digital art on the blockchain. The NFT index tracks the performance of the top 10 blue-chip projects (you might have heard of CryptoPunks, for example) into a single investment. Alongside is finalizing the methodology, and this index will be available in Q1 of 2022.

Methodology: to be announced

Number of assets: 10

Yearly fee: to be announced