Bitwise Launches Institutional DeFi Index Fund as TVL Tops $50B

Crypto asset management firm Bitwise has entered the burgeoning decentralized finance market with its own index fund containing nine DeFi tokens.

Bitwise launched the new product on February 17, touting it as the “world’s DeFi crypto index fund.” It is only available to accredited investors. However, it shows an increase in interest from large institutional companies.

Bitwise was founded in 2017 and already manages one of the world’s largest crypto index funds with $800 million in assets under management – the Bitwise 10 Crypto Index Fund. This type of product offers broad exposure to a number of assets rather than investing in individual ones.

The Bitwise DeFi Crypto Index Fund will consist of nine leading DeFi assets: Uniswap (UNI), Aave (AAVE), Synthetix (SNX), MakerDAO (MKR), Compound Finance (COMP), UMA (UMA), Yearn Finance (YFI), 0x (ZRX), and Loopring (LRC).

Holdings and weights will change as the space evolves, the company added, but at the time of launch, 25% was in UNI, 23.4% Aave, almost 12% SNX, 10.6% MKR, and so on down the list.

The fund’s custodian is Anchorage Digital Bank, which became the first federally chartered digital asset bank in U.S. history in January and now secures over $5 billion in crypto assets, the release added.

$50 Billion Locked

Matt Hougan, chief investment officer for Bitwise Asset Management, stated that 2021 was the year for DeFi, highlighting some of the fledgling industry’s recent milestones;

“The growth and activity in the market is incredible. Today there are decentralized trading venues handling over $30 billion in volume per month; automated lending programs making individual loans as large as $200 million; and the total estimated value of funds currently locked into DeFi-related contracts recently crossed $40 billion.”

According to DappRadar, the actual total value locked for the entire space has just reached $50 billion for the first time. DeFi Pulse reports it at a lower $41 billion, but it has omitted some of the leading protocols so figures may not be accurate.

Other DeFi Token Indexes

The new Bitwise fund is technically not the first DeFi token index as there are existing ones from DeFi Pulse (DPI), PieDAO (DEFI+L), and Synthetix (sDEFI). However, it is the first offered to institutional investors and backed by a chartered bank.

The world’s largest crypto find provider, Grayscale, which recently closed its XRP trust, is also betting heavily on DeFi, having recently registered trust filings for a number of assets including Aave, Polkadot, Chainlink, Uniswap, SushiSwap, Yearn Finance, Compound, Maker, and Synthetix. These trusts are not operational yet, but it also demonstrates the growing interest in the DeFi space from institutions.

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