NFT INDEX - NFTI

The NFT Index is a digital asset
index designed to track tokens’
performance within the NFT industry.

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The NFT Index is a capitalization-weighted index that tracks the performance of decentralized financial assets across the market.

No Impermanent Loss

Uses market capitalization for component weights, not fixed percent, so it does not suffer underpeformance from impermanent loss.

Cheap & Efficient

Eliminating the need to perform countless costly transactions manually saves you time and money.

Diversified Portfolio

Always less volatile than more concentrated portfolios. Downside protection due to holding a wider selection of tokens.

The NFT Index
tracks important
NFT assets.

View the exact holdings on TokenSets

VIEW HOLDINGS

NFT INDEX  

NFT Index Construction

VERSION 0.2

Objective

The NFT Index is a digital asset index designed to track tokens’ performance within the NFT industry. The index is weighted based on the value of each token’s circulating supply and liquidity. The NFT Index aims to track NFT projects in Decentralized Finance that show a commitment to ongoing maintenance and development.

Token Inclusion Criteria

As part of the inclusion assessment, NFT Index considers a wide range of characteristics of the token, the project and the protocol. These criteria can be placed in four groups:

Token’s Descriptive Characteristics

  • The token must be available on the Ethereum blockchain.
  • The token must be associated with a decentralized finance protocol.
  • The token must not be considered a security by the corresponding authorities across different jurisdictions.
  • Protocol must be in one of the following token categories on Coingecko or CoinMarketCap: Non Fungible Tokens, Entertainment, Virtual Reality, Augmented Reality and Music. More categories will be added in the future as the market matures.
  • Whitelisted tokens which match the criteria and can be included into the index listed at Pro-blockchain

Token’s Supply Characteristics

  • It must be possible to reasonably predict the token’s supply over the next five years.
  • At least 7.5% of the five year supply must be currently circulating.
  • Token must have reasonable and consistent DEX liquidity on Ethereum.
  • The token’s economics must not have enormous locking, minting or other patterns that would significantly disadvantage passive holders.

Project’s Traction Characteristics

  • The project must be widely considered to be building a useful protocol or product.
    • Projects focused on competitive trading/holding, having Ponzi characteristics, or projects that exist primarily for entertainment, will not be included.
  • The project’s protocol must have significant usage.
  • The protocol or product must have been launched at least 90 days before being able to qualify to be included in the index.
  • The protocol or project must not be insolvent.

Protocol’s User Safety Characteristics

  • Security professionals must have reviewed the protocol to determine that security best practices have been followed to maintain user assets safe under different circumstances.
    • Alternatively, the protocol must have been operating long enough to create a consensus about its safety in the decentralized finance community.
    • The selected tokens must have sufficient liquidity across a variety of trading platforms.
  • In the event of a safety incident, the team must have responded promptly and addressed the incident responsibly in the aftermath, providing users of the protocol with a reliable solution and the decentralized finance community with adequate documentation to provide transparency about the incident. 
  • The selected tokens must have sufficient liquidity across a variety of trading platforms.

Index Calculation

Formula

The NFTI uses a combination of root market cap and liquidity weighting to arrive at the final index weights. We believe that liquidity is an important consideration in this space and should be considered when determining portfolio allocation.

TW = 70%*RMCW + 30%*LW

where,

TW – token weight in the $NFTI

RMCW – square root of market cap weighted allocation

LW – liquidity weighted allocation

  • Circulating Supply is the number of tokens circulating the last time circulating supply was determined multiplied by price. The first circulating supply was determined on February 03, 2021, using Pro-blockchain as a reference source.
  • Price is the market price of the token in USD.

The number of the assets is 10.

Index Maintenance

The index is maintained monthly in two phases:

Determination Phase

The determination phase takes place during the third week of the month. It is the phase when the changes needed for the next reconstitution are determined.

  • Additions and deletions: The tokens being added and deleted from the index calculation are determined during the third week of the month and published before monthly reconstitution.
  • Circulating Supply Determination: The NFT Index currently references Pro-blockchain circulating supply number. The Circulating Supply is determined during the third week of the month and published before the monthly reconstitution.

Reconstitution Phase

Following publication of the determination phase outcome, the index composition will change to the new weights on the first working day of the following month. I.e components will be added or removed, and weights adjusted.

Any funds based on the NFT Index will be expected to execute any buy and sell transactions during the first week of the following month.

Issuance of NFTI token

Any client can issue new NFTI Index tokens using the DeFi TokenSets protocol. To do this, he needs to initially have tokens that are included in the index and deposit them as a pledge into a smart contract to receive NFTI.
This allows to reduce the spreads between the fair value of the NFTI token and its value on DEX platforms.

Redemption of NFTI token

Any NFTI token holder can use the decentralized TokenSets protocol to receive the tokens that are included in the index, in exchange for the NFTI token.