Better Index Funds Built with Tools that Already Exist

Better Index Funds Built with Tools that Already Exist

By benlakoff | Charged Particles | 26 Jul 2021


 

At Charged Particles, we often get VERY excited about the possibilities emerging with NFTs.

Our first decentralized dApp went live in February, but this is just barely scratching the surface of what is possible. We always say NFTs enabled with Charged Particles technology have “endless possibilities” — which is no joke.

Leveraging Charged Particles Protocol, and the current dApp as is, we’ll walk through how one could create a Better Index Fund with Charged Particles + NFTFY or NIFTEX Protocol.

Curious how? Charged Particles allows users to create “Nested NFTs” which allow a NFT (standard ERC-721) to hold other tokens.

Ready to start building these? You can, today.

Index Funds

According to Investopedia, an index fund is “portfolio constructed to match or track the components of a financial market index, such as the Standard & Poor’s 500 Index (S&P 500). An index mutual fund is said to provide broad market exposure, low operating expenses, and low portfolio turnover. These funds follow their benchmark index regardless of the state of the markets.”

In the traditional publicly traded markets, index funds are gigantic with somewhere >$11T in Assets Under Management (AUM).

Index funds in crypto are starting to gain in popularity as well. The ability to buy one asset that passively tracks a grouping of similar assets is very appealing.

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Current Index Projects are around $175M Assets Under Management (AUM)

Want broad exposure to the NFT market? You can easily purchase pieDAO’s PLAY or IndexCoop’s MVI and get access to a number of NFT Protocol Governance Tokens in the space.

Is this enough?

NFT Index Funds

I get the question all the time… “How do I get broad exposure to NFTs?”

Yes, we all think that NFTs will be a big thing, but it’s hard to jump on OpenSea and buy some individual art pieces to jump in on the wave. That’d be like wanting to ‘invest in art” and going down to a local art dealer and starting to acquire a few pieces — not easy.

There are a few “NFT Index Fund” options out there as mentioned above, but I think we can do better.

Hint: It uses Nested NFTs.

Here are the steps to make a Improved NFT Index Fund* leveraging Charged Particles Technology.

1 — Mint a new NFT (or use one of your favorite ones you have already…)

2 — Go to app.charged.fi and navigate to “Manage”, select your NFT of choice and deposit inside of that NFT:

> A few curated pieces of art from the community (Art NFTs that are expected to increase in value)

> Key ART NFT Protocol Governance Tokens (e.g. $RARI, $IONX, $OGN, $AUDIO, $SUPERBID, $MEME, etc.)

> Key METAVERSE Protocol Governance Tokens (e.g. $MANA $SAND $DG $CUBE $AXS)

> Key Art Fractionalized Tokens (e.g. $WHALE, $B20, any others from NIFTEX)

> Metaverse Digital Real Estate NFTs from CryptoVoxels, Decentraland, and wherever else.

> Throw in some PLAY — a Metaverse NFT Index from PieDAO

3 — Take this Charged Particle Basket NFT and go to NFTFY or NIFTEX. Fractionalize into ERC-20 tokens.

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In 3 steps, you’ve created your own Index of fungible tokens* (ERC-20s) that represent a broad overview of the NFT ecosystem.

Want something more targeted? You’re the creator here, design the index you’d like to see.

Charged Particles is live on Polygon, so you can even play around / try this out at a fraction of the layer 1 gas costs.

*Note: Fractionalized NFTs are likely treated as securities by many jurisdictions, but this is a hypothetical way to combine existing protocols (e.g. Charged Particles for the NFT Container, NFTFY / NIFTEX for the fractionalization) and solve a real need.

Summary

NFTs will continue to be used in more innovative ways across new and existing platforms. Charged Particles allows users to do so much more with this (already amazing) technology.

Charged Particles dApp allows users the ability to mint (for free) NFTs, Energize / Charge their existing NFTs (deposit assets inside them, also free) and bundle things in ways that get us really excited.

Integrations with what we have, and where we’re going will lead us to wild new frontiers that we can barely imagine.

Have an idea for a dApp built using Charged Particles Protocol? Check out our accelerator.

Come build the future of NFTs with Charged Particles.

About Charged Particles

Charged Particles is a protocol that allows users to deposit ERC-20 tokens(ANY tokens) into an NFT. A scarce NFT (e.g. Financial Product, Art, Collectible, Virtual Real Estate, In-Game Item, etc.) can now be transformed into a basket holding a number of other tokens. The Principal amount can be time-locked inside the NFT, and through integration with Aave’s aTokens, the programmable yield from these DeFi yield-generating assets is just a few clicks away.

What’s in your NFT?

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benlakoff
benlakoff

Charged.Fi


Charged Particles
Charged Particles

A protocol fusing Decentralized Finance (DeFi) and Non-Fungible Tokens (NFTs). Users to deposit a primary asset such as DAI into their NFTs, which is converted to a yielding asset (e.g. aDAI). Principal & interest (“Charge”) from the deposit asset in then “locked” into the NFT.

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