I recently came across a new token in Coinmarketcap that left me intrigued; CMC20. That is the Coinmarketcap 20 Index DTF. It turns out CMC20 is not just a new token but a type of token called Decentralized Token Folio (DTF) whose value is fixed relative to a basket of assets. CMC20 runs on the Binance Smart Chain blockchain.

This token is backed by the Reserve protocol. Reserve is a platform that allows to create tokens linked to an index. In this case the Coinmarketcap 20 Index, which includes the top 20 coins by market capitalization, excluding stablecoins, pegged tokens and tokens under litigation or restricted investment factibility.

CMC20 DTF is currently backed by these assets:

As can be seen in the graph, an investment in CMC20 is equivalent to investing in some of the most popular cryptocurrencies in the market.

An investor looking to gain exposure into digital assets can purchase this index DTF, or others like this, and will profit of the increasing rate of adoption of cryptocurrencies in general. It is not necessary to pick one coin over another, investing in this asset is basically an investment in the crypto market as a whole.

This type of tokens is the digital equivalent to the Index Funds that have been a part of traditional finance for decades. Institutions and pension funds rely heavily on these funds in order to mitigate risks while getting exposure to potential gains.

This article was intended for entertainment purposes only, and does not constitute financial advice.