CRYPTO20 is an autonomous cryptocurrency-only portfolio
composed by utilizing an index strategy. The token sale funding
will be used to buy the underlying cryptocurrency assets
and CRYPTO20 will hold the top 20 cryptocurrencies by
market capitalization. CRYPTO20 cuts out the middleman,
the platform, and is thus able to offer significantly lower fees.
Index funds have consistently beaten the average managed
fund since their inception.
CRYPTO20 is not a platform, it is a fully functioning
product and its token value is not based on speculation but
rather the product benefits and net asset value of the 20
underlying cryptocurrencies. There are no broker fees, advice
fees or exit fees. CRYPTO20’s utility token is called C20. It
can be traded at any time, holdings are fully transparent and
there are no legacy banking fees or expensive fund managers.
C20 tokens are directly tied to the underlying assets with
a novel liquidation option that can be exercised via the
smart contract. This function ensures a greatest lower bound
(infimum) on the market value of all tokens.
CRYPTO20 allows for access to a diverse cryptocurrency
portfolio by holding a single token. The tokens will be tradable
on exchange post-ICO and no further tokens will be issued.
The top 20 cryptocurrencies by market capitalization change,
and so will CRYPTO20’s holdings. This rebalancing process
allows for tracking of the cryptocurrency market index and is
an effective risk mitigation strategy.
A cryptocurrency portfolio based on a hybrid index system
consisting of the top 20 coins by market cap, with weekly
rebalancing and a component cap of 10% produces a combination
that has broad market exposure and acceptable turnover
without allowing a single asset, and thus single source of risk,
to dominate. This paper seeks to structure and justify our
hypotheses and conclusions.