Galaxy Digital Launches DeFi Index Fund, Galaxy-Bloomberg Index

In yet another sign of Wall Street embracing decentralized finance, Bloomberg and Galaxy Digital have announced the launch of the Bloomberg Galaxy DeFi Index (DEFI), and Galaxy Digital introduced the Galaxy DeFi Index Fund, which tracks the performance of the index.

This is the fourth collaboration between the two firms. In May 2018, they launched the ​​Bloomberg Galaxy Crypto Index (BGCI), comprising multiple cryptocurrencies, which then became the foundation of the Galaxy Crypto Index Fund.

Following that, the two firms collaborated on the Bloomberg Galaxy Bitcoin Index (BTC) and the Bloomberg Galaxy Ethereum Index, which were underpinning for the Galaxy Bitcoin Fund and the Galaxy Ethereum Fund.

“Decentralized finance is growing as the next major investment theme within crypto,” said Alan Campbell, head of product management for Bloomberg’s Multi-Asset Index business, in a statement. “As liquidity and institutional custody solutions continue to grow, DeFi has become an increasingly compelling option for institutional investors, and we’ll continue working with Galaxy to expand our crypto index offering.”

Steve Kurz, partner and head of asset management at Galaxy Digital, which is headed by founder and CEO Michael Novogratz, says this new technology is disrupting financial services in real time.

The new DeFi index fund, like all three other Galaxy funds based on the Bloomberg/Galaxy indexes, is available only to accredited investors — individuals with income above $200,000 (or $300,000 for a couple) in the past two years, a net worth above $1 million as an individual or couple, or a Series 7, 65 or 82 license.

The DeFi index measures the performance of the largest decentralized financial protocols by market value. These software protocols are standards and rules written to govern specific tasks or activities and to provide liquidity to the DeFi system. They are designed to offer financial services without a central financial intermediary like a brokerage, a bank or an exchange.

Constituents of the new index are selected on the basis of institutional trading, custody readiness in the U.S. and the quality of pricing, according to the joint company announcement. Each constituent cannot represent more than 40% of the index or less than 1% of its overall value and they can change on a monthly basis. As of Aug. 1, there were nine constituents, including three — Uniswap, Aave and Maker — which account for more than 70% of the index.

The DeFi index fund has a 2% management fee like the Galaxy Crypto Index Fund, but it requires a minimum investment of $1 million, unlike the crypto index fund, which has a $25,000 minimum like the Galaxy Bitcoin and Ethereum funds. They, however, charge 1% management fees for investments of $100,000 and 1.25% for smaller investments.