Abstract：Per the announcement, the crypto index/benchmark will analyse the performance of large Decentralized Finance (DeFi) protocols by market cap that provide financial services without a centralized financial intermediary, such as an exchange, brokerage or a bank.
Manhattan-based finance and media giant Bloomberg, along with Galaxy Digital, had long been striving to expand their crypto offerings for the world. Finally today, the companies announced the launch of the Bloomberg Galaxy DeFi Index (ticker: DEFI) and Galaxy DeFi Index Fund.
Per the announcement, the crypto index/benchmark will analyse the performance of large Decentralized Finance (DeFi) protocols by market cap that provide financial services without a centralized financial intermediary, such as an exchange, brokerage or a bank.
The assets in the DeFi Index are picked based on institutional trading, custody readiness and the quality of pricing. Each asset cannot represents a holding more than 40% max and not less than 1% of the overall value of the benchmark. As of August 1, 2021, the Index comprises of of Uniswap, Aave, Maker, Compound, Yearn, and Sushi amongst others.
DeFi and the Threat to Financial Services
According to a recently published report, Decentralized finance has become an $80 billion industry in 2021, reflecting a growth of 385% over a year. If the industry keeps growing at this pace, it can break the $800 billion benchmark by next year. To which Alan Campbell, Head of Product Management for Bloombergs Multi-Asset Index business noted, “DeFi has strongly emerged as the next crucial investment theme within crypto.”
Campbell also stated that as liquidity and institutional custody solutions are on a constant rise, institutional investors will ultimately hop into the DeFi space. As such, Bloomberg and Galaxy Digital are trying to expand the crypto index offering and services globally.
It is worth noting that Galaxy Digital is a leading service provider for institutions that wish for exposure to innovations happening in the crypto space. Steve Kurz, partner and head of asset management at Galaxy Digital, seem optimistic about his firms partnership with Bloomberg. According to him, “this partnership will provide investors with accurate data and tools to anticipate the risk and future of financial services.”
Earlier in 2018, Bloomberg and Galaxy Digital partnered to float the Bloomberg Crypto Index, which contained coins like Bitcoin (BTC) and Ethereum (ETH). The launch of this new index arrived after Bitwise inaugurated its defi crypto index in February of that year. The concerted efforts by these firms will aid in taking crypto mainstream, first to financial market participants, then to the public.
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