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Equal Weight Index Futures

2020-07-30 10:02:44Read:4344


Equal Weight Index Futures

Equal weight index is a future contract that provides the same weight to each underlying component token index.

Equal weight index gives each of its constituents the same weight and importance and periodically adjust to regain the balance. Example, consider an equally weighted index consisting of four components, A, B, C, and D, with price of 1, 2, ,5, 10 USDT respectively. Purchasing the index with 2000 USDT, you spend on each constituent 500 USDT and get amount of each token of 500, 250, 100 and 50 respectively.
If token A rises by 10%, token B falls by 5%, token C falls by 2% and token D rises by 3%, the index will change by 1.5%. Formula: (10%-5%-2%+3%)/4=1.5% The rise or fall of each token component has the same impact in determining the total value of the index. That is where the name equally weighted index comes.

Each component in the equally weighted index has the same weight at the beginning, but as rises and falls of any component over time, the weight of each component will changes. Hence a rebalancing will be forced quarterly.


The Advantages of Equal Weight Index Futures

Compared with futures with a single token as underlying, the index future has the following advantages:

1. Easier choice. Take DEFI as an example. DEFI consists of 10 tokens. To select one from those tokens to invest is very difficult and time consuming for many people. But invest in the index contract directly will be a much easier decision. If you are bullish on DeFi, you can buy DEFI index contract.

2. More diversified and less risk. Index tends to be less volatile compared with the rise and fall of a single component token, which can smooth the plunge and surge of tokens and leave you more time to stop loss.

Introduction of Index Future

ALT_USDT
t consists of tokens of large market cap and good liquidity, reflecting the general trend of cryptocurrency market capitalization movement.

EXCH_USDT
It consists of native tokens of mainstream exchanges, reflecting the development and outlook of exchanges.

DEFI_USDT
It consists DEFI tokens of good potential and liquidity, reflecting the outlook and development of DEFI industry.

PRIV_USDT
It consists of popular anonymous tokens , reflecting the outlook and development of anonymous token market


Index Components

Large market cap index (ALT_USDT)

|components | quality |
| -------- | -------- |
| BCH_USDT | 0.6586 |
| BSV_USDT | 0.8591 |
| EOS_USDT | 60.2011 |
| ETH_USDT | 0.5159 |
| LTC_USDT | 3.4153 |
| XRP_USDT | 762.4276 |

Exchange token index (EXCH_USDT)

| components | quality |
| -------- | -------- |
| BNB_USDT | 14.2064 |
| GT_USDT | 474.6535 |
| HT_USDT | 58.5645 |
| OKB_USDT | 47.3934 |

DeFi Index (DEFI_USDT)

| components | quality |
| --------- | -------- |
| BNT_USDT | 69.1228 |
| COMP_USDT | 0.6856 |
| KAVA_USDT | 46.5766 |
| KNC_USDT | 70.3581 |
| LEND_USDT | 380.964 |
| LRC_USDT | 988.1423 |
| MKR_USDT | 0.1946 |
| REN_USDT | 694.927 |
| SNX_USDT | 33.6496 |
| ZRX_USDT | 271.2232 |

Anonymous coins index (PRIV_USDT)

| components| quality |
| --------- | -------- |
| BEAM_USDT | 359.118 |
| DASH_USDT | 1.8937 |
| GRIN_USDT | 315.7064 |
| SERO_USDT | 797.639 |
| XMR_USDT | 1.8493 |
| XZC_USDT | 25.6393 |
| ZEC_USDT | 2.0659 |


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