Apr 11 | 5 min read
The Bankless BED Index (BED) provides safe, passive exposure to crypto’s most popular assets, BTC, ETH, and DPI, the total of which makes up more than 75% of the total crypto market capitalization. It is based on the thesis that these three holdings capture the upside of three crypto themes: store of value, programmable money, and decentralized finance. BED gives holders a way to deploy funds in support of the “bankless” revolution thesis.
BED serves as a product for crypto beginners to gain exposure to crypto without needing to: (1) execute multiple transactions on multiple platforms, (2) actively monitor the market to rebalance allocations across assets, or (3) incur high expenses from rising gas costs. It wraps three key holdings in the DeFi space into one single purchase, an index comprised of Bitcoin, Ethereum, and a DeFi token index.
The value proposition of BED is three-fold. It is passive, meaning allocations are monitored and rebalanced on a monthly basis to maintain equal weighting and prevent concentration of Bitcoin, Ethereum, and DPI. It is cost-efficient as transactions are bundled into a single index which distributes gas fees while eliminating individual purchase fees. Finally, it provides exposure for crypto beginners to the biggest themes of the bankless thesis: Bitcoin, Ethereum, and DeFi.
BED is a collaboration between Bankless, which leads the methodology, and Index Coop. Bankless is a leading source of DeFi education, awareness, and insights with the self-described goal of driving the world towards a future of “banking less, less banking, and less dependence on banks.” It was founded in 2020 by Ryan Sean Adams and David Hoffman.
Bankless has a corresponding DAO that acts as a steward of the Bankless Movement progressing the world towards a future of greater freedom. BanklessDAO now manages the index maintenance of BED.
The first step of the methodology is to determine which tokens should be included in the index. To be eligible for inclusion into BED, each asset must meet the following criteria:
Market Capitalization Value: Assets must have a Large cap valuation ($25b+).
Usage: Components must show signs of heavy usage either as a network (BTC and ETH) or smart contract theme (DeFi).
Liquidity: Assets must have sufficient liquidity for initial inclusion and rebalances.
Safety: Assets and themes within the Bankless BED Index should have vast, well-established safety guarantees.
Security: Any network/protocol must have conducted sufficient security audits and/or security professionals must have reviewed the protocol to determine that security best practices have been followed.
The BED Index aims to track crypto’s top 3 assets with real usage and large capitalizations around the theme of blockchain: BTC, ETH, and DPI, each with equal weight in the index. The weight of each token is:
33.3% Wrapped ETH
33.3% Wrapped BTC
The final step of the methodology is to maintain the quality of the index which is done monthly in two phases:
Determination Phase: During this phase, the changes needed for the next reconstitution are determined. It takes place during the last week of the month.
Reconstitution Phase: The underlying index is rebalanced after the close of trading on the first Friday of each calendar month. The index is rebalanced in accordance with the MCAP of its underlying tokens.
Now that we have examined the methodology behind $BED, let’s take a look at its 3 holdings. Current weightings are available here: https://www.tokensets.com/portfolio/bed. Here’s a brief summary of each token:
Wrapped Bitcoin (wBTC): An ERC-20 token with Bitcoin as an underlying token. As an ERC-20 token, it can be used in Ethereum’s DeFi ecosystem.
Wrapped Ethereum (wETH): An ERC-20 token with Ethereum as an underlying token.
DeFi Pulse Index (DPI): A digital asset index designed to track projects in the Decentralized Finance industry that have significant usage and show a commitment to ongoing maintenance and development.
BED offers a simple, transparent way for crypto newcomers to gain diversified exposure to varied assets—Bitcoin, Ethereum, and DeFi—that, in total, makeup around 75% of the total crypto market capitalization. It provides an efficient way to purchase Bitcoin and Ethereum with low transaction fees and low dollar cost averaging in a professionally rebalanced index.
Its three-fold value proposition—it is passive, cost-efficient, and centered around the themes around the biggest themes of the bankless thesis—makes it a clear choice for crypto beginners
If you’re looking to exchange a fiat currency, like the U.S. dollar, directly for an Index Coop product like BED, then you’ll want an Ethereum wallet like Argent, Metamask, or Rainbow. With Argent and Metamasks wallets, you can connect to your bank account or debit card, which allows you to exchange fiat currencies directly for Index Coop products.
First, you’ll need to download one of the above apps. (Metamask also has a browser extension if you prefer not to use your mobile phone.)
Next, you’ll set up your new wallet and connect your bank account
Once you’ve deposited fiat currency in your wallet you can exchange it for Index Coop products like BED Index
If you already have an active Ethereum wallet and are used to buying and selling currencies on a decentralized exchange (DEX), then you can buy Index Coop products that way, too. Uniswap and Sushiswap currently have the best liquidity for Index Coop products.
First, you’ll need to connect your wallet to the exchange of your choice.
You can also buy Index Coop products directly from the Index Coop or TokenSets, which route through Uniswap but gives you a complete breakdown of the underlying tokens as well as the methodology on which it is based.
Disclaimer: This content is for informational purposes only and should not be construed as legal, tax, investment, financial, or other advice.
Disclaimer: This content is for informational purposes only and is not legal, tax, investment, financial, or other advice. You should not take, or refrain from taking, any action based on any information contained herein, or any other information that we make available at any time, including blog posts, data, articles, links to third-party content, discord content, news feeds, tutorials, tweets, and videos. Before you make any financial, legal, technical, or other decisions, you should seek independent professional advice from a licensed and qualified individual in the area for which such advice would be appropriate. This information is not intended to be comprehensive or address all aspects of Index or its products. There is additional documentation on Index’s website about the functioning of Index Coop, and its ecosystem and community.
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