The NFT Index (NFTI) Review
The NFT Index measures the performance of decentralized financial assets throughout the market. To keep track of decentralized finance projects, the index is weighted according to the value of each token’s circulating supply. Rather than using set percentages for component weights, it uses market capitalization. This ensures that it does not experience underperformance due to temporary losses.
More diversified portfolios are often less volatile. The disadvantage of having a larger collection of tokens is that there is less protection. You’ll save time and money by not having to manually complete a plethora of time-consuming and expensive transactions.
What Exactly Is An NFT Index Portfolio?
The NFT Index now has eight tokens: Polygon (Matic), Enjin, Decetraland, Sand, Axie Infinity, Aavegotchi, Rarible, and Meme. Each position is weighted according to its market capitalization compared to the other investments in the index.
What Is The Aim Of The Project?
To measure the performance of tokens in the decentralized finance sector, the NFT Index has been created. The index is weighted according to the circulating supply of each token. Tracking projects that have a high level of utilization and demonstrate a strong commitment to continued development is the goal of this project.
Token Criteria For Inclusion In The NFT Index
While making its inclusion evaluation, the NFT Index takes into account a broad variety of factors, including the token, the project, and the protocol. There are four distinct categories to which these standards might be assigned:
- The token must be available on the Ethereum blockchain.
- The token must be associated with a decentralized finance protocol.
- The token must not be considered a security by the corresponding authorities across different jurisdictions.
- The token must be a bearer instrument. None of the following will be included in the index; wrapped tokens, tokenized derivatives, synthetic assets, Tokens that are tied to physical assets, or tokens that represent claims on other tokens.
The token’s supply must be generally predictable over the next five years. At least 7.5 percent of the five-year supply must be in circulation today. There should be no major locking, minting, or other patterns in the token’s economics that would be detrimental to passive holders. NFT liquidity on Etherscan must be acceptable and consistent for a token to be considered “hot.”
Characteristics of Tokens for Index Inclusion
The project must be widely considered to be building a useful protocol or product. It must have been launched at least 180 days before being able to qualify to be included in the NFT Index. Projects focused on competitive trading or holding, having Ponzi characteristics, or projects that exist primarily for entertainment will not be included.
Is the NFT Index Safe?
In the case of a safety issue, the team must have acted quickly and properly in the aftermath. Tokens chosen for inclusion must be widely available on a variety of exchanges. Professionals in the field of security must have examined the protocol to ensure that it adheres to current best practices for safeguarding user assets.
Supply of NFT Index Circulation
The index assumes that all tokens included in the index have a total supply of 100%. To calculate the NFT Index value, take the current market value of all tokens and multiply it by the current supply. Using the same formula as the S & P500, the index is calculated similarly.
What is NFTI Crypto?
The native currency of the NFT Index initiative is NFTI crypto tokens. To participate in the portfolio of tokens, investors may purchase NFTI.
How Does the NFT Index Work?
In the current version of the NFT Index, CoinGecko’s circulating supply number is used as the reference. Each month, the circulating supply is calculated and released in the third week of each month. It is at this phase that the adjustments required for the next reconstitution may be identified. At this point, the tokens that will and will not be included in the index computation are decided.
There will be a strict deadline for any transactions based on the NFT Index to be completed by the index reconstitution date or soon afterward. On the first working day of the next month, fresh weights will be applied to the index. This means that parts will be added or deleted, and weights will be altered.
To keep track of tokens in the NFT business, the NFT Index was created. Each token’s circulating supply value is used to weight the index. The NFT Index intends to measure NFT initiatives in decentralized finance that demonstrate a long-term commitment to growth and function.
- The NFT Index measures the performance of decentralized financial assets throughout the market.
- To keep track of decentralized finance projects, the index is weighted according to the value of each token’s circulating supply.
Further NFT Index Information
- NFT Index
- Price $801.15
- Market Cap