The dust of Ethereum ETF has settled, decoding Haya's on-chain ETF index products

Written by Tyler

On July 23, according to official information from the SEC, it has officially approved the S-1 applications of multiple ETF issuers, and the Ethereum spot ETF has been officially approved for listing and trading. It is expected that preliminary trading will take place tomorrow (U.S.) It will start this Tuesday morning, tomorrow night (Beijing time).

Imagine if any ordinary investor could complete the investment and transaction process of crypto-asset ETFs in one stop through the simple form of NFT minting or token swap on the chain, wouldn’t it be great?

This is what Haya is doing too.

As we all know, since October 2023, spot Bitcoin ETF has become one of the core narratives that prompted this round of market rebound, especially on July 23, the U.S. Securities and Exchange Commission (SEC) officially allowed the listing and trading of Ethereum spot ETF. Market sentiment has been reignited, and the secondary market is on fire. But very realistically, crypto ETFs have discouraged many ordinary investors who are interested in gaining exposure to crypto assets - high entry barriers, high handling fees, complex transaction processes, and even currently only Bitcoin and Ethereum The two mainstream options cannot cover broader and more Alpha growth targets.

But variables quietly arise in this awkward situation. Haya keenly captures this incremental market demand and is committed to creating a more friendly, convenient and low-threshold on-chain crypto ETF investment environment for ordinary investors. Allow more ordinary investors to participate in the investment of crypto assets and share the dividends of market development.

The rising crypto ETF investment craze

First of all, we need to understand that ETFs are "open-end funds that track market indexes and can be freely traded on stock exchanges." Users do not need to know too much about specific assets. It relies on the understanding of the development trend of the track to directly realize the portfolio allocation of the entire industry or market through a package of assets.

That is, ETF not only allows users to obtain income from single stock transactions, but also allows them to obtain returns from a basket of concept stocks, thereby achieving the so-called "fuzzy correctness" - obtaining near-Beta industry net growth income, sharing Growth dividends for the overall crypto market.

However, whether it is the United States or Hong Kong, China, the influential ETFs launched in the crypto world are all centered around Bitcoin and Ethereum, and there is no index crypto ETF yet.

SoSoValue statistics show that as of July 22, 2024, the total net asset value of 11 U.S. Bitcoin ETFs exceeded US$60 billion, of which the ETF net asset ratio (market value as a percentage of the total market value of Bitcoin) reached 4.61%. Historical cumulative net inflows have exceeded US$17 billion, continuing to hit a record high.

At the same time, the total asset management scale of 6 Hong Kong virtual asset spot ETFs exceeds US$350 million, of which the Bitcoin spot ETF holds a total of nearly 5,000 BTC, with a total net assets of US$317 million; the Ethereum spot ETF holds There are nearly 13,000 ETH in total, and the total net assets are US$44 million.

In terms of development speed, the US Bitcoin spot ETF’s volume of more than 60 billion US dollars can be said to be a “lightning achievement” achieved in the past six months or so. It also fully illustrates the growth of the market, especially the OTC market. The absolute enthusiasm of a large number of users for crypto-assets - as the most eye-catching emerging asset class, cryptocurrencies represented by Bitcoin have already made hundreds of millions of traditional investment users eager to get their hands on precipitated funds.

But as mentioned above, although traditional crypto ETFs are a "timely rain", they are not enough. Their high entry threshold, high handling fees, complex transaction processes and other problems still make many people interested in obtaining crypto. Ordinary investors with asset exposure are discouraged, and they are also unable to cover broader and more Alpha growth targets such as BNB, SOL, and TON.

Under the current background that the types and quantities of crypto assets on the chain are extremely rich, whether it is mapping the traditional financial development logic or considering the actual crypto investment needs, there are on-chain ETFs in the form of different asset classes and different track directions. Crypto portfolio allocation is beginning to become more important and necessary.

Haya, which is positioned as a "decentralized crypto bank for digital residents", is also targeting this field and is committed to providing crypto investment products in the form of ETFs on the chain, thereby simplifying the threshold for investors to enter the crypto market and helping Users can easily share the long-term, stable and efficient growth dividends of the encryption market.

Haya’s H20: The first index-type on-chain ETF product

Haya’s currently launched H20 is also the first index-type on-chain ETF product. It is supported by a basket of crypto assets (20 component tokens) and can be used at any time Subscription and redemption, users can track the performance of high-quality Tokens in specific areas of the blockchain through operations such as subscription transactions and redemptions of ETF products to achieve diversified investment purposes.

The selection of the 20 component tokens that make up this index ETF also follows a rigorous screening process:

• The 20 component tokens are selected based on their circulating market value and 90-day cumulative trading volume to ensure that they represent the most important and most actively traded assets in the market;
• At the same time, the specific weight is determined by market value and is based on circulating supply and Adjustments are made for factors such as trading volume, and the weight of a single component token is capped at 25% to prevent excessive concentration;
• Additionally, the index is rebalanced quarterly to reflect changes in market conditions and ensure it remains representative of current crypto The currency structure, component list and their weights are also adjusted according to the latest data;

So as of now, the first batch of 20 component tokens are as shown in the figure below, including BTC, ETH, BNB, SOL, DOGE, TON, ADA, SHIB , AVAX, TRX, DOT, LINK, NEAR, MATIC, LTC, UNI, RNDR, APT, FIL, ARB.

Among them, Bitcoin and Ethereum each account for 25%, reaching a cumulative weight of half, ensuring that the index can not only have its Beta as a ballast stone, but also share the dividends of the other 18 Alphas.

Judging from the historical backtest data, the overall net value of H20 is also in perfect line with the overall cyclical trend of the crypto industry. It is not only much higher than the overall performance of the US stock market S&P during the same period, but also better than the income performance of only holding BTC.

It is worth noting that the base date of the index is May 19, 2024, with a basis point of 100, and the latest net value as of July 21 is 105.23, with a gain of more than 5% in just two months.

H20 dividend participation form

Currently H20 is the first index-type on-chain ETF product launched by Haya. In the future, Haya will also launch multiple crypto concept ETFs based on the weight of high-quality assets in different fields. Currently, Haya It has reached a cooperation with Enlighten Tech, a Singapore-based ETF service agency, which is responsible for the global compliance issuance business of crypto ETFs. Enlighten Tech is working with Malaysian financial institutions to apply for compliant ETF products. In addition, the markets being promoted include other Southeast Asian countries, the Middle East, Brazil, Europe, North America, etc.

And H20 will also become a key part of the pan-Haya ecosystem (index fund H20, stable currency HAI, DeFi platform Haya) in the future. The functions of H20 include but are not limited to: serving as an over-collateralized asset issued by HAI, participating in liquidity mining Mining LP obtains income, transaction fees/liquidation fees, other fees and interests, etc.

Since H20’s smart contracts are deployed on Arbitrum, you can use assets on the Arbitrum chain (such as USDT, USDC, ETH and WETH) to obtain H20 shares.

And users hold ETF assets on the chain through H20, which are mainly divided into two forms (the fees are both 0).

The first step is minting: users directly convert a basket of tokens into corresponding ETF shares (token form) through smart contracts. For example, according to the current weight of index token components, on the official website’s “Mint” page, enter the amount you want to obtain For H20 ETF shares, the respective amounts of required token components are automatically calculated.

As long as the number of 20 corresponding tokens in the linked wallet is greater than (equal to) the required amount, H20 ETF shares can be minted:

• The user enters the number of ETFs to be purchased, and Haya automatically calculates the corresponding inclusions The number of each component currency;
• Minting, deduct the corresponding number of component coins from the user's wallet to the smart contract;
• The smart contract transfers the user's component coins to the fund pool kept by the contract;
• Trigger the minting contract function to give the user Transfer the corresponding amount of ETF;

The other is more direct, that is, buying - users purchase ETF shares (in the form of tokens) that have been minted from other minters or holders through DEX.

The implementation logic of redemption is opposite to the two implementation methods of casting. This advantage is to give users the power to freely combine assets. Any user can create a cryptocurrency ETF and accept user capital injections.

Summary

The market always likes to overestimate the short-term effects of new things and underestimate their long-term impact.

Looking at the on-chain world, based on the diversity, operability and programmability of the Web3 ecosystem, DeFi products have long been stacked on top of each other like Lego blocks to create innovative and diversified financial products. For the growing number of incremental encryption users, this means dizzying learning costs and investment thresholds.

同時に、ナスダックなどの伝統的な証券市場に上場されている仮想通貨ETFファンドは、7×24時間ノンストップ取引と非常に速いイノベーションと反復を備えたブロックチェーンの世界と比較すると、本質的には伝統的な証券取引です。ポートフォリオの作成とトレーディングの両方に遅れが生じます。

したがって、暗号通貨ユーザーが新しいパブリックチェーンのパッケージ、DeFiトラック、またはさらに細分化されたシナリオなど、チェーン上で投資ポートフォリオを自由に作成し、同時に即時かつシンプルなマルチエクスポージャーの資産配分を直接実行できるようにする方法は、暗号通貨の世界の成長に直面している問題であり、ユーザーが慎重に検討する必要があるトピックの量です。

そのため、Haya の H20 のような分散型 ETF プラットフォームは、そのようなニーズをより専門的に満たし、特定のトラックまたはサブディビジョンに対してシンプルな資産配分サービスのパッケージをチェーン上で直接提供しようとするものであり、これは注目に値します。

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