What is an index?

An Index describes a market e.g. a section of a market and measures its performance. Market capitalization-weighting is the standard in index construction (e.g. SP500) which means a big company/ asset gets a bigger weight in the index.

What is a portfolio?

A portfolio is a collection of assets therefore a combination of financial assets such as stocks, bonds, cash, derivatives and crypto assets.

What is a token-as-a-portfolio?

A token-as-a-portfolio represents a portfolio. So if there is total supply of 100 tokens and you hold 1 token you effectively hold 1% of the portfolio.

If someone sells tokens what happens next?

If you sell 1 token representing e.g. 1% of total supply the investment manager need now reduce the entire portfolio holdings by 1% in value and you receive the equivalent 1% portfolio value in ETH back.

How is the token price determined?

The token price appreciates with the Portfolio value and is the sum of all realized and unrealized profits and losses.

Is there dump risk?

The token price and therefore the portfolio value is published on the web site and therefore publicly known. If the STC token would trade on exchange at 0.50 USD but the published value is 1 USD there would exist an arbitrage opportunity and it will be exploited in the shortest possible time by the market since you can withdraw 24/7 against the Smart Contract by hitting the withdraw function through the Smarter Than Crypto web page. Therefore we do not see any dump risk as the STC token always represents value through the portfolio holdings.

Shorting, Leverage

Leverage in crypto market with 200% volatility is not a good idea. Crypto markets already have a lot of optionality built-in. Shorting is also not a good idea as there is limited supply and high demand. Additionally there is huge negative carry of e.g. 60% p.a. which means you need to earn 60% to break even. Therefore the best you can do is risk-off by going into cash or cash substitutes.

Why is STC better than passive Top 20?

The only logical way to mitigate risk in the asset class crypto is to go towards cash. The optimal parameters for the portfolio and rebalancing methodology were carefully determined via a structured data science approach. A cryptocurrency portfolio consisting of the top 20 coins by market capitalization, with weekly rebalancing and a component cap of 20% produces a combination that has broad market exposure and acceptable turnover without allowing a single asset, and thus single source of risk, to dominate. SMARTERT THAN CRYPTO’s strategy is able to avoid market losses due to not forcing full investment but at the same time is able to outperform the market due to efficient portfolio construction. By holding a basket of coins from the index universe determined through portfolio optimization we expect to avoid coins with a return below the mean and therefore underperform and hold a few that over perform, the sum of the returns will provide a better return with less risk than the market/index return.

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Homepage: www.smarterthancrypto.com