[PRE-ANN] Crypto Exchange Traded Fund ETF - Crypto Diversification Fund (CDF)

[fr4nkthetank]

Introducing CDF

So you can build a portfolio of CryptoCurrencies that is low cost, safe, flexible and trades on exchanges.

I am in IRL a trader in finance.  Arbitrage and ETF market maker and liquidity provider.  


HOW IT WORKS:


-The fund does an ICO which has a fix value.  All funds are used to buy currencies that are in the fund.  The top 10 currencies will have 85% of market weight, and 15 more will have 15% weight.  The fund will invest in 25 currencies total.  At the end of each day the fund is re balanced according to market weighting.  Simply put, the fund will follow the CMCI INDEX (Coin Market Cap index).  

-Redemptions :  Traders can redeem CDF units for cash equivalent (in btc of course) at the NAV, at the end of the next day's rebalancing.  The NAV (net asset value of the fund) is calculated daily.  All this is transparent and will be posted.  The redemptions will have a min amount of units to be exchanged and must be exchanged in blocks of units (round numbers).  This permits traders to arbitrage the fund, and permits the fund to correctly follow the NAV.  If there are too many redemptions, a designated market maker may be given to 2 or 3 groups, based on an auction, which proceeds will be paid as a special dividend to the fund's unit holders.

-Dividends : Any proceeds by POS coins held by the fund or others will be paid out to unit holders on a monthly basis (in btc).

-Fees :  The fees will be 0.45% yearly, calculated Daily at each re-balancing.  Can be lower as fund grows.

-Tech : The fund will be based off EDIT: will be on the ETH network, like DAO.  



The idea is that a lot of people want to diversify from bitcoin, and this is an excellent diversification vehicule.  It is transparent and predictable.  It is self-regulating - that is - if more people buy it, the price will go higher than the NAV, and traders will arbitrage it - creating new units through the redemption process - or destroying units (inverse scenario).

This is different from a normal scam coin ICO.  Hence no flashy graphics and smart sounding gibberish.  The NAV, fund holdings, and relevant information will be updated daily for all to see.  All proceeds will be held in cold wallets on an always offline system - and transfered only through the redemption process.


BOUNTIES:  The totality of the funds fees will be given out to people who want to help with this idea.  I do this IRL, so I figured why not create an ETF in the crypto world.  So PM me if you want to help or post here.  I'm looking to have people involved in this project, so we can have a real diversification option.  This will be run on the backside like a real ETF, like I do everyday.  

[Godson_Mansa]

hero member, been posting since may, password wasn't recently changed.

i'm listening.   

[Kushedout]

Friendly advice, don't pay out divs (for various reasons). Instead, use any and all "profit" to buy back tokens and in process reduce supply/increasing price/create volume.

[fr4nkthetank]

Thanks for the input guys.  For the div payouts its true it would be a major undertaking, i should then just add it up in the fund (adds to the NAV).  Then the fund's NAV becomes higher than the funds exchange price, and people can redeem units for btc.  So in practice, lets say the unit is worth 0.025btc total net asset value - and we get a huge POS payout for some reason of 0.01 total value - the NAV is now 0.035btc.  Anyone can then buy units @ 0.025btc, redeem @ 0.035btc and make a profit.  This leads to destruction of units and the total number of units decreases.  In the inverse scenario, people send btc and get new units, so there is unit creation.  There will probably be a fee for unit destruction, and no fee for unit creation.  I still have to work out some details of how that would actually work in practice but I think its do-able.


Roadmap:
I'm going to start by doing the crypto index - so we can follow the market as a "whole".  This is like the S&P 500 of crypto - I believe its outdated to simply look at the btc price/market cap, there is so much more going on now.

Then I'll create the units once the automatic redemption/calculations is done on excel and test it out.  This won't be mineable, and it won't be like all other coins - it'll be more like DAO (we can say DAO follow the ETH price, because it holds ETH), except no one votes for anything and this will follow a global price index.

[lestherat]

Frank we love flashy graphics and smart sounding gibberish. 

Change your Op, made it interesting, the idea was good but you need more effort.

>Good Luck.

[MickyCOB]

I am watching this. Will keep an eye on it and wait for roadmap

[fr4nkthetank]

Frank we love flashy graphics and smart sounding gibberish. 

Change your Op, made it interesting, the idea was good but you need more effort.

>Good Luck.

I know lol.  keep in mind i'm just playing around with ideas here and getting some input from everyone.  I'll make sure to have flashy colors when it launches   The index is pretty much done, it was a little complicated.  I'll post results probably today.

[republicrypto]

watching for this thread ,, look like interesting project 

[fr4nkthetank]

Ok i'd like some input/opinions on the index.  I've changed the frequency of everything due to the complications of it all.  Also instead of an automated system for redemptions i'll do it manually, I think its safer this way.







So basically, its once a month rebalancing, the value of the index is 10 btc at first (base value).  Any input is appreciated, especially on the coin selection, I want to go by market cap - but also by volume.  After one month, some coins may be dropped and new coins may be added depending on the above factors.


edit: I was bouncing around in my head the idea of having a max % per coin, and including more coins. 

[rajeshgarnaik]

very good project, good luck dev.

[fr4nkthetank]

Thanks for everyone's input, a pretty final version of the fund is now here :


https://bitcointalk.org/index.php?topic=1528971.new#new


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