Sort the crypto world

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By Kyle DaCruzDirector, Product Digital Assets

Pattern detection is a skill that we develop from early childhood and that we hone through experience throughout human life. Categorization is an important part of how humans learn and make optimized decisions when faced with multiple data points. In the crypto world, with over 10,000 coins, there is a growing need for a rigorous classification system to structure investment decisions.

MV Index Solutions (MVIS), a subsidiary of VanEck, develops, monitors and markets MVIS indices, a targeted selection of pure and invested indices. In 2017, MVIS, in partnership with CryptoCompare, a London-based digital asset data provider, became the first regulated index provider to launch a series of digital asset indices designed to track market data as accurately as possible. performance of otherwise fragmented global digital asset markets. These indices were the first to meet investment industry benchmarking standards by providing public regulation, industry-wide data distribution, appropriate identifiers, and other reporting requirements. standard index governance. Today, MVIS is regulated by the EU Credentials Regulatory Directive and is the first index provider with such regulatory status to offer transparent digital asset indices that comply with EU standards. industry.

MVIS introduces a categorization of digital asset coins into distinct, non-overlapping categories that form the building blocks of a new crypto classification system. Categories capture the value and use case associated with a part. Using a qualitative process, each part is categorized. Coins may change categories over time and new categories may appear. The MVIS ‘Leaders’ investment category indices capture the largest and most liquid coins of a category that are also supported by major crypto exchanges and custodians in the United States.

Categories allow investors to group similar digital assets into groups to analyze and represent targeted exposures. They allow for more in-depth peer analysis and an overall assessment of performance. As the basis of the investable indices, they provide the underlying components to build an investment solution aimed at capturing the performance of the coins within the category. They allow users to measure, compare and capture the performance and characteristics of targeted categories. MVIS categories will help make digital assets digestible for traditional financial investors while providing crypto native funds with additional benchmarking capabilities.

CategoryDefinitionExamplesDeFiFinancial services built on distributed networks without central intermediariesUniswap, AaveExchangeTokens owned and operated by a centralized cryptocurrency exchangeBinance, FTXInfrastructure ApplicationsA decentralized computer program designed to perform specific tasksPolygon, ChainlinkMedia & EntertainmentUsed to reward users, for content, for games gambling or social media Axie Infinity, Basic Attention TokenPayments Unstable digital money for use in distributed network Bitcoin Cash, Litecoin, wallet applications Smart Contract Platforms Blockchain protocol designed to host a variety of self-developed and third-party applications Ethereum, Cardano, Solana Stablecoins Designed to minimize volatility by docking with a more stable asset Tether, USDC Store of Value Designed to maintain or increase purchasing power over time Bitcoin

Source: MV Indexing Solutions. Data as of 12/10/2021.

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Originally posted by VanEck on Nov 8, 2021.

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DISCLOSURES

Important information regarding cryptocurrencies.

The information contained in this document represents the opinion of the author (s), an employee of the advisor, but not necessarily those of VanEck. The securities / financial instruments discussed in this document may not be suitable for all investors. The suitability of a particular investment or strategy will depend on the individual investor’s situation and goals.

This material has been prepared for informational purposes only and does not constitute an offer to buy or sell or a solicitation of an offer to buy or sell any securities / financial instruments, or to participate in any trading strategy. negotiation.

Certain statements contained in this document may constitute projections, forecasts and other forward-looking statements, which do not reflect actual results, are valid as of the date of this communication and are subject to change without notice. Information provided by third party sources is believed to be reliable and has not been independently verified for accuracy or completeness and cannot be guaranteed. VanEck does not guarantee the accuracy of third party data. References to specific securities and their issuers or sectors are for illustration purposes only.

Cryptocurrency is a digital representation of value that functions as a medium of exchange, a unit of account or a store of value, but it is not legal tender. Cryptocurrencies are sometimes traded for US dollars or other currencies around the world, but they are usually not backed or backed by a government or central bank. Their value is entirely derived from the forces of market supply and demand, and they are more volatile than traditional currencies. The value of cryptocurrency can be derived from the continued willingness of market participants to exchange fiat currency for cryptocurrency, which can result in a permanent and total loss of value of a particular cryptocurrency if the market for this cryptocurrency disappears. Cryptocurrencies are neither covered by FDIC insurance nor by SIPC. Changes or legislative and regulatory actions at the state, federal or international level may adversely affect the use, transfer, exchange, and value of cryptocurrency.

Investing in cryptocurrencies, such as Bitcoin, comes with a number of risks, including volatile market price swings or flash crashes, market manipulation, and cybersecurity risks. Additionally, cryptocurrency markets and exchanges are not regulated with the same customer controls or protections available in investing in stocks, options, futures, or currencies. There is no guarantee that a person who accepts cryptocurrency as a form of payment today will continue to do so in the future.

Investors should conduct extensive research on the legitimacy of each individual cryptocurrency, including its platform, before investing. The characteristics, functions, characteristics, functioning, use and other properties of the specific cryptocurrency may be complex, technical, or difficult to understand or assess. Cryptocurrency can be vulnerable to attacks on security, integrity, or operation, including attacks that use sufficient computing power to overwhelm the normal operation of the cryptocurrency blockchain or other technology under -jacent. Certain cryptocurrency transactions will be deemed to have been made when recorded in a public ledger, which is not necessarily the date or time a transaction may have been initiated.

Investors must have the financial capacity, sophistication, and willingness to bear the risks of an investment and a potential total loss of their entire cryptocurrency investment. The fees and expenses associated with investing in cryptocurrency can be substantial.

The lack of regulation of cryptocurrencies can present risks and any future development of regulation could affect the viability and expansion of the use of cryptocurrencies. Investors should conduct extensive research before investing in cryptocurrencies.

The information provided by Van Eck is not intended to be and should not be construed as financial, tax or legal advice. It is not a recommendation to buy or sell an interest in cryptocurrencies.

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