CF Benchmarks launches CF Category indices, for focused exposure to blockchain economic drivers

CF Benchmarks is excited to announce the launch of CF Category indices, the latest additions to our CF Classification Series of thematic portfolio indices, which track the performance of specific blockchain Categories within the CF Digital Asset Classification Structure (CF DACS).

Category Index objectives

Each index is a liquid, investible benchmark portfolio that tracks the return performance of all eligible protocols and tokens within its respective CF DACS Category.

The indices provide a discrete view of returns from each CF DACS Category, thereby enabling clearer observation and analyses of their individual contribution to the blockchain economy, particularly as defined by the CF Digital Asset Category Index Methodology.

Rationale rooted in CF DACS

The basis of each Category index is its corresponding Category in the CF DACS, CF Benchmarks’ robust multi-level taxonomy of the digital asset universe, which classifies and segments digital assets by their functional purpose.

CF DACS was created to help investors understand the blockchain economy, enabling greater accuracy and precision in assessments of return attributions, while facilitating optimization of digital asset portfolios.

The launch of specific CF DACS Category indices continues the mission of providing investors with the tools required to improve visibility into return drivers, and for improved portfolio optimization.

Furthermore, the availability of segmented Category indices also provides greater flexibility and access to investors seeking exposure to specific characteristics of the blockchain economy, as encapsulated by CF DACS Categories.

Index origins

The new indices stem from the following CF DACS Categories:

• Sector Applications, containing DeFi, Culture and Industry DApps (AKA Decentralized Apps)
• Services, covering Infrastructure and Utility protocols
• Settlement networks, comprised of Programmable and Non-Programmable blockchains (i.e. layer 1s, with and without smart-contract functionality)

Their corresponding Category indices are as follows:

• CF Sector Category Index
• CF Services Category Index
• CF Settlement Category Index

Methodology outline

Index constituents are market-cap weighted, in accordance with the CF Digital Asset Series Ground Rules, and as specified in the CF Digital Asset Category Index Methodology.

Category indices were incepted on December 1st, 2023, at a value of 1,000, and each one is reconstituted and rebalanced quarterly.

Settlement Price variants of each index are published at times synchronized with market closing times corresponding with the following key geographical regions:

• Asia Pacific (4:00 pm Hong Kong Time)
• London (4:00 pm London Time)
• US (4:00 PM New York Time)

Additionally, a streaming, real-time Spot Rate variant of each Category index is published once per second, 24 hours a day, 365 days a year.

Regulatory Basis

Meanwhile, all CF Category indices cohere with the UK Benchmarks Regulation (UK BMR) framework, meaning they are all consistent with the standards specified by BMR for use as regulated Benchmarks. They are also compliant with the ETP listing standards of major European stock exchanges.

Key use cases

As such, CF Category indices are suitable for deployment in the following broad use cases:

• Performance benchmarking of actively managed portfolios of digital assets
• Passive replication in investment funds and financial instruments and products
• The settlement of financial instruments including derivative contracts
• As a means of valuing or “marking to market” portfolio holdings of digital assets

Conclusion

All told, the new CF Category indices provide direct visibility into returns stemming from protocols classified under their respective CF DACS Categories. The indices are calculated to the same standards as all regulated benchmark indices published by CF Benchmarks.

As such, Category indices offer institutional investors and issuers of regulated products a more focused means of meeting crypto investment objectives, and understanding exposures to the Category level of the digital asset universe, as elaborated by CF DACS.

Understand the CF Digital Asset Classification Structure in under two minutes by watching the video below.

Read more about CF DACS

• CF DACS Token Explorer
• CF DACS Methodology Guide

Read more about CF Category indices

• CF Sector Category Index
• CF Services Category Index
• CF Settlement Category Index
• CF Digital Asset Category Index Methodology Guide

Explore all CF Classification Series indices