The non-fungible token (NFT) space is booming and many investors are wondering which NFT to invest in. In particular, the high risk of investing in a single NFT is currently still deterring many investors.
NFT index funds could eliminate this fear and reduce the risk of Bitcoin Up investing in the NFT sector – but what are NFT index funds anyway? And how can you get in?
Non-fungible token sales are at record levels. At the same time, according to Google Trends, more people worldwide are interested in NFT than ever before:
As it is currently still extremely difficult to value individual NFTs, many investors are looking for ways in which they can invest in the NFT sector with as little risk as possible. But what options are there for investors to invest broadly in the booming NFT industry?
NFTX is a platform where users can create ERC-20 tokens backed by NFT. This makes it possible to create indices consisting of sought-after non-fungible tokens. For example, one can create indices consisting of collectibles from CpryptoKitties, CryptoPunks, Axies Infinity or other popular NFT collectibles.
But that’s not the only way to invest in the NFT market in a diversified way. Similar to the „ETF token“ DeFi Pulse Index (DPI), there is also an „NFT ETF token“ that combines and maps various projects from the NFT sector into one token. This allows investors to invest in multiple NFT projects by buying just one token.
In the following, we take a look at two index funds from NFTX and an „NFT ETF Token“ from Index Cooperative.
CryptoPunks are 10,000 uniquely generated characters created by Larva Labs, each of which exists only once on the blockchain. No two CryptoPunks are the same and each of them can only be officially owned by a single wallet on the Ethereum Blockchain. Just recently, a single CryptoPunk sold for over $700,000.
The most diversified option to invest in CryptoPunks collectibles is the Punk Basic Index Token (PUNK-BASIC). The index token is composed of various types of CryptoPunks and the price of PUNK-BASIC is based on the average of all CryptoPunk NFT deposited in the index. Currently, you can either create PUNK-BASIC yourself by depositing the corresponding NFTs or buy the token on SushiSwap.
Hashmasks artwork consists of 16,384 unique digital portraits created by over 70 artists from around the world. Each Hashmask has distinguishable characteristics, the most important being skin colour, character, mask and eye colour.
In addition, every owner of a Hashmask NFT painting has the opportunity to give their Hashmask a name. This name is subsequently visible to everyone on the Ethereum Blockchain. Just a few weeks ago, one of these NFT artworks sold for 420 Ethereum, which equates to just under US$650,000 at the time of going to press.
The NFTX Hashmasks Index (MASK) is based on the same principle as the PUNK-BASIC token. By depositing hashmasks on NFTX, you receive the index fund token MASK in return. This reflects the average price of all deposited Hashmasks and can either be generated by the user or purchased on SushiSwap.
Overall, there are many different NFT index funds on the NFTX platform, which can be viewed in detail on the official NFTX website.
Index Cooperative is a community-led crypto project that focuses on constructing various crypto indices. The project’s best-known index is the DeFi Token DPI, which combines and maps the 10 largest DeFi tokens in one index. Each DPI token is backed by the various DeFi tokens in the index.
Recently, the Index Cooperative Community has proposed a new „ETF token“ that is to be launched soon. The token is to bid on the emerging metaverse sector. A metaverse is a collective virtual space that can be made unique with the help of non-fugible tokens. Many proponents of metaverses believe that much of the future of entertainment of sports and business will shift to a virtual environment.