Creating a well thought out investing strategy is key to growing wealth. But most people do not have the time, skills or interest to spend hours analyzing stocks, bonds, cryptos or other assets. Besides, finding specific investment assets with good growth potential that caters to your specific risk profile and investing in them comes with a lot of complexity.
Index funds offer a way to autopilot through the risk and cumbersome process of analyzing assets to find the “best ones” and continually monitoring and balancing them. They are a popular asset among professional and novice investors in the traditional investment space as they have relatively low fees, enable investing in multiple assets and offer potentially more stable returns.
Simply put, index funds are a collection of assets that enable a hands off passive investment strategy. One of the most popular index funds that offer consistent returns is the SPDR S&P 500 ETF. This fund tracks the Standard & Poor’s 500 index and easily provides exposure to a wide array of asset classes. Another example that perhaps would be for those willing to take on more risk but with higher potential returns is the WCLD ETF. This fund invests in emerging cloud-based stocks and has produced higher returns than the SPDR over the past year.
So in the same way that there is the example of the safer SPDR and the slightly more risky but potentially better returning WCLD in the traditional finance world, Cook offers a similar approach in the DeFi world by listing two index funds namely the Crypto Largecap Index and ETH DeFi Index.
As the name suggests, the Crypto Largecap Index will be a composition of the largest crypto assets, including Bitcoin (BTC) and Ether (ETH). By investing in the Crypto Large Cap Index, users will be able to expand their exposure to a wider crypto market but also the fund will automatically optimize the balance every month to produce the highest return.
The other ETH DeFi Index will consist of tokens of the most popular DeFi protocols such as UNI and AAVE. This will allow users to invest across multiple promising DeFi protocols and attribute their capital’s growth potential to that of multiple protocols rather than just one.
In order to buy either the Crypto Largecap Index or the ETH DeFi Index users will be able to swap any of the listed tokens such as ETH for each of the funds individually named tokens. These individual tokens are what we call “ckTokens” and can be sold or redeemed at any time. Each ckToken represents the specific fund with a unique name on the Cook platform. So for example the Crypto Largecap Index is called the “CLI” and the ETH DeFi Index is called “EDI”.
These two index funds on Cook add substantial value to the Cook platform and users. Similar to how index funds offer investment diversification and spread out risk with low fees in traditional markets, crypto index funds on Cook Finance allow more users to experience crypto investments without dedicating their investments to one or two volatile crypto coins. We hope funds like these will attract more people to try out crypto investing.
As we head further into the future, we will add many more exciting funds and tools on the Cook platform. Users will eventually have a wide range of options and will be able to invest in them depending on their risk appetite and growth expectations. Our team is working hard every day to make DeFi investing easy so as many people as possible can get introduced to this exciting world of decentralized finance.
