Binance has taken another step towards promoting DeFi and the comfortable work of their investors. On 28 August at 7 o’clock UTC Binance will launch a perpetual contract DeFi/USDT composite index. It consists of 10 elements. The DeFi Composite Index is a futures contract that will use tezer as collateral and trade with a maximum leverage 50x. Binance points out that the DeFi ticker is a ticker that represents all decentralized finances, not a specific token. This fact allows investors to collectively trade the DeFi market rather than a separate asset.
Binance Futures will launch a DEFI/USDT composite index perpetual contract, with trading opening at 2020/08/28 7:00 AM (UTC). The DEFI/USDT Composite Index perpetual contract is a USDT-margined futures contract that uses USDT as collateral. Users will be able to select between 1-50x leverage.
DeFi protocols included in the index and their interest rates.
At the moment, as we can see from the table, the highest percentage weight among the 10 constituents remains for Chainlink and is 28%. The smallest share of weight is related to the Compound protocol – 4.03%. If we look at the statistics of DeFi tokens by their market capitalization, then all 10 constituents are in the top 20 DeFi tokens, except Kava.io (KAVA).
Calculation of the DeFi Composite Index.
This index is compiled and designed to measure the overall market efficiency of decentralized finance now. The price of the DeFi Composite Index is calculated by a weighted average value of the price of its elements and is in US dollars.
Every Thursday at 7:00 UTC the index weight will be rebalanced according to market updates.
Also, Binance claimed that in the event of a sudden change in one or more components (delist or no organic volume), these components will be replaced by alternatives with the recalculation of the weight of all components.
When one or several constituents face drastic changes (e.g. delist or no organic volume), when special adjustment deemed necessary, there are two kinds of adjustment: exclude and recalculate weight (and Divisort), exclude and fill up with constituents from the alternate list, recalculation also needed.
Let’s see how accurately the DeFi Composite Index will reflect the overall picture of the DeFi market. We will check next Thursday whether the main elements of the index will change.
Charts courtesy of Binance