DEXTF Protocol Review 2021: Be Your Own XTF Fund Manager?

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One of the most talked-about chatters within the cryptocurrency community in the past few years has been the prospect of there being a Bitcoin ETF on Wall Street one day. We've already had them in some markets like in Europe, Canada, and South America, where they've seen explosive growth with retail and institutional investors alike. But as we'll get into our DEXTF review today, there's certainly more than just Bitcoin or even regular ETFs that are worthy of your attention.

So, why have exchange-traded funds – or ‘ETF' as they're better known – garnered so much attention? Simply put, the creation of an ETF brings about the start to more mainstream attention for a particular asset, bond, currency, sector, or entire market segments. One could so very easily buy or sell your stake in entire funds in the form of ETFs on the stock market – which would be able to track a highly diverse basket of investments – as one would with a piece of company stock.

But what does DEXTF bring to the table that might be more worthwhile than seeing Bitcoin be listed on the New York Stock Exchange? Well, DEXTF carries more than just the weight of marketable cryptocurrencies for the masses, but also brings along a whole new evolution to the idea of how ETFs are made. In our DEXTF review, we'll learn more about how they can disrupt ETFs into the new age, with a platform for permission-less and democratized decentralized ETFs.

DEXTF Review

What Is DEXTF?

Another addition to the burgeoning DeFi sector, DEXTF brings a completely new component of the traditional financial markets into the decentralized community. DEXTF stands for ‘decentralized exchange-traded funds,' and their ultimate goal is the creation of a platform where users can create, manage, buy, sell, or exchange ETFs within a permission-less, oracle-less, non-custodial, and completely decentralized asset management ecosystem.

DEXTF upends the traditional ETF market that relies on a large third-party of intermediaries to help manage your funds and investments. This makes investing and managing ETFs cost-prohibitive, let alone allowing common investors to make and launch their own ETFs for others to subscribe to. With DEXTF, users can choose from any cryptocurrencies to create their own basket of one or more ETFs. DEXTF is run and developed by Memento Blockchain Pte. Ltd, which is based in Singapore.

It has twice – May 8th, 2019 and April 16th, 2020 – been awarded the Monetary Authority of Singapore's Financial Sector Technology and Innovation (FSTI) Proof of Concept (POC) grant. This has essentially allowed Memento and DEXTF to experiment and develop new tech. In late 2019, DEXTF raised $460,000 in an oversubscribed seed funding round, which was led by cryptocurrency and blockchain-focused LuneX Ventures, and the Singapore government-owned SGInnovate fund.

What Are The Unique Features Of DEXTF?

The core philosophy behind DEXTF's platform is the idea that you are the owner of your assets, not some unknown and un-seen third party. This is the reason behind DEXTF's trust-less exchange for marketing and investing into ETFs, where users are able to own, control, and fully manage their tokenized digital-native XTFs in a non-custodial environment. DEXTF's unique approach has also helped to solve some of the inherent problems with decentralized finance (DeFi), as well.

As a tokenized asset management platform, DEXTF has chosen not to rely on the use of oracles to connect to outside information or market feeds. The development team over at DEXTF has hinted that in the past, oracles have been used as a point of exploitation. Either as an open security flaw as a means to manipulate the pricing has led DEXTF to model their platform where XTFs can only be created, minted, and redeemed based on the performance of the underlying tokens.

The value of a fund, therefore, is reliant upon the market movements and arbitrage of those tokens. This simplicity in design makes DEXTF's platform highly modular for users and investors to be a part of – which we'll know more about in our DEXTF review. It's incredibly robust and can maintain its decentralization as much as possible as a self-sustainable ecosystem. This added efficiency also helps to curb another downside of DeFi, which is the potential for exceedingly high gas fees.

How Does DEXTF Work?

DEXTF's asset management protocol enables any one of its users to mint and redeems XTF funds (note the difference between an ‘ETF' and an ‘XTF'). An XTF is essentially a basket of up to 10 digital assets such as cryptocurrencies, which is then minted together as a single Ethereum-based ERC-20 token that will track the underlying performance of that XTF. In the traditional sense, this ERC-20 token represents a share of an ETF that proves your ownership.

Once that XTF has been minted, users can then manage their portfolio or redeem that XTF to take profits. This is done by partnering with Kyber Network, where users can deposit stablecoins such as DAI and USDC, which will then be invested into a particular XTF. All of this is done in a single transaction instead of necessitating you to buy each individual token to gain exposure to a basket of different digital assets all at once, such as needing to manually build your portfolio.

For fund managers that are creating XTFs on DEXTF for investors to buy shares in, they can assign ‘risk ratings' to help indicate the potential risk or volatility of a basket of assets. As of writing this DEXTF review, their platform has support for 67 different tokens that be a part of XTF funds, including popular cryptocurrencies such as Aave, BAT, Compound, Crypto.com, Chainlink, SUSHI, Uniswap, Wrapped Bitcoin (WBTC, Wrapped Ethereum (WETH), yearn.finance, and more.

What Role Do Users Play In DEXTF?

So far, we can compress down our DEXTF review by explaining quite simply that users can mint or sell a basket of up to 10 cryptocurrencies into a singular XTF token, which will then track the performance of said basket. On the surface, this is supported by the role of ‘fund managers' and ‘investors.' The former is responsible for creating new XTFs within DEXTF, while the latter will invest – to buy, sell, or trade – those XTFs to gain exposure to the wider cryptocurrency markets.

But as we learned earlier on in our DEXTF review, their platform is built on a unique trust-less and oracle-less tokenization protocol. To make sure this ecosystem remains as robust as possible, DEXTF also relies on the active and healthy participation of ‘liquidity providers' and ‘arbitrageurs. They work in tandem with fund managers and casual investors to create the best possible experience for every user on DEXTF that has exposure to XTF funds.

Liquidity Providers And Arbitrageurs

Liquidity providers (or LPs) are needed to guarantee as much liquidity as possible for users to buy XTF funds from a decentralized exchange (DEX), such as through Uniswap. By creating an XTF pool on Uniswap, fund managers and investors can actively earn a portion of trading fees and are lucratively rewarded through liquidity mining. They then become liquidity providers, which play a vital role in making sure investors can cost-effectively buy or sell XTF funds on more mainstream and popular DEXs.

Another important role that needs to be filled within DEXTF is arbitrageurs. As we learned earlier in our DEXTF review, DEXTF doesn't rely on pricing data or market feeds through oracles. Instead, it relies on market forces that will be played out by arbitrageurs to balance out the price of a particular XTF. This depends on arbitrage players to actively seek out price discrepancies between the price of an XTF fund and the value of the underlying assets essentially if an XTF is under- or over-valued.

For example, a user who spots that an XTF token is being overvalued on a decentralized exchange such as Uniswap could then mint the underlying assets into more of the same XTF token. This action will help to stabilize the price. Just as how liquidity providers can profit from providing liquidity, arbitrageurs are also incentivized by offering new XTF funds to the market. These dynamics mean that arbitrageurs' actions will indirectly provide pricing information for DEXTF to value their XTFs.

What Does DEXTF Offer?

Logging in to DEXTF's dApp (decentralized application), you're immediately presented asked to connect to your cryptocurrency wallet, such as using MetaMask. Once that's done, you can view all the different XTFs, including their ticker names, XTF token price, current assets under management (AUM), their respective risk ratings (from Conservative to Aggressive), and each XTF's description. You can then choose to mint, redeem, or trade those respective XTF tokens through Uniswap.

From here, you can also see the composition of each XTF and see the weightage of each asset that forms part of that XTF. DEXTF reports the average investor annual percentage yield for its XTFs to be around 253%. Sorted by AUM, the top XTF is the DEXTF Opportunities fund (XTF.XXXXTF), which has a price of $1,584.54 per XTF token (share). Since its inception on December 9th, 2020, it has gained 1,585%. According to DeFi Pulse, DEXTF has around $4.8-million in total value locked (TVL) as of this DEXTF review.

Other funds such as the DEXTF Safe Fund and The Stabilised Fund have seen 1,465% and 1,104% gains since inception, respectively. Once you've decided to mint an XTF token – in essence, invest into an XTF – you can then choose how many XTF tokens you'd like to buy. Unlike a regular ETF, XTFs can be bought in units smaller than 1. Aside from working on decentralized exchange-traded funds, DEXTF is also working on some other additions to its platform.

Here's a couple of exciting additions to the DEXTF protocol that we've found for this DEXTF review:

1. Decentralized Structured Tokens (DEXST)

For investors that want more opportunities for exposure into new and merging investment possibilities, DEXTF has created DEXST, or ‘decentralized structured tokens.' This essentially allows users to make hybrid tokens in a similar fashion to creating XTFs. These hybrid tokens are more versatile in that they can represent more than just standard cryptocurrency tokens or fixed assets. In DEXTF's case, DEXSTs are made for investors to gain exposure to DeFi.

DEXSTs can exist alongside the existing XTFs, where funds can be made to compose unique DeFi offerings such as yields, derivatives, synthetic assets, options, and more. This is perfect for those investors that want to invest in more than just assets and instead have the choice of betting on entire markets, sectors, or strategies within decentralized finance. The creators of DEXSTs can also have more granular control over their risk-return profile, thus increasing the potential profitability.

2. Capital Protected Structured Tokens (CPST)

As an extension of the previous point made in our DEXTF review, the first DEXST will be CPST or a Capital Protected DEXST. The introduction of CPST cleverly allows investors to gain exposure from any potential upside of market movements (such as the price of Ethereum, in this case) while also protecting investors from significant losses if that market turns volatile. In short, investors can take profits if the CPST goes up but can take back their original invested capital if it goes down.

What Are DEXTF's Cryptocurrency Tokens?

The namesake native cryptocurrency token of the DEXTF asset management platform is DEXTF. As an ERC-20 Ethereum-powered token, it functions both as a tool for its decentralized community governance as well as for incentives and rewards within the ecosystem. DEXTF token holders can vote within the community governance on new proposals such as new upgrades, setting management fees, interest rate algorithms, and more.

As for incentives, fund managers and investors can be rewarded for taking part in a DEXTF XTF fund or for milestone accomplishments and to reward for good performance. For example, fund managers that launch an XTF fund can receive DEXTF cryptocurrencies and earn additional rewards for being one of the top funds, best performing funds, and more. Otherwise, you can also earn DEXTF tokens through liquidity mining, earning from trading fees on liquidity pools, and more.

How Are The Tokenomics Like For DEXTF Cryptocurrency Tokens?

As of writing this DEXTF review, DEXTF is in the midst of a 5-year token distribution program to encourage users with incentives. They have committed to absolute transparency and won't be planning a private or a public sale of its DEXTF cryptocurrency tokens. Users could earn an additional 2x rewards bonus of DEXTF tokens are used either as a pair or for the underlying asset. This rewards program will be split into three separate groups, as follows:

  • Monthly Incentive Programme, for portfolio managers and investors – 20,000,000 DEXTF (Sep. 2021 – 10,000,000 DEXTF, Sep. 2022 – 5,000,000 DEXTF, Sep. 2023 – 2,500,000 DEXTF, Sep. 2024 – 1,700,000 DEXTF, Sep. 2025 – 800,000 DEXTF)
  • Milestone-based Incentive Programme, for portfolio managers – 5,000,000 DEXTF
  • Liquidity Mining Incentive Programme, for all users – 25,000,000 DEXTF

The price of a single DEXTF token at the time of this DEXTF review is $2.11, according to data from CoinMarketCap. Presently, DEXTF's native currency has a circulating supply of 13,500,000 DEXTF, with a market cap value of $27.6-million, but there will be a total token supply of 100,000,000 DEXTF. Of that total supply, 25% will be allocated to fund managers and investors; 25% for DEXTF's liquidity mining program; 30% kept by the DEXTF team for development; 15% to be determined by the community; and the final 5% for advisors consulting for DEXTF.

What Are DEXTF's Future Roadmap Updates?

Currently, the DEXTF team is working to gradually add new improvements to its platform. As we mentioned earlier in the DEXTF review, each XTF fund can only compose of 10 assets. But this is only a soft lock, and future updates will either increase this threshold or remove it entirely. Furthermore, DEXTF will also be adding more new tokens to its supported assets list – which currently stands at 67 different cryptocurrencies – as well as introduce new asset types.

These can be tokenized versions of real-world assets such as equity, debt, options, and more that could be added into an XTF. While writing this DEXTF review, we've also taken a look at their roadmap for ‘DEXTF V2', which is slated for a full public launch sometime in Q2 or Q3 of 2021. DEXTF V2 will introduce active asset management services, which essentially allows for portfolio managers to change the composition, weightage or remove entire assets altogether from an XTF.

With the V2 update, fund managers can now do this without having to redeploy the XTF anew. This will open up even more power for fund managers to make adjustments and rebalancing on the fly to best capture profits for investors. The V2 update will also be more modular, as XTF funds can have new functionalities, including the ability to participate in yield farming, issue options, use margin to take up short positions, trade directly with decentralized exchanges, and more.

DEXTF Review – Conclusion

To summarise our DEXTF review, we can see quite readily that DEXTF presents something quite unique in the DeFi space as of right now. Crypto-based asset management isn't new, as we've seen with platforms like TokenSets. But none have thus far gone through the lengths that DEXTF has, by bringing the power of traditional ETFs into the heart of decentralized finance, where average users can be their own fund managers and investors into a variety of powerful and lucrative XTFs.

With more than 98 different XTF funds to choose from, you're certainly not spoilt for choice here. While a traditional ETF can be expensive and complex, DEXTF makes investing into diverse investment pools incredibly accessible, fun, and highly lucrative to what you might find in conventional markets today. While most people are tuning in to see the SEC might finally approve a Bitcoin ETF, our DEXTF review proves that there's a whole more you can find when you dive a bit deeper into crypto

DEXTF Review
Overall
4.6
  • Ease of Use
  • Features
  • Project Values
  • Tokenomics Model
  • Long-Term Sustainability

Pros

  • Support for a large variety of different cryptocurrencies (67 at the time of writing), with support for more tokens and different types of assets in the future.
  • Allow users to create their own XTFs, manage a portfolio, or buy, sell, and trade XTFs with ease on a single platform.
  • Plenty of XTF funds for users to choose from (98 at the time of writing) for their investments, with highly lucrative rewards (+1,000%) for some XTF funds).
  • A lot of monetization and earnings opportunities for users – liquidity mining, rewards for XTF performance, arbitrage, etc.

Cons

  • Reliance on network participants (instead of oracles for getting pricing feeds) to balance out the market prices for XTF funds could result in some valuation differences.

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