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Coinbase has just launched the crypto equivalent of the S&P 500, with its new ‘COIN50’ representing the top 50 digital assets listed on the exchange.
The company announced the Coinbase 50 Index on November 12, introducing it as a “regulated crypto benchmark developed in partnership with Coinbase Asset Management and Market Vector Indexes.”
The new offering is a market cap-weighted index of the top 50 assets that meet the index’s criteria, with traders now able to use this to track the performance of the broader crypto market and benchmark their returns.
It works in a similar way to traditional finance options, like the S&P 500, with the company creating the index so investors can gain diversified exposure to the market.
Meet the Coinbase 50 Index (COIN50), a whole new way to track the performance of the cryptoeconomy. https://t.co/cFF7G3YXYr pic.twitter.com/PmxkN9grvv
— Coinbase 🛡️ (@coinbase) November 12, 2024
It currently covers 80% of the total crypto market cap, with Coinbase saying: “This is just the beginning.”
It includes coins like Bitcoin, Ethereum, Solana, XRP, Cardano, and others and its constituents span several categories including DeFi, Smart Contract Platforms, Memecoins, Payments, Media and Entertainment, and more.
In the future, the company hopes to launch a “significantly broader index, to align with the growing size and diversity of the crypto market.
“This path sets the foundation for our indices to evolve alongside the industry, ensuring they provide critical price discovery and remain a comprehensive benchmark for the cryptoeconomy.”
Coinbase explains its screening process for Coin50 Index
With the industry still being young, the company has focused on building a benchmark which includes screening and dynamic selection.
In a white paper, Coinbase says there are three categories of fundamental screening which are applied to indexes. This includes security, with “only digital assets with no known security vulnerabilities, including critical bugs, undue exposure to 51% attacks where applicable, or other factors, are allowed.”
The architecture is looked at too, including features like transparency, immutability, cryptographic algorithms, permissionless consensus, pseudonymity, and peer-to-peer networks.
The economic design structure of a token is considered as well, with assets that are “pegged to other digital assets, a fiat currency, a group of those currencies, or any hard assets” being disallowed. The assets must also have most of their token supply in public circulation.
Featured Image: AI-generated via Ideogram
