Summary:
We propose adding new wrapped assets from 21.co in order to support a wider array of tokens, enabling AMKT to better track the cryptoasset market and reduce overconcentration for holders.
AMKT is built on Ethereum, limiting interoperability with protocols including Polkadot, Cardano, XRP, Dogecoin and Litecoin.
21.co has built wrapped implementations of these assets in order to bring them to Ethereum. The structure mirrors assets commonly used in DeFi like BitGo’s Wrapped BTC (WBTC) and seeks to improve on cross-chain exposure.
Motivation:
The stated goal of AMKT is to most accurately follow the market, yet many of the largest assets in the crypto market have been excluded from AMKT due to the technical impossibility of being secured within the Ethereum-native AMKT contract. Furthermore, with these top assets excluded, AMKT is overweight BTC/ETH compared to their real weights relative to the market.
Including these assets will improve tracking efficiency as AMKT will better follow movements in the market, leading AMKT to be a better vehicle for traders to express positions on the direction of the market in the short term, which has the side effect of benefitting long term holders in the form of better execution and reduced slippage.
A recent example was the movement of XRP after the outcome of their SEC suit. XRP, one of the top ten assets in crypto at the time, saw an 80% price spike, yet AMKT holders didn’t see this reflected in their holdings. Traders with the intention of using AMKT to place a short term directional position on the market were not able to use AMKT to take that position.
Implementation:
We propose including the following assets for eligibility at the time of of the next reconstitution:
- 21ADA
- 21XRP
- 21DOT
- 21LTC
- 21BCH
- 21DOGE
In order to be implemented in the AMKT index, the assets must follow the criteria outlined in the AMKT methodology, which includes criteria for minimum liquidity thresholds and secondary trading. Should these assets meet the criteria at the time of the AMKT reconstitution, they’ll be added to the index like any other top 15 asset.
Risk Factors:
The implementation features a reliance on 21.co, introducing a new custodial trust assumption for the underlying assets.
Dependency on 21.could adversely impact AMKT holders if the wrapped assets were found to be undercollateralized or otherwise rehypothecated.
If the 21.co wrapped asset contracts were to have a security vulnerability, AMKT holders could be adversely impacted.
If liquidity for 21.co tokens were to be insufficient, AMKT creations and redemptions could be adversely impacted.
Relevant Links:
Conclusion:
We recommend AMKT holders vote FOR our proposal to add 21.co assets, improving tracking efficiency and overconcentration risks for AMKT holders.