On-chain ETF products lead new trends in encryption investment

Recently, the Ethereum spot ETF was officially approved for listing and trading by the U.S. Securities and Exchange Commission ( SEC ), and is expected to begin preliminary trading this Tuesday. This news will undoubtedly further stimulate the investment enthusiasm in the encryption market.

However, traditional encryption ETFs, while providing investors with new options, still face issues such as high entry barriers, expensive fees, and complicated trading processes. At the same time, existing ETF products are mainly focused on the two major mainstream encryption assets, Bitcoin and Ethereum, and cannot meet investors' demand for a broader allocation of encryption assets.

In this context, some innovative projects are beginning to focus on creating a more friendly, convenient, and low-threshold on-chain encryption ETF investment environment. These products aim to allow more ordinary investors to participate in the investment of encryption assets and share the benefits of market development.

Currently, the total net asset value of 11 Bitcoin ETFs in the United States has exceeded $60 billion, with an ETF net asset ratio of 4.61%, and a cumulative net inflow of over $17 billion. The total asset management scale of 6 virtual asset spot ETFs in Hong Kong has also surpassed $350 million. These data fully demonstrate the huge demand in the market for encryption asset ETF products.

However, traditional encryption ETFs still have some limitations. In addition to the high thresholds and complex processes mentioned above, existing products also find it difficult to encompass a wider range of growth potential assets such as BNB, SOL, and TON. Therefore, on-chain ETF forms of encryption investment portfolio allocation targeting different asset classes and track directions are becoming increasingly important and necessary.

Some projects are launching index on-chain ETF products, supported by a basket of encryption assets. These products typically include around 20 component tokens, which can be subscribed to and redeemed at any time. Users can track the performance of quality Tokens in specific areas of the blockchain through simple ETF product operations, achieving diversified investment.

The selection of component tokens for these on-chain ETF products typically follows a strict screening process, considering factors such as market capitalization and trading volume. Weight allocation is also scientifically designed to ensure that there are mainstream assets as ballast while being able to share the growth dividends of other potential assets.

Based on historical backtesting data, the overall net value performance of this type of on-chain ETF product often aligns closely with the cyclical trends of the encryption industry, not only significantly surpassing traditional stock market indices during the same period but even outperforming the returns of holding Bitcoin alone at certain times.

Currently, there are two main ways for users to participate in on-chain ETF investments: first, by directly converting a basket of tokens into corresponding ETF shares through smart contracts; second, by directly purchasing already minted ETF shares on decentralized exchanges. This model grants users greater freedom in asset portfolio composition.

In the future, we can expect to see more on-chain encryption concept ETF products emerging for different fields and themes. These products may become an important part of a broader decentralized financial ecosystem, playing a role in various scenarios such as collateral and liquidity mining.

Overall, on-chain ETF products are bringing new possibilities to the encryption investment field. They are expected to help more ordinary investors lower the barriers to entry and achieve more flexible and diverse asset allocation strategies. With the continuous innovation and development in this field, we can expect to see more interesting application scenarios and investment opportunities emerge.