RWM WisdomTree Crypto Index December 2022 Rebalance

Senior Associate, Quantitative Research

The WisdomTree RWM Crypto Index Committee generally meets monthly to discuss the broad crypto market, including the performance, allocations and constituency of the Index.

Sometimes after these meetings, a reconstitution takes place to implement changes determined by the voting members of the committee.

At the most recent committee meeting, the committee approved the addition of Avalanche (AVAX) to the Index, and the subsequent rebalance took place on Friday, December 9.

What Is Avalanche?

Avalanche is a layer 1 smart contract solution and a primary competitor of Ethereum, Solana and PolkaDot.

Its unique value proposition is that it consists of subnetworks of validators that can achieve consensus in different ways to enable the use of different blockchains that are application specific.

This gives developers the capability to launch applications and enterprise blockchain deployments in one interoperable, scalable ecosystem. In terms of market cap and total value locked (TVL) in applications on the platform, it is one of the largest and has recently become available for custody—which is why the discussion for inclusion took place only recently.  

Top Layer 1 Smart Contract Platforms

Going beyond the basic market capitalization, liquidity, risk and regulatory requirements for potential inclusion (which AVAX satisfies), the committee reviews additional metrics to ensure the sanctity of the blockchain or protocol being added to the Index.

For layer 1 smart contract solutions, this consists of general user and transaction activity, as well as U.S. dollar value being locked into smart contracts on the platform.

Prior to 2022, Avalanche saw explosive growth in overall user activity. User activity has since been decreasing gradually but has begun to steady at around 450K unique monthly active users—a number that is not insignificant in terms of user base.

Monthly Transactions

Top Layer 1 Blockchain Total Value Locked

Although Avalanche only has a fraction of the total user base of Ethereum and Bitcoin, the number of transactions taking place on the blockchain and the share of total value locked in layer 1 smart contract platforms have remained competitive even amidst what some are referring to as a “crypto winter.” 

What Changes Were Made to the Index?

After a proposal review by the committee and subsequent vote, the committee agreed to rebalance the Index to include Avalanche (AVAX) due to its dominance in the layer 1 smart contract solutions space with a competitive user base and transaction activity.

The committee also agreed to remove (YFI) for lackluster protocol development and usage, as well as low market cap versus other DeFi alternatives.

Lastly, the committee added weight to Bitcoin (BTC) to better align the layer 1 network allocation with the broad investible market weight.

Rebalance Index Exposure

Important Risks Related to this Article

The RWM WisdomTree Crypto Index is not a product offered by Foreside Fund Services, LLC. An investor cannot invest directly in the Index.


About the Contributor
Senior Associate, Quantitative Research

Blake Heimann is a Senior Associate on the Quantitative Research & Multi Asset Solutions team at WisdomTree, based in Europe. He initially joined WisdomTree in 2020 as an Analyst on the Research team in the U.S. In his current role, he is responsible for supporting the creation, maintenance, and reconstitution of equity and digital asset indices.

Blake's finance career began in 2017 at TD Ameritrade, where he started as an Analyst before transitioning to a role as a Quantitative Analyst. During this time, he focused on research and development of machine learning applications in finance. Blake holds bachelor's degrees in Mathematics and Economics from Iowa State University, and he has completed his Master's in Computer Science with a specialization in Machine Learning at Georgia Tech.