Earlier this week, Coinbase (NASDAQ:COIN) launched the Coinbase 50 Index: A Global Crypto Benchmark.
Coinbase introduced the Coinbase 50 Index (COIN50), a benchmark representing the “top 50” digital assets listed on Coinbase Exchange that meet the index’s fundamental criteria for inclusion.
Crypto traders are able to use the COIN50 as a benchmark to track broader market trends and gain insight into the “overall performance of the cryptoeconomy.”
It’s worthwhile to note that the term “cryptoeconomy” has been frequently used by Coinbase over the years to refer to a so-called economic system developing in the nascent digital assets and blockchain / web3 ecosystem. However, it is still very difficult to compare the crypto markets to the much more stable traditional financial markets.
With the exception of Bitcoin (BTC), there are still no significantly well-established cryptocurrency networks, not even Ethereum (ETH), as it faces issues related to its unpredictable monetary policy and ETH is also facing greater competition from other blockchains such as Solana (SOL).
Crypto has come a very long way in the past decade, but it still does not present compelling investment opportunities, apart from Bitcoin (BTC). And while memecoins like Dogecoin (DOGE) have captured the interest of many new investors, it is still unclear whether such speculative projects will be able to deliver long-term value.
With that being said, Coinbase’s latest product can still be viewed as a step in the right direction. Given the increasingly solid foundation crypto ecosystem participants have been building during the past few years, it is quite likely that other companies will introduce similar indexes. Coinbase is wisely laying the groundwork for a fast-evolving cryptoeconomy which is projected to onboard many more new users across the globe.
Eligible traders can trade this index via a COIN50 perpetual future (COIN50-PERP) with up to “20x leverage on Coinbase International Exchange and Coinbase Advanced.”
The Coinbase 50 Index (COIN50) is described as a regulated crypto benchmark developed in partnership with Coinbase Asset Management and Market Vector Indexes.
As the publicly-listed crypto exchange, Coinbase is positioned to offer an index that investors globally “can rely on for transparent, reliable exposure to the crypto market.”
The cryptoeconomy is expanding, with an ecosystem of networks and tokens driving innovation and improving “access within our financial system.”
As more investors recognize the long-term value of crypto, the need for efficient ways to gain “diversified exposure to this growing asset class is clearer than ever.”
In traditional finance, indices and their associated tradable products have long provided an effective way for investors to gain “broad exposure and benchmark their portfolios. Crypto is now ready for the same.”
The Coinbase 50 Index, rebalanced quarterly, is described as a market cap-weighted index of the “top 50 assets that meet the index’s criteria.”
Traders can use the index to track the performance of the broader crypto market and benchmark their returns.
The index methodology builds on the track record of Core Coinbase Indices, which have been modeled by Coinbase Asset Management.
This approach “scrutinizes” eligible assets based on fundamental criteria such as token economics, blockchain architecture, and security.
Every asset within the COIN50 index is listed and accessible on Coinbase Exchange, which has a “rigorous vetting process” that evaluates assets against legal, “compliance, and technical security standards.”
Although the Coinbase 50 Index currently covers ~80% of the total crypto market cap, this is said to be “just the beginning.”
As the cryptoeconomy market matures, their goal at Coinbase is to launch a broader index, to align with the size and diversity of the crypto-assets market.
This path sets the foundation for indices to evolve alongside the industry, ensuring they provide “critical price discovery and remain a comprehensive benchmark for the cryptoeconomy.”
Eligible traders will be able to trade the Coinbase 50 Index via a COIN50 perpetual futures contract (COIN50-PERP) with “up to 20x leverage on Coinbase International Exchange, for eligible institutional users, and Coinbase Advanced, for eligible retail users.”
This contract will be available to users in “eligible jurisdictions outside the US, UK, and Canada.”
Coinbase further revealed that they are currently in the process of exploring additional ways to enable users to gain exposure to the Index.
As clarified in the update, a license agreement is required to use the index, index data or trademarks for various commercial purposes.
