Brazil’s Hashdex to Launch DeFi ETF—The Sixth Crypto ETF in Brazilian Market

Crypto asset manager Hashdex today announced that it has received approval to launch what the company is describing as the “world's first” DeFi ETF.

Developed in collaboration with cryptocurrency index provider CF Benchmarks, Hashdex's new CF DeFi Index ETF—which will trade under the ticker DEFI11—will track the price of the CF Benchmark's DeFi Modified Composite Index. That index will itself track a basket of 12 tokens linked to the DeFi market, with Ethereum, Uniswap, AMP, and Curve making up more than half of the basket’s total value.

The remaining tokens in the index are AAVE, Maker, Polygon, Chainlink, The Graph, Compound, Synthetix, and Yearn Finance. 

DeFi is a catch-all term used to describe a group of protocols, applications, and other tools, mostly available on the Ethereum blockchain, that can be used to borrow, lend, and trade crypto assets without third-party intermediaries. On Ethereum alone, more than $96 billion is currently flowing through DeFi applications, and the market cap for DeFi coins is currently $137 billion, per data from CoinGecko.

An ETF is a financial instrument that allows buyers to invest in shares that represent an asset, such as gold, without actually buying and holding the underlying asset. Cryptocurrency ETFs allow investors to gain exposure to a given coin or token without the need to buy crypto from an exchange or store it themselves in a digital wallet.

According to Hashdex, roughly 70% of its index is made up of DeFi protocols, 15% is in smart contract network tokens, and the remaining allocation is distributed among "support" protocols and scalability solutions.

Crypto ETFs are popular in Brazil

DEFI11 is now the fourth cryptocurrency ETF offered by Hashdex. The company became a pioneer in the investment community after it received approval to launch the Hashdex Nasdaq Crypto Index FI, an ETF that tracks a basket of cryptocurrencies and the first cryptocurrency ETF in all of Latin America.

Besides HASH11 and the new DeFi ETF (DEFI11), Hashdex offers a purportedly “carbon neutral” Bitcoin ETF (BITH11), as well as an Ethereum ETF (ETHE11). In addition to Hashdex's products, Brazilans can also trade a Bitcoin ETF (QBTC11) and an Ethereum ETF (QETH11) managed by QR Asset Management. Hashdex's DeFi ETF would make the sixth crypto ETF to launch in Brazil.

According to Brazilian financial news site InfoMoney, cryptocurrency ETFs were among the most profitable products listed on Brazil's stock exchange last year. HASH11 has quickly become the second-most popular ETF in Brazil, surpassing BOVA11, which tracks the Ibovespa index, and just behind IVVB11, which tracks the S&P 500. 

The DEFI11 ETF will be launched in February, but the reservation period to acquire the first shares will begin tomorrow, according to an announcement shared by Hashdex on its official Twitter account.

According to Brazilian news site Valor Investe, the initial subscription price will be around 50 reals, or roughly $9. The offer will be coordinated by XP Investimentos (Brazil's largest broker), Itaú BBA (Brazil's largest private bank), and Banco Genial.