D-ETF Secures $50 Million Prior to Public Sale
The GEM commitment signals an institutional appetite for an alternative to the long-proposed bitcoin ETF
Blockworks exclusive art by axel rangel
key takeaways
- Even though US markets have yet to see the traditional crypto spot ETF approved, investors can still experience its benefits through holding D-ETF’s ERC-20 token
- The D-ETF team created one of the first ETFs that can offer dividends instead of ongoing costs
D-ETF, a decentralized exchange-traded fund, has received a $50 million commitment from GEM Digital. The DAO-managed crypto ETF said that the commitment is a critical step to a public sale on a tier one exchange and will be used for global expansion, intrinsic value and product development.
Even though US markets have yet to see the traditional crypto spot ETF approved, investors can still experience its benefits through holding D-ETF’s ERC-20 token. Its white paper explains the governance and tokenomics, but essentially this instrument enables investors to diversify risk without paying the individual transaction fees or fund management fees. It exposes them to a basket of cryptocurrencies managed through a DAO (decentralized autonomous organization) structure.
By structuring the fund around a DAO, the D-ETF team created one of the first ETFs that can offer dividends instead of ongoing costs. This innovation revolutionizes the traditional ETF model by replacing the traditional fund manager with the community. The fund model doesn’t need payment for managing the portfolio. D-ETF programmed the smart contract to divide transaction fees between funding the intrinsic value pool and sending direct dividends to token holders.
Similar to staking yields, the DAO offers dividends in the native token. The dividend consists of 1.5% of the total transaction volume. So over time, a user wouldn’t just see the value of their D-ETFs change; they would see the number of D-ETF tokens increase.
Because DAOs are a relatively novel organization structure, D-ETF recently published a paper outlining the mechanics of avoiding centralization. It explains how its multi-sig wallet and 24-hour clock offer the community transparency and ensure funds are protected from a single point of failure.
D-ETF built the project on the premise that with the right governance and smart contracts, a decentralized community can make better risk-averse investment decisions than an individual investor or portfolio manager.
The GEM commitment signals an institutional appetite for an alternative to the long-proposed bitcoin ETF. Regardless of institutional adoption, the instrument will make it easier for new investors to get into the space. But it will also introduce them to one of the foundational value adds of blockchain technology: trustless governance.
As more people see the practical utility of DAOs in decentralized finance (DeFi), they will likely explore other similar solutions in industries such as metaverse gaming, physical real estate and NFTs (non-fungible tokens). It is an educational on-ramp to the world of decentralization.
D-ETF is still in early development, but the financial commitment from GEM Digital is a significant step toward its plans for a public sale. In Q1 2022, it raised $300,000 from an initial dex offering with Thorstarter and $200,000 from CyberFi. It also completed a second security audit from Certik. Before the public sale, D-ETF plans to integrate a FIAT on-ramp solution and add stake pools.
GEM is a $3.4 billion alternative investment group that has completed over 530 transactions in 70 countries. The family of funds and investment vehicles provides GEM and its partners with exposure to small-mid cap management buyouts, private investments in public equities, and select venture investments.
This content is sponsored by D-ETF.
Get the news in your inbox. Explore Blockworks newsletters:
- Blockworks Daily: The newsletter that helps thousands of investors understand crypto and the markets, by Byron Gilliam.
- Empire: Start your morning with the top news and analysis to inform your day in crypto.
- Forward Guidance: Reporting and analysis on the growing intersection of crypto and macroeconomics, policy and finance.
- 0xResearch: Alpha directly in your inbox. Market highlights, data, degen trade ideas, governance updates, token performance and more.
- Lightspeed: Built for Solana investors, developers and community members. The latest from one of crypto’s hottest networks.
- The Drop: For crypto collectors and traders, covering apps, games, memes and more.
- Supply Shock: Tracking Bitcoin’s rise from internet plaything worth less than a penny to global phenomenon disrupting money as we know it.
