Non-fungible token sales, while a little off last year’s record levels, are still astronomical. At the same time, since the emergence of the hype in spring 2021, according to Google Trends, many people worldwide are still interested in NFTs (the following graphic is only related to the German-speaking market):
However, as it is currently extremely difficult to value individual NFTs, many investors are looking for ways to invest in the NFT sector with as little risk as possible. But what options are there for investors to invest broadly in the booming NFT industry?
NFTX is a platform where users can generate ERC-20 tokens backed by NFTs. This makes it possible to create indices consisting of coveted non-fungible tokens. For example, one can create indices composed of collectibles from CryptoKitties, CryptoPunks, Bored Apes, or other popular NFT collectibles.
But that’s not the only way to diversify investing in the NFT market. Similar to the “ETF Token” DeFi Pulse Index (DPI), there is also an “NFT ETF Token” that summarizes and maps various projects from the NFT sector in one token. This allows investors to invest in multiple NFT projects by purchasing just a single token.
In the following, therefore, two index funds from NFTX and an “NFT ETF Token” from Index Cooperative.
1. NFTX: CryptoPunks Index Fund (PUNK)
CryptoPunks are 10,000 uniquely generated characters created by Larva Labs, each of which only exists once on the blockchain. None of the CryptoPunks are the same and each of them can officially only be owned by a single wallet on the Ethereum blockchain. Auction prices in excess of $700,000 for individual NFTs in the series are not uncommon.
The most diversified option to invest in the CryptoPunks collectibles is the Punk Basic Index Token (PUNK-BASIC). The index token is made up of various types of CryptoPunks and the PUNK-BASIC price is based on the average of all CryptoPunk NFTs stored in the index. Currently you can either create the PUNK-BASIC yourself by storing the corresponding NFTs, or the token SushiSwap to buy.
2. NFTX: Hashmasks Index Fund (MASK)
The artworks of hash masks consist of 16,384 unique digital portraits created by over 70 artists from around the world. Each hashmask has distinguishable characteristics, with skin color, character, mask and eye color being the most important.
In addition, each owner of a hashmask NFT painting has the option to name their hashmask. This name is then visible to everyone on the Ethereum blockchain. In March of last year, one of these NFT artworks sold for 420 Ethereum, which is nearly $1.28 million at press time.
The NFTX Hashmasks Index (MASK) is based on the same principle as the PUNK BASIC token. By depositing hash masks on NFTX, you receive the index fund token MASK in return. This maps the average price of all stored hash masks and can either be generated yourself or on SushiSwap be acquired.
Overall, there are many different NFT index funds on the NFTX platform, which can be looked at in more detail on the official site of NFTX can look at.
3. Indexcoop: Index fund for NFT crypto projects (MVI)
Index Cooperative is a community-led crypto project focused on constructing various crypto indices. The best-known index of the project is the DeFi token DPI, which summarizes and maps the 10 largest DeFi tokens in one index. Each DPI token is backed by the various DeFi tokens of the index.
In the past year, the Index Cooperative Community has one new “ETF Token” proposed, which was set up in April 2021. The “Metaverse Index” token (MVI) refers to the emerging metaverse sector. Many Metaverse proponents believe that much of the future of entertainment, sports and business will shift to a virtual environment.
Index Cooperative’s Metaverse Index (MVI) offers investors the opportunity to invest in a decentralized and virtual future. MVI consists of the following tokens:
Within the MVI token are many of the most well-known tokens in the NFT sector, such as Decentraland (MANA), Enjin (ENJ), Rarible (RARI) and Sandbox (SAND).
Disclaimer
This post was previously published in March 2021. It has been reviewed and adjusted accordingly for re-publication.
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