Sales of non-fungible tokens, while a bit down from last year’s record highs, are still astronomical. At the same time, since the hype emerged in the spring of 2021, according to Google Trends, many people around the world are still interested in NFTs (the following graph is only for the German-speaking market):
However, since it is currently extremely difficult to assess individual NFTs, many investors are looking for ways to invest in the NFT sector with as little risk as possible. But what are the options for investors to invest heavily 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 indexes consisting of collectibles from CryptoKitties, CryptoPunks, Bored Apes, or other popular NFT collectibles.
But this is not the only way to diversify investments in the NFT market. Similar to the DeFi Pulse Index (DPI) “ETF Token”, there is also an “NFT ETF Token” which summarizes and maps various projects in the NFT sector into a single token. This allows investors to invest in multiple NFT projects by purchasing 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 existing only once on the blockchain. None of the CryptoPunks are identical and each of them can only officially belong to one wallet on the Ethereum blockchain. Auction prices over $700,000 for individual NFTs in the series are not uncommon.
The most diverse option for investing in CryptoPunks collectibles is the Punk Basic Index Token (PUNK-BASIC). The index token is made up of different types of CryptoPunks and the PUNK-BASIC price is based on the average of all CryptoPunk NFTs stored in the index. At the moment, you can either create the PUNK-BASIC yourself by depositing the corresponding NFTs, or buy the token on SushiSwap.
2. NFTX: Hashmasks Index Fund (MASK)
Hashmasks artwork consists of 16,384 unique digital portraits created by over 70 artists from around the world. Each hashmask has distinct characteristics, with skin color, character, mask, and eye color being the most important.
Additionally, each owner of an NFT hashmask painting has the option of naming 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, or 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 reflects the average price of all stored hash masks and can be generated yourself or purchased from SushiSwap.
Overall, there are many different NFT index funds on the NFTX platform, which can be viewed in more detail on the official NFTX website.
3. Indexcoop: Index Fund for NFT Crypto Projects (MVI)
Index Cooperative is a community-driven crypto project focused on building various crypto indices. The most well-known index of the project is the DeFi DPI token, which summarizes and maps the 10 largest DeFi tokens in a single index. Each DPI token is backed by the different DeFi tokens in the index.
Last year, the Index Cooperative Community offered a new “ETF token” which was launched in April 2021. The “Metaverse Index” (MVI) token refers to the emerging sector of the metaverse. A lot 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 industry, such as Decentraland (MANA), Enjin (ENJ), Rarible (RARI), and Sandbox (SAND).
This article was previously published in March 2021. It has been reviewed and adjusted accordingly for republication.
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