Reconstitution & Rebalancing

DCgen Ethereum Index ($DCE)

Overview

The DCgen Ethereum Index ($DCE) undergoes a combined process of reconstitution and rebalancing every eight weeks. This unique, synchronized approach ensures that the index remains a precise and updated representation of the Ethereum ecosystem. It captures both the most impactful projects based on market capitalization (reconstitution) and adjusts the weights of existing assets to reflect current market conditions (rebalancing).

Process

1. Market Capitalization Ranking: At the end of every eight-week interval, all Ethereum Ecosystem tokens are ranked based on their latest market capitalization.

2. Inclusion Criteria: Tokens must adhere to the predefined set of criteria for inclusion in the index. See eligibility criteria.

3. Additions & Weight Calculation: Tokens that have gained prominence and meet all inclusion criteria will be added to the index, and their weights will be calculated based on their most recent market capitalization.

   • If more than 30 tokens meet the criteria, only the top 30 by market capitalization will be included.

4. Deletions & Weight Adjustment: Tokens that no longer meet the eligibility criteria, or have fallen significantly in market capitalization ranking, might be removed from the index. Existing tokens might also have their weights adjusted to align with new market conditions.

   • Tokens facing significant issues, such as governance disputes, technological vulnerabilities, or regulatory challenges, may also be considered for removal.

5. Risk Assessment: Prior to the actual reconstitution and rebalancing, a risk assessment is conducted to evaluate potential impacts.

6. Execution: The reconstitution and rebalancing actions are executed simultaneously once the new list of constituents and their weights are finalized.

Communication

All changes, whether pertaining to reconstitution or rebalancing, will be announced publicly immediately after they have been automatically implemented on Monday nights at 4 AM. While this approach does not offer advance notice for index-tracking products and investors to make adjustments, it ensures real-time transparency of the index's composition.

Rationale

The combined process of reconstitution and rebalancing ensures that the DCgen Ethereum Index ($DCE) remains dynamic and relevant. It captures both the evolving landscape of the Ethereum ecosystem and the shifts in market capitalization, providing investors with a balanced and up-to-date representation.