Example - A Crypto ETF

An ETF, or Exchange Traded Fund, is a passively managed fund, which is invested in a portfolio of multiple instruments chosen according to a preset formula of composition.

An ETF, or Exchange Traded Fund, is a passively managed fund, which is invested in a portfolio of multiple instruments that are chosen according to a preset formula of composition. Note that shares of such funds can be listed and traded on an exchange (hence an ETF). This is assured by InkEnvelope’s abstraction power—any financial product can be detached from the INK domain as a fungible token, making it immediately tradable on any locally available DEX.

With the INK Products Module, an asset management DAO can specify composition formulas with eligible members and execution rules (such as which DEX to use).

The ETF constructor supports two redemption modes: liquidation at maturity and instantaneous swap. The latter allows an investor of a fund token to swap it back to the vault in exchange for component tokens, enabling arbitrage trading.

The convenience of such modulated construction of financial products is apparent, particularly for small-to-mid sized DAOs seeking to quickly launch their fund operations to service, and hopefully, build up their investor base.