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Network distribution changes arising from hard forks, emissions and airdrops can have an impact on the price of a crypto asset and therefore the value of an index tracking that asset.
In order to maintain accurate pricing for AMKT, the following procedure is followed with respect to these events.
- Hard forks occur when different policies are adopted by consensus nodes, and holders of the original assets receive new crypto assets.
- Eligible Crypto Asset Trading Venues often provide pricing for both forked coins during the interregnum between the fork occurring and deposits and withdrawals being enabled for both coins. In these situations, Alongside Crypto Indexes will treat the crypto asset as an aggregate asset from a pricing perspective, holding both parts of the forked coin and aggregating their value into a single unit. Alongside will recognize the newly forked coin as a separate coin, and apply standard pricing techniques to both assets. Governance reserves the right to make a fair-value estimate of the value of the forked coins in extraordinary situations.
- Emissions are regular awards given to holders of certain crypto assets in the form of “gas” that powers transactions on the network itself. Given the small values involved with emissions, it is not practical for investment funds handling regular inflows and outflows to accurately track AMKT if they accrued emissions on a daily basis. As a result, the AMKT ignore emissions for index calculation purposes, though it is expected that fund managers tracking these indexes may accrue emissions and periodically liquidate them to deliver excess returns to shareholders.
- An airdrop is a process where a new token is distributed to holders of an existing cryptocurrency. Airdrops are usually used as a marketing tool to promote awareness and adoption of the new token. They can also be used to distribute tokens to users who are active in a certain community or who meet certain criteria.
- Airdrops are not native to the internal return drivers of any given cryptocurrency and can require agency on the part of cryptocurrency holders which can put them at risk, so they are not incorporated into AMKT.
- Staking rewards are not included in Alongside Crypto Indexes due to the liquidity restrictions associated with them. When holders of a crypto asset lock up their holdings as collateral to validate transactions or other network actions, they may be entitled to staking rewards.
- These rewards can typically come with stipulations that prevent the coins from being immediately spent as a result of a time-lock, which may make them unsuitable for inclusion in an index that is designed to track the real-time market value of cryptocurrencies.