Step 2: AMKT Benchmark Creation
Creating the AMKT Benchmark is the second construction step, using the AMKT Asset Universe as it's foundation
The AMKT Benchmark is constructed using the Step 1: AMKT Asset Universe as its input list of tokens. The purpose of the AMKT Benchmark construction step is to turn the asset universe into a calculable, implementable Benchmark.
The AMKT DAO Stewards construct and publish the methodology for the AMKT benchmark. This is the final step taken by the DAO before the Index can be implemented in a token.
While the AMKT Asset Universe may contain a very large number of assets, benchmark construction involves applying additional exclusion criteria.
Common examples of criteria the AMKT DAO may consider include:
- Trading history: How much of a history of liquidity is required to allow for sufficient price discovery?
- Asset market liquidity: Does the asset have sufficient current liquidity?
- Data reliability: Are there redundant venues from which to pull data about the assets?
AMKT assets are weighted by relative free-float market capitalization. A token’s free-float market capitalization is best defined as
circulatingTokenSupply * price. Several factors are considered when calculating a token’s supply, including the total number of tokens that have been minted or created, the number of tokens that have been burned or destroyed, and the number of tokens that are currently locked or otherwise unavailable for use.
Factors that require a degree of discretion when determining circulating supply are the number of tokens held in team projects, tokens held by early investors, tokens held in reserves, and tokens considered otherwise lost.