Crypto Quarterly Market Update Nasdaq CryptoTM Index (NCITM) Review: September 2022

ByNasdaq Global Indexes Research and Hashdex Research

DeFis Influence Grows in Latest NCIE Rebalance

The Nasdaq Crypto Index Europe (NCIE) was created to provide European investors with a reliable and dynamic crypto asset benchmark. A key feature of the NCIEs methodology, designed to ensure the index is appropriate for professional investors, is a quarterly rebalance of the index constituents and their weightings.

The latest NCIE reconstitution went effective Sept. 1 at the market close. The most notable change was the inclusion of Uniswap (UNI), a decentralized finance (DeFi) protocol that has generated a lot of recent attention. (The other change at the reconstitution was the removal of Litecoin.)

Uniswap, a decentralized exchange (DEX) on the Ethereum blockchain, has performed well through the current crypto winter, and its traded volumes and fees remain healthy. The operational performance of a DeFi protocol during such turbulent times is especially noteworthy when compared to the performance of centralized finance or CeFi platforms that have faced significant challengesand in some cases, bankruptcy (e.g., Celsius, 3AC, Voyager)during the same period. These CeFi platforms did not have the high level of transparency and lack of human intervention that are built into the structure of Uniswap and many other DeFi protocols. These blue chip DeFi protocols (including Uniswap) once again proved to be resilient during challenging times.

What is Uniswap?

Uniswap was created in 2018 byHayden Adams, a former mechanical engineer at Siemens. The first version (v1) of the Uniswap protocol was published as a proof-of-concept for automated market makers (AMMs). The second and third versions were launched in May 2020 and May 2021, respectively, introducing new options to allocate liquidity within a certain price range. Uniswaps name may be used in reference to the following: