Combined LANITA index is a Ethereum-based coin and is a 100% asset supported by the top 30 cryptocurrencies with the maximum market capitalization.
The top 30 cryptocurrencies are characterised by
- market capitalization of about or above 1.0 billion dollars each
- high liquidity
- representation on most major exchanges
- widely presented information on current activities and plans
The base price of LANITA token is calculated as 1/100 of the price of the weighted arithmetic mean of the top 30 basket. Or 1% of the weighted basket of currencies from the top 30 list.
Prices are weighted to exclude the dominant effect of cryptocurrencies with a high cost per index according to the following formula:
S = (S1+S2+S3+…+S30)/30 – average price in the selection
where S1, S2, S3….S30 are prices of top 30 cryptocurrencies
LANITA = (S/S1+S/S2+…..+S/S30)/100
As a result, the share of any cryptocurrency from the top 30 will not exceed about 3% in the basis of calculating the LANITA index.
It will allow to:
- Significantly reduce the risk for the portfolio (since the adverse change in the price of a specific cryptocurrency will be minimized)
- Diversify the portfolio as a whole
- Be a 100% asset supported by the top 30
In the exceptionally unfavorable situation of a sharp drop of one of the positions, the total portfolio drawdown will not exceed 3%.
Basic Principles of Rebalancing
1. If the cryptocurrency of the initial portfolio of top 30 is out of the list for two weeks and is lower by more than 20% in terms of capitalization, it is replaced by a candidate for the list of top 30.
2. When deciding on exclusion of a specific cryptocurrency from the list, fundamental indicators, the news background, and technical performance should be taken into account (apart from a decrease in capitalization). The plans of the company that issued the cryptocurrency should also be considered.
In our work, we categorically do not accept the acceptable principles of rebalancing. Purely mechanical leveling, often used by various funds, involves a very high risk. If the market is in the flat state (of which we naturally can not know in advance), the strategy of selling for more and buying for less works. But only in the case, when the markets undergo extensive fluctuations around the line (for example).
If the market moves in a directional way, the strategy of mechanical rebalancing will bring nothing except losses or a decrease in yield.
In case of directed upward movement, in fact, investments in the leader decrease and investments in the outsider increase resulting in the overall decrease in income.
In case of directed upward movement, in fact, investments in the falling currency increase, while investments in a stable one decrease. This strategy can lead to completely unpredictable losses. In the traders' language, this is called averaging of losses.
Contract LAN30 : 0xc874bc86d544b005a5d3082db8cb5adda9a82c68
Official Site : http://lanita.io/
White Paper : http://lanita.io/whitepaper_en.pdf
Twitter : https://twitter.com/lanita_io
Explorer : https://etherscan.io/token/0xc874bc86d544b005a5d3082db8cb5adda9a82c68