I have some questions on how does ICNX work.
Would cryptocurrencies be bought each time a new ICNX is created?
For example, if composition of ICNX is 50% BTC and 50% ETH (just assumption)
If I buy $1 worth of ICNX, would .5$ of both btc and eth be bought by Index fund immediately?
Wouldn't it mean lots of wastage in fees?
Real ICNX has 12 cryptocurrencies. For each purchase of each cryptocurrency they have to pay gas and fees of exchange.
Yes, when you buy ICNX from Iconomi platform, buy orders are executed on your behalf and the ICNX tokens are created. I'm sure they have a way better fees plan than the average trader. In addition, there is a 0.1% entry/exit fee, so basically it will cover all fees paid by Iconomi.
Keep in mind that people will also buy ICNX from exchanges, and in that case no fees will be paid by Iconomi.
I got your point.
But, entry fee is just 0.1%. If Index Fund buys each of the crypto, they have to pay fees of exchange which would be around 0.1% (would be more for some cryptocurrencies) and also transaction fees/gas.
I can see three solutions to this problem-
1. Minimum purchase amount of ICNX would be higher (maybe greater than $10).
2. They make their own exchange.
3. They sell ICNX monthly/weekly. To club all the purchases and minimise the fees.
All exchange fees are percentages, so they scale proportionally to the amount invested so it doesn't matter whether purchases are large or small...
1% of 10000 is 100
1% of 10 a thousand times is also 100...
Or maybe I'm missing what you are getting at.
ETH gas is a fixed amount instead of a percentage of the transaction so that is the only thing I can think of that would set a minimum buy limit, but the price of gas is super cheap.
