Unlock the potential of blockchain technology with Kriptomat’s Smart Contracts strategy, a pivotal part of our Intelligent Portfolios. This strategy offers a deep dive into the world of smart contracts, the powerful tools at the heart of blockchain innovation.
Designed for investors eager to tap into the technological advancements reshaping industries, this strategy focuses on the top coins enabling smart contracts at the protocol level. Join us as we guide you through the benefits, mechanics, and potential of investing in smart contract-enabled coins, showing you how to leverage this cutting-edge technology for your investment portfolio.
Breaking down Intelligent Portfolios and smart contracts
Intelligent Portfolios use algorithms and data analytics to enhance investment strategies. They analyse market trends and risks while adjusting asset allocations, making them suitable for both experienced investors and crypto newcomers. They offer a sophisticated, user-friendly way to navigate the complexities of cryptocurrency.
A notable feature of these portfolios is their capability for sector-specific investment, allowing investors to focus on distinct areas within the blockchain space, such as smart contracts.
Smart contracts, essential in blockchain, execute agreements autonomously with their terms coded directly into them. They allow trustless transactions without intermediaries, cutting costs and boosting efficiency. Additionally, their immutability and high security ensure transaction integrity, as they can’t be altered once deployed on the blockchain.
These contracts represent a paradigm shift in how we conceive of and execute contractual agreements across a multitude of sectors, including finance, real estate, healthcare, and legal services. Their integration into Kriptomat’s Intelligent Portfolios reflects a forward-thinking approach to investment, one that recognizes the transformative potential of blockchain technology in reshaping the future of digital interactions and transactions.
Core principles of the Smart Contracts strategy
Kriptomat’s Smart Contracts strategy is built on a set of foundational principles, guiding investors through the dynamic landscape of blockchain technology and smart contracts.
- Focus on leading smart contract platforms: The cornerstone of this strategy is its emphasis on the largest coins that enable smart contracts at the protocol level. These coins are not just digital currencies; they represent platforms that facilitate a wide range of decentralised applications, making them integral to the blockchain ecosystem.
- Rule-based, transparent approach: The strategy adheres to a set of predefined rules, guiding the selection and management of assets. This rule-based approach ensures that decisions are not influenced by market speculation or biases, but are instead driven by objective criteria. Transparency in the strategy’s mechanics is key, allowing investors to understand the rationale behind asset selection, portfolio adjustments and fees.
- Criteria for asset inclusion: For a cryptocurrency to qualify for inclusion in the Smart Contracts index, it must fulfil specific criteria. These include having sufficient market value, liquidity, security and reliable data feed from exchanges. The strategy is calculated with categorization from coinmarketcap.com and daily closing prices and circulating supply from coingecko.com.
- Rebalancing process: To maintain the strategy’s effectiveness and alignment with its investment objectives, regular rebalancing of the portfolio is crucial. The rebalancing process is carried out monthly. It involves adjusting the holdings to ensure that each cryptocurrency continues to meet the strategy’s criteria and that the portfolio reflects the current state of the smart contract market. This may involve adding new qualifying cryptocurrencies or removing those that no longer meet the criteria.
Through these mechanisms, Kriptomat’s Smart Contracts strategy provides a structured, transparent, and dynamic approach to investing in cryptocurrencies that are crucial to the advancement of blockchain technology. It represents a strategic choice for those looking to engage deeply with blockchain technology, providing exposure to coins that are likely to play a pivotal role in the future of decentralised systems and applications.
Benefits and limitations
The Smart Contracts strategy by Kriptomat presents a blend of unique benefits and certain limitations. Understanding these can help investors align their strategies with their investment goals and risk appetite.
Benefits:
- Simplicity: This strategy stands out for its straightforward nature. It’s ideal for investors who prefer a hassle-free approach, removing the complexity of choosing among hundreds of cryptocurrencies.
- Exposure to key blockchain innovations: This strategy provides direct exposure to coins at the forefront of blockchain innovation, particularly those enabling smart contracts, which are essential for decentralised applications.
- Potential for high returns: Given the crucial role of smart contracts in the blockchain ecosystem, coins supporting these technologies have the potential to become cornerstones in decentralised finance and other applications, offering the possibility of significant returns.
- Automated, rule-based approach: The strategy’s systematic approach allows for a disciplined and unbiased investment in the DeFi sector.
Limitations:
- Limited diversification: A major portion of the returns are driven by Ethereum, leading to limited diversification within the portfolio. This concentration can increase risk if Ethereum experiences volatility.
- Market sensitivity: The strategy’s focus on a specific area of the crypto market makes it sensitive to changes and developments specific to smart contracts and related technologies.
- Higher risk profile: Due to its focused nature and the evolving state of smart contract technologies, this strategy might have a higher risk profile compared to more diversified crypto investment approaches.
Overall, Kriptomat’s Smart Contracts strategy offers a unique opportunity to engage with an integral part of the blockchain revolution. It is ideally suited for investors who are enthusiastic about the potential of smart contracts and are prepared to navigate the associated risks and complexities of this specialised investment area.
Current portfolio allocation (November 2023)
The composition of the portfolio is determined by taking into account the 10 biggest crypto assets by market capitalization categorised as “Smart Contract tokens” on coinmarketcap.com. It excludes stablecoins.
As of November 2023, here is the current allocation of Kriptomat’s Smart Contracts portfolio:
| Cryptocurrency | Allocation (%) |
|---|---|
| Ethereum (ETH) | 76.13% |
| Binance Coin (BNB) | 12.63% |
| Cardano (ADA) | 4.02% |
| Chainlink (LINK) | 2.27% |
| Avalanche (AVAX) | 1.47% |
| Stellar (XLM) | 1.18% |
| Ethereum Classic (ETC) | 0.86% |
| Internet Computer (ICP) | 0.61% |
| VeChain (VET) | 0.50% |
| Algorand (ALGO) | 0.32% |
This table highlights Kriptomat’s Smart Contracts strategy, focusing on a range of key assets. The percentages show each cryptocurrency’s share in the overall strategy, reflecting a balanced investment in leading assets. The allocation, carefully chosen to capture the essence of the Smart Contracts market and its growth potential, is updated on the first day of each month to maintain its effectiveness and alignment with market developments.
Strategy performance
The performance of Kriptomat’s Smart Contracts strategy, while closely correlated with Bitcoin’s movements, has shown superior results. As of the latest data up to November 2023, the strategy’s performance stands as follows:
- 6 Months: +11.21%
- 1 Year: +41.47%
- 3 Years: +341.69%
- 5 Years: +746.87%
These figures illustrate the strategy’s success in leveraging the growth of smart contract-enabled cryptocurrencies, offering investors a profitable avenue closely aligned with Bitcoin’s trends but with enhanced returns. It’s important to remember, however, that past performance, even when outperforming a benchmark like Bitcoin, is not a guaranteed predictor of future results.
Who is this strategy for?
Kriptomat’s Smart Contracts strategy is tailored for a specific investor profile, particularly those seeking targeted exposure to the burgeoning field of smart contract-enabled coins. This strategy is best suited for:
- Smart contracts advocates: Ideal for those who have a solid understanding of blockchain technology and its applications, especially in the area of smart contracts. These investors are firmly convinced of the value of eliminating intermediaries in finance and other sectors where trustless applications are essential.
- Risk-tolerant investors: Given the focused nature of this strategy on a specific segment of the crypto market, it is suitable for investors who are comfortable with a higher level of risk. These individuals are often looking for growth opportunities and understand the volatility associated with specialised areas of blockchain technology.
- Innovative trend followers: This strategy appeals to investors who are keen on investing in emerging technologies that have the potential to revolutionise various sectors. They are usually on the lookout for investment opportunities that align with future trends in technology and finance.
- Diversification seekers within blockchain: For investors who already have a broad cryptocurrency portfolio, this strategy offers a way to diversify into a specialised and rapidly evolving area of the market. It’s a strategic choice for adding depth to an existing portfolio with a focus on innovative blockchain applications.
- Long-term investors: Those with a long-term investment horizon who believe in the future of decentralised applications and blockchain technology will find this strategy aligns with their vision. They are typically less concerned with short-term fluctuations and more focused on the potential long-term growth of smart contract-enabled coins.
In essence, Kriptomat’s Smart Contracts strategy caters to forward-thinking investors who are excited about the potential of smart contracts and are looking for a dedicated investment avenue to explore this advanced aspect of blockchain technology.
Learn how to kickstart your investing journey with Kriptomat’s Smart Contracts strategy through our insightful guide “Kriptomat’s Byte-Sized Guide to Intelligent Portfolios: Navigating the Future of Crypto Investments”.
Zooming out
Kriptomat’s Smart Contracts strategy provides a strategic gateway for investors to engage with a crucial and dynamic aspect of the cryptocurrency world. For those looking to diversify their portfolio with a focus on the future of blockchain technology, this strategy offers a structured and insightful pathway.
As with any investment strategy, success in this area requires staying informed, understanding the evolving landscape, and aligning investments with individual risk tolerance and long-term goals.
We invite you to continue exploring a large selection of educational content on our platform to deepen your understanding of crypto. Consider opening a Kriptomat account to enhance your cryptocurrency investment strategy with our Intelligent Portfolios and a plethora of other high quality trading tools.
Further reading
Learn more about Kriptomat’s Intelligent Portfolios and discover other strategies in the following articles:
- Invest Smarter: How to Optimise Your Crypto Assets with Kriptomat’s Intelligent Portfolios
- Unlock DeFi Potential Through Kriptomat’s Intelligent Portfolios
- Profit from Momentum with Intelligent Portfolios: Inside Kriptomat’s Capture Movers Strategy
- Maximise Investment Efficiency with Kriptomat’s Equal Weight Intelligent Strategy
- Measured Moves: Guide to Kriptomat’s Risk Adjusted Strategy for Intelligent Portfolios
- The Big Ten: Kriptomat’s Intelligent Portfolio Strategy for Top Market Cap Cryptocurrencies
NOTE
This text is informative in nature and should not be considered an investment recommendation. It does not express the personal opinion of the author or service. Any investment or trading is risky, and past returns are not a guarantee of future returns. Risk only assets that you are willing to lose.
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