“We’re trying to boost the liquidity of the fund with companies that aren’t over 50% [of digital asset-linked revenue] but are kind of in the zone,” Lee said, adding the aim is to make this a pure-play digital transformation fund in the very near future as this sector grows.
Essentially, DAPP is a blockchain-related ETF. “It’s tied to the blockchain across a wide variety of use cases, applications and implementations,” Lee said.
“Bitcoin is the number one blockchain application, but there are a lot of other things going on,” he continued. “Ethereum is a common digital currency, but it’s also a platform and a way to build other applications on the blockchain. These applications are decentralized peer-to-peer networks, and it’s a new way to build technology.”
There are several blockchain ETFs that all launched in early 2018. The largest is the Amplify Transformational Data Sharing ETF (BLOK), which has $1.4 billion in assets and charges an expense ratio of 0.71%. (DAPP’s expense ratio is 0.65%.)
BLOK has been on a roll with a one-year gain of 266%, including 71% year to date.
Both DAPP and BLOK share many similar holdings within their respective top-10 positions. Beyond that, BLOK’s other holdings include the likes of Alibaba Group Holdings, Oracle Corp., Visa Inc., Alphabet Inc. and Honeywell International Inc.
Lee said the aim of DAPP is to be more of a pure play on blockchain and the transformation to the digital asset ecosystem.
“We’re not trying to duplicate exposures or companies you already have in your core equity allocation,” he said.
Ultimately, Lee posited, technology tied to the blockchain could potentially transform the economy in numerous ways.
“There are threads of innovation happening now on the blockchain that weren’t around 15 years ago,” he said. “It’s here, and this ETF is providing exposure to the companies that are early movers doing business within this blockchain economy.”