In a significant instance of crypto market providers proving their worth to the larger investor community, Alongside, the first fully backed on-chain broad-based crypto market index, has raised $11 million from a seed round led by Andreessen Horowitz, popularly known as a16z. The round also saw participation from investors like Coinbase Ventures, Franklin Templeton Investments, Village Global, Not Boring Capital, and other angels.
Investment from such backers was driven by Alongside’s value proposition and its vision of becoming an on-chain Vanguard.
According to the CEO and co-founder of Alongside, Austin Diamond, “the goal is low-fee index products designed to enable total market exposure to crypto as a whole.” Apart from Diamond, the other co-founders are Jun Ho Hong (Head of Engineering), Gauthier Le Meur (Chief Operating Officer), and Rai Sur (Chief Technology Officer).
Comprehensive indexes enhance market efficiency
In any market, comprehensive indexes bring efficiency by removing the guesswork involved in picking individual assets. It also helps diversify risk by distributing the risk-return dynamics over a portfolio rather than pivoting it on a single asset.
Since the founders of Alongside had experiences working with Consensys, Coinbase, NASDAQ, and Google — a robust mix of crypto firms, traditional finance bodies, and big tech — it could add value to the crypto market by introducing an index of its own. The products of Alongside also go through stringent audits and are held by qualified, secure third-party custodians.
According to Austin Diamond, the firm’s name stemmed from a wordplay of mutual funds, “where everyone invests alongside each other.”
Composable, redeemable and collateralized
The recently launched $AMKT is an on-chain ERC-20 token, collateralized by 25 underlying assets while being composable and redeemable. Each $AMKT token empowers its holders with a vote toward building a well-balanced network through a DAO-led governance mechanism.
For on-chain buying, $AMKT is available on Uniswap and through Matcha on Polygon. Users can buy with fiat or on exchanges from Tranask and Gate.io. For purchases through a wallet, the available options are Coinbase Wallet, Rainbow, Metamask, and Zerion.
The full collateralization of the $AMKT token comes from the top 25 assets in crypto, excluding stablecoins and crypto assets of “questionable security status,” according to CEO Austin Diamond.
Coinbase Custody has been tasked with the job of securely holding the assets. There is a live reserves dashboard through which users can view the composition of the collateralization reserves in real time.
Since the token is composable, people can use the AMKT token across other protocols like lending, options, and more.
Evolution of crypto indexing
Alongside believes its offerings are better than the comparable legacy products in the traditional finance market. According to Austin Diamond, “traditional equity indices or ETFs are indexing equity products. But in our case, we want to give direct exposure to crypto assets as a whole.”
The firm will keep rebalancing the index every month and reconstituting it quarterly. While the proportions of the existing assets will change month-on-month, the inclusion and exclusion of assets will happen every quarter.
The vision of Alongside for the future would be launching different DeFi-centric products or those built on layer-2 blockchain as a category. The founders believe that the consistent evolution of the crypto space would give birth to a different market for crypto assets than what exists now. “As the market matures and other asset classes live on-chain, we’ll be able to build products that look different than what we have today,” said Austin Diamond.