Index constituents - selecting the coins to be included in the C100 index.

Indices are a great way to track the performance of selected assets. The methodology of asset selection determines the reliability of investment tools built on top of the index.

In one of our first publications, we discussed how an index can be created: the composition of participants, weights, rebalancing, etc. As outlined in the White Paper and displayed on the c100index.digital homepage, the general principles of C100 Index are:

1. Company maturity — index member companies are among the largest by capitalisation according to CoinMarketCap — the world’s most-referenced price-tracking website for crypto.
2. Returns — the index does not include companies issuing tokens in the form of a stablecoins linked to fiats or other cryptocurrencies. This solution maximizes investor’s exposure to digital space growth.
3. Time to rebalance — the market dynamics of all tokens is different. To ensure that the index continues to include leading companies in the crypto industry, the composition of participants is rebalanced on the first day of each month. For exchange-traded indices on orthodox capital markets, a quarterly rebalancing approach is common, but due to the young and innovative nature of the industry, a shorter interval has been chosen. It ensures we capture market changes in a relevant way.
4. Participation ceiling — although the market appreciates the fundamental value of some projects (e.g Bitcoin dominates about 40% of the entire crypto market), the maximum participation size for each token is limited to 10%. This approach allows the index to show better results on a longer time horizon giving weight (and way) for tokens with greater upside potential.
5. Liquidity — to be included in the C100 Index, participants must have been traded on major exchanges for at least three months.
6. Validation — the main indicator determining whether a token should be included or excluded is the market demand. It is aligned with the core principles of crypto — letting the community select the best projects in the space.

To conclude, the main objective of C100 Index is to provide investors with a convenient tool for investing in crypto tokens, allowing them to experience the full benefits of the most innovative and fastest growing economic sector.