6. Risk Management

The iTokens methodology incorporates strong risk management measures to ensure the indices remain reliable and representative in the rapidly evolving cryptocurrency market. These measures include, but are not limited to:

• Liquidity Requirements

  • Include only assets that meet defined liquidity thresholds, ensuring the indices remain practical and reflective of active market participants.

  • The precise criteria and data sources used to evaluate liquidity are detailed in the methodology for each specific index, ensuring the construction of the index is tailored exactly to its unique needs

• Diversification Measures

  • Apply caps or limits on individual asset weights to avoid over-concentration and ensure balanced index.

  • Use periodic rebalancing to maintain diversity and mitigate risks from market fluctuations.

• Data Integrity

  • Indices rely on validated and auditable third-party data sources to ensure consistent and reliable data inputs.

  • Each index may utilize its own specific data providers, carefully selected to ensure high data quality.

  • Providers are evaluated based on their credibility, reliability, and ability to supply accurate and comprehensive data.

  • Regular checks are performed to verify the accuracy and consistency of data, reducing the risk of errors in index construction.

  • Updates to data sources or methodologies are carefully reviewed to maintain the quality and reliability of the indices.

• Adaptation to Market Changes

  • The methodology is designed to respond effectively to significant market events such as extreme volatility, asset forks, or other unexpected developments in the blockchain ecosystem.

  • An oversight process ensures that emerging risks are identified and managed in a timely manner.

By integrating these safeguards, the indices constructed under this methodology aim to provide users with reliable benchmarks while reducing exposure to undue risks.