Artemis Announces the Outerlands Fundamental Index

The digital asset market has seen significant growth and development in recent years, prompting investors to seek more sophisticated tools for market analysis and investment. Digital asset indices to date have typically relied on market capitalization for weighting their components. This approach often results in a heavy concentration in a few assets, with Bitcoin and Ethereum frequently comprising over 80% of these indices. While these two assets are undoubtedly significant, this concentration can overshadow many other widely used and innovative projects in the digital asset space whose market cap is not as high relative to their usage.

To address this issue, we are introducing the Outerlands Fundamental Index, a novel approach to digital asset indexing that aims to provide a more balanced representation of the ecosystem, powered by Artemis fundamental data.

The Outerlands Fundamental Index Approach

The Outerlands Fundamental Index takes a different approach. Rather than relying on market capitalization, a metric often influenced by narrative and speculation, this index determines weightings based on a combination of fundamental metrics for each asset, including:

1. Transaction counts

2. Daily active users

3. Fees generated

By using these metrics, the Outerlands Fundamental Index aims to better reflect the actual usage and activity of digital assets, rather than just their market value.

For instance, by comparing the weights of different assets in a market cap weighted vs fundamentally weighted index, we can see the effects of the innovative methodology. While a traditional, market cap weighted index would have allocated only 3% to SOL, its fundamental counterpart would have allocated 22%, more accurately accounting for all of the activity taking place on Solana. 

We see that assets related to platforms with greater usage have a higher weighting in the index. Interestingly this means that eight of the top 10 assets in the index are Layer 1 tokens like SOL and ETH. The full top 10 assets by weight in the index are:

This innovative index is the result of a partnership between two industry trailblazers:

• Artemis Analytics: A leading provider of on-chain fundamental data analytics for digital assets. Artemis collects, curates, and publishes transparent, high-quality on-chain fundamental data for each asset in the Index Universe.

• Outerlands Capital: An asset management firm specializing in factor-based investment strategies for digital assets. Outerlands brings its expertise and deep research capabilities to the table, using fundamental data to systematically construct broadly diversified portfolios.

The Outerlands Fundamental Index follows a rigorous methodology to ensure it captures a true representation of the digital asset landscape. Here's a simplified overview of how it works:

• Eligibility Criteria: To be included in the index, an asset must meet certain criteria, including:

  • Classification as a "Tier 1" asset by Artemis (meaning it has curated, high-quality fundamental data available)

  • A minimum market capitalization of $30 million

  • Not being classified as a wrapped token, stablecoin, meme coin, or privacy token‍

• ‍Data Collection: For each eligible asset, the index collects data on transactions, active users, and fees over the trailing 30 days.‍

• Weighting Calculation: Each asset's weight in the index is determined by its share of the total activity across all three metrics. Currently, the index uses an equally weighted average of 1/3 transactions, 1/3 active users, and 1/3 fees.‍

• Regular Rebalancing: The index is rebalanced monthly to ensure it stays up-to-date with the latest fundamental data.

The Index offers several potential advantages for investors:

• Broader Exposure: By looking beyond market cap, the index provides exposure to a wider range of actively used digital assets.‍

• Activity-Based Weighting: The index weights assets based on their actual usage, potentially identifying valuable projects before they become market cap leaders.‍

• Reduced Concentration Risk: By not relying solely on market cap, the index aims to provide a more diversified exposure to the digital asset market.‍

• Transparency: All data models used by Artemis are open source and can be verified by anyone in their public GitHub repository.

As the digital asset market continues to evolve, so too will the Fundamental Index. An Index Committee, composed of experts from Outerlands Capital and Artemis Analytics, will regularly review the methodology to ensure it maintains fidelity to its goal of tracking the performance of the most actively used digital assets.

For investors looking to gain exposure to the digital asset market in a way that reflects real-world usage and activity, the Fundamental Index offers an exciting new option. By focusing on fundamental metrics rather than just market cap, it provides a fresh perspective on what truly drives value in the world of digital assets.

If you are curious to play around with the historical performance of the index benchmarked against other sectors, assets, and indices, check out the Artemis Terminal Home page. Stay tuned for more updates as we continue to refine and expand this innovative approach to digital asset indexing!

Artemis Disclaimer: The information in this document does not constitute a recommendation to invest in any tokens, interests in any fund, or any other investment.  Artemis Analytics does not make any such recommendations, does not act as an investment adviser, and does not sponsor or issue any investment product, whether based on Artemis Analytics’ analysis or otherwise, including any product sponsored by Outerlands Capital.  Outerlands Capital is solely responsible for any investment product or vehicle it sponsors based on the index.  Any investment involves a risk of loss, and investors should review information provided by any issuer of securities before they invest.  The performance figures provided do not account for any fees that might be charged by the sponsor of an investment opportunity related to the indices shown.  Any such fees could materially affect performance. The performance figures are based on hypothetical[, backtested] analyses and do not represent actual trading or any person’s actual results.

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Outerlands Disclaimer: This information is not an offer to sell securities of any investment fund or a solicitation of offers to buy any such securities or digital assets. An investment in any strategy involves a high degree of risk.  There is no guarantee that the investment objective will be achieved.  Past performance is not necessarily indicative of future results. There is the possibility of loss and all investment involves risk including the loss of principal.   

The information in this Methodology is believed to be reliable and has been obtained from sources believed to be reliable. We make no representation as to the accuracy or completeness of such information. Any projections, forecasts and estimates contained in this presentation are necessarily speculative in nature and are based upon certain assumptions.  It can be expected that some or all of such assumptions will not materialize or will vary significantly from actual results. Accordingly, any projections are only estimates and actual results will differ and may vary substantially from the projections or estimates shown.

No current or prospective investor should assume that the future performance will be profitable or equal to past performance levels.  Investing generally includes fees such as trading and custodial fees, management or performance fees among other fees, all of which lower performance results.