What is the Zerocap Innovation Index?

This article provides a overview of Zerocap Innovation Index.

The Zerocap Innovation Index (ZII) is an in-house trading strategy that aims to capture long-term upside through investing in a plethora of tokens across a diverse multitude of categories. The index is founded on our main thesis of the eventual adoption and use of web3. Web3 is the general term used to describe the next iteration of the internet that is decentralised and owned by all participants through the use of blockchain technology. As web3 gradually becomes the new paradigm for the internet, a variety of infrastructure will be required; together, these pieces form the web3 stack. 

The web3 stack is similar to the web2 internet stack, however, each infrastructure layer is decentralised and leverages blockchain in some way. Allocating weight to these infrastructure pieces ensures that the ZII is rendered a long-term investment. Whilst narratives and hype can drive short-term market cycles, web3 is a wider, holistic framework that has the potential to take over the market. If our thesis is correct, demand for these key infrastructure pieces will skyrocket. Ultimately, the goal of the ZII is to provide investors with exposure to the infrastructure that will power this decentralised, blockchain-based internet stack. 

All tokens included in the ZII are viewed as “the bottom of the stack” in the sense that the protocols accrue value from the projects built atop of them instead of building on a base layer. The infrastructure categories focus on: 

• Layer 2s which scale blockchains like Ethereum
• Layer 0s that facilitate the efficient development of new layer 1s

• Oracles that provide real-world, off-chain data to blockchains in a decentralised fashion

• Decentralised Data Storage which allows protocols, users and developers to store data and information on-chain without relying on a single, trusted authority

• Effective DAOs that are driven to achieve a single set of purposes through communal governance votes

• Mainstream Adoption Engines which bring crypto the mainstream with large web2-based partnerships and scalable projects for institutional clients

Our Investment Committee undertakes rigorous on-chain and off-chain diligence to determine suitable token weightings, concentrating on market leaders and frontier innovators. All digital assets are backed by institutional grade protections such as Multi-party computation, SGX hardware isolation, detailed audit trails and bespoke insurance issued to Zerocap Pty Ltd by Lloyds of London.

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