trading Reduce transactions and gain diversification with custom sets
Looking for the perfect solution to get broad exposure to the crypto industry with a single token purchase trading?
A Token Set is like an index fund, with one purchase you can get exposure to a basket of assets. A Token Set is a smart contract that can operate on the Ethereum or Polygon Network. When called, the transaction automates the purchase of its underlying assets. Anyone can create a new Token Set and anyone can purchase an existing token set. It’s important to understand the set created by another person before buying it, as there can be a fund fee or continuous trading within. In either scenario, when purchased, you will receive a token representing the shares of the Token Set. Each Token set has its own ticker symbol which can be added to your wallet. The token can be traded back at anytime by burning the tokens token set and receiving back the token or tokens used to purchase it trading.
How to access Token Sets trading?
In order to access any DeFi — Decentralized Finance project, like a DEX — Decentralized Exchange, trading you need to have a web browser wallet. If you are new to crypto, I highly recommend setting this up, its quick and opens doors to many projects and opportunities. The web browser wallet is used to securely access the crypto universe. Personally I use MetaMask, which has mostly been a good experience, however, it’s not unusual to experience a glitch from time to time. Once you have funded your MetaMask wallet, you can go to TokenSets and search from the available sets or you can create your own. You can also explore sets on the trading Ethereum Network or the Polygon Network.
Which Network should I use for trading?
At the moment, pre the trading Ethereum 2.0 upgrade, gas fees have been very high, making trades very expensive. Gas prices fluctuate on average around $45 to make a trade and sometimes significantly higher when the network is very busy. To get around this issue, many are using the Polygon Network, which is a layer 2 on the Ethereum network. To use it, you need to access the Polygon Network Bridge and move over funds from Ethereum to Polygon. This bridge requires a lot of gas, but it’s a one time transaction and well worth it in the long run. Once on Polygon, transactions cost pennies and are fast to settle. You can also visit the Polygon Faucet to receive free Matic tokens, the Polygon native token, reducing trades from pennies to free. You can return to the faucet many times to replenish when you run out.
Why use token sets?
In addition to the convenience of replacing many trades with one trade, it allows one to better manage their diversification while others can piggyback off their efforts. The crypto field is developing rapidly consisting of many projects, some at infancy, while others more established. There’s competing layer 1 chains, and associated dex’s and dapps, all offering slight variations and improvements. It’s unknown if a few will succeed and many fail, similar to what we saw during the dot com boom. Many share the opinion that it’s different with crypto where they can all exist and communicate with each other through cross chain bridges. Whichever opinion you lean towards, diversification will help you emerge with strong gains, regardless of the outcome. Token sets allows a crypto investor to do this effectively with complete customization. I created an index called EID — Ether INDEX Diversified, which is comprised of the following tokens minted on the Polygon Network. The token price is set to $5 USD.
Token Contract: 0x7babF06458C2560d0219b61DC8523A1909e0D0FB
Who else uses Token Sets?
There is a fantastic group of people that comprise the Index Coop which use Token Sets to create diversified projects. The Index Coop is a DAO — Decentralized Autonomous Organization which is governed by the Index token. The Index Coop’s most notable tokens are the Ether and Bitcoin double leverage token, the DPI token— Defi Pulse Index token(captures DeFi projects), and the MVI token — MetaVerse Index token (captures the meta verse). For a full description and in depth allocation check out their website. Currently the aggregate balance of assets under management at Index Coop is 420 millions dollars. Keep in mind the assets (the index tokens) are not held by index coop, rather the purchaser retains custody.
Bottom line:
Token Sets is a super cool project, one that will likely survive beyond the bull run we are experiencing. It introduces custom Indexes with a simple user interface. While many features are still being developed and fine tuned, it is a proven success. Anyone can create a token set, so what are you waiting for trading?
The advent of innovative DeFi applications like Token Sets introduces both opportunities and complexities in cryptocurrency accounting. At OnChain Accounting, we recognize the importance of accurate financial tracking and reporting in these scenarios. Utilizing Token Sets for diversification involves multiple crypto transactions, each requiring precise accounting to ensure correct tax trading reporting and compliance. Our expertise in cryptocurrency accounting, coupled with advanced tools such as cryptocurrency tax software and crypto tax calculators, enables us to effectively manage these transactions. This meticulous approach to cryptocurrency accounting is crucial for anyone leveraging DeFi tools like Token Sets, ensuring their financial records are comprehensive and compliant with the dynamic regulations of the crypto world.
