The DAO landscape is in its initial stages and is constantly expanding; however, a significant number of Protocol DAOs have reached an appropriate level of maturity. The DAOX construct includes the two largest Protocol DAOs by market capitalisation in order to provide the appropriate exposure to this sub-segment and a reduction in overall volatility. In terms of non-Protocol DAOs, DAOX includes projects with robust liquidity on the main ERC-20-based Decentralised Exchanges (“DEXes”), assets that have gathered pace, have passed the initial stages and have reached a relevant size. The overarching narratives in the DAO landscape are considered in order to maintain an appropriate level of diversification.

The index is rebalanced on a 3-month basis. However, the methodologist will review monthly the evolution of the index and decisions in-between rebalancing periods might be taken given the evolution of the market.

DAOX is constructed based on a modified market cap-weighted methodology, with the following considerations:

• The weightings of each project are proportional to a modified measure of their market capitalisation, i.e., are computed based on the square root of market capitalisation.
• Square root of market capitalisation is used in order to smoothen out the large differences between the top projects and the rest of the assets.
• Upper cap of 15%: any token allocation must be lower or equal to 15%, in order to limit the effects of any single asset’s trajectory driving the returns of the portfolio.
• Lower cap of 3%: any token allocation must be higher or equal to 3%, in order to have an appropriate level of exposure to smaller projects in the portfolio.