Index description

A spotlight on the companies building the underlying security, risk & compliance, infrastructure, network, and exchanges for cryptographic systems.

The Lux Web3 Infrastructure Index (ticker: LUXDEX) is designed to track the performance of companies that are building the critical infrastructure and tooling that are taking advantage of technological breakthroughs to help companies trade; build, secure and monitor applications; as well as measure risk and compliance at scale. The Index combines publicly traded companies where crypto is core to their strategy, and publicly traded crypto companies in infrastructure, security, exchange and developer-first EVM chain categories, weighted by publicly traded token market capitalization.

Thesis

The Lux Web3 Infrastructure Index captures companies that are building the underlying security, compliance, infrastructure, network, and exchanges needed to make the benefits of an underlying ledger or smart contracts a reality. The index includes the monitoring and security stack to secure crypto contracts and transactions; the risk and identity stack to enable trustless and compliant interactions; and the data and developer infrastructure to build scalable and reliable applications. It also includes the foundational networks and exchanges enabling trading and entryways into the cryptoworld, ethereum virtual machine (EVM)-compatible chains that serve as foundational building blocks for decentralized apps and companies where crypto composes a meaningful percentage of revenue. 

The index is the first of its kind to combine publicly listed companies and crypto assets into one index. This provides a comprehensive picture of companies investing in and developing the critical infrastructure powering the Web3 ecosystem.

As an industry, Web3 is in the first inning of companies forming the foundations for the crypto data stack (similar to the early days of the data stack with FiveTran, DBT & Snowflake), establishing the monitoring and safety standards for the crypto security stack and measuring risk in the midst of regulatory pressures. We believe this index will mature and grow and become one public proxy of crypto industry maturity.

Index creators

The Lux Web3 Infrastructure Index was developed by Lux Capital, in partnership with Thematic. For over 20 years, Lux Capital invests in emerging science and technology ventures, with over $4b in assets under management. Thematic, the platform for building custom investment products at scale, enables investors and organizations of all sizes to build and manage their own financial indices and ETFs, supporting equities, dividend bearing equities, crypto, and more.

Index eligibility

The Lux Web3 Infrastructure Index combines publicly traded (e.g. NASDAQ, NYSE) and crypto traded companies. To be eligible for inclusion in the index, companies must develop a foundational piece of underlying crypto infrastructure - whether that is exchanges, networks, data and developer tooling, or payment rails.

For crypto companies, the company must have a public market coin or token with a market capitalization of at least $100m. Market capitalization refers to the total market value of the circulating supply.

For publicly traded companies, the company must report and generate revenue from crypto operations of at least $100m annually. Additional requirements are detailed below.

• Eligible security types generally include common stocks, ordinary shares and depositary shares.
• Only long positions are permitted. 
• One security per issuer is permitted. If an issuer has multiple securities, the security with the highest three-month average daily dollar trading volume (ADDTV) will generally be considered for possible inclusion in the Index.
• If, at reconstitution, Lux becomes aware that an issuer or security will soon undergo a fundamental change that makes it ineligible, it will be removed from consideration. This includes entering into a definitive merger or acquisition agreement or other pending arrangement that would make it ineligible for Index inclusion, or a filing of bankruptcy or similar protection from creditors.

Index weighting

The index uses a custom weighting methodology developed by Thematic to mirror the relative importance of each Web3 infrastructure category. The weighting methodology for crypto companies is as follows:

• 30% - Infrastructure
• 15% - Security
• 15% - Exchanges
• 15% - EVM chains

For each category, the weighting metric used is market capitalization of the company’s public coin or token.

Public companies represent the remaining 25%, and the weighting metric is crypto revenue.

Lux Capital may, as a part of regular rebalancing and reconstitution operations, choose to update the weighting methodology and metrics used.

Index operations

Index calendar

Index maintenance 

Deletion policy

If, at any time during the year other than the Index Reconstitution(s), an Index Security that no longer meets the Eligibility Criteria, or is otherwise determined to have become ineligible for inclusion in the Index, it is removed from the Index. This includes circumstances where an Index Security is determined to be ineligible for continued inclusion in the Index due to bankruptcy, delisting, or a definitive agreement that would likely result in the security no longer being Index eligible.

Replacement policy

Index securities deleted at any time during the year other than the Index Reconstitution(s) are not replaced.

Corporate actions

In the interim periods between scheduled index reconstitution events, individual Index securities may be the subject to a variety of corporate actions and events that require maintenance and adjustments to the Index.

In certain cases, corporate actions and events are handled according to the weighting scheme or other index construction techniques employed. Wherever alternate methods are described, the Index will follow the “Non-Market Cap Corporate Action Method.”

Index share adjustments

Other than as a direct result of corporate actions, the index does not normally experience share adjustments between scheduled index rebalance and reconstitution events.

Additional information

Announcements

Lux announces Index-related information via the Lux Web3 Infrastructure Index website at https://www.gothematic.com/idx/luxdex.

For more information on the general Index Announcement procedures, please refer to the Lux Index Methodology Policy.

Holiday Schedules

The Index is calculated Monday through Friday, with the exception of US national holidays as determined by NYSE and NASDAQ.

Unexpected market closures

For information on Unexpected Market Closures, please refer to the Lux Index Methodology Policy.

Calculation types

For information on the Index calculation types as well as the mathematical approach used to calculate the Index(es), please refer to the Calculation Manual – Equities & Commodities. 

Recalculation and restatement policy

For information on the Recalculation and Restatement Policy, please refer to the Lux Index Recalculation Policy.

Data sources

Public company data is provided by Xignite. Web3 data and metrics provided by CoinGecko.

Contact information

For any questions regarding an Index, please contact Thematic at index@gothematic.com.

Index dissemination

Index values and weightings information are available through Lux Web3 Infrastructure Index website at https://www.gothematic.com/idx/luxdex.

For more detailed information regarding Index Dissemination, see the Lux Index Methodology Policy.

Index calculation and dissemination schedule

The Index is calculated five (5) days a week, Monday through Friday, after close of trading at 16:00 ET.

Website

For further information, please refer to Lux Web3 Infrastructure Index website at https://www.gothematic.com/idx/luxdex.

Governance

Index governance

All Lux Indexes follow the same governance structure. For a detailed list of this information, please see the Lux Index Methodology Policy.

Lux Index Management Committee

The Lux Index Management Committee approves all new Index Methodologies. This committee is comprised of full-time professional members of Lux. The committee meets regularly, and reviews items including, but not limited to, pending corporate actions that may affect Index constituents, statistics comparing the composition of the indexes to the market, companies that are being considered as candidates for addition to an Index, and any significant market events.

For a detailed overview of the Index Management Committee, please see the Lux Index Methodology Policy.

Internal reviews of methodology

For a detailed description on internal reviews of the Methodology, please see the Lux Index Methodology Policy.

Communication with stakeholders and consultations

For a detailed description on Consultations and Communications with Stakeholders, please see the Lux Index Methodology Policy.

Index cessation

Lux has a documented procedure that is followed for Index Cessation that includes termination/retirement of an Index or Index Family.

For more information, please refer to the Lux Index Cessation Policy.

Discretionary adjustment

This Index Methodology was created by Lux to achieve the aforementioned objective of measuring the underlying purpose of each Index governed by this methodology document. Any deviations from this methodology are made in the sole judgment and discretion of Lux so that the Index continues to achieve its objective.

For more information on potential adjustments including Calculation and Pricing Disruptions, Expert Judgment, and Unexpected Reconstitution/Rebalances, please refer to the Lux Index Methodology Policy. 

Glossary of terms used in this document

For the glossary of key terms, please refer to the Lux Index Methodology Policy.

Disclaimer

Lux may, from time to time, exercise reasonable discretion as it deems appropriate in order to ensure Index integrity, including but not limited to, quantitative inclusion criteria. Lux may also, due to special circumstances, if deemed essential, apply discretionary adjustments to ensure and maintain the high quality of the index construction and calculation. Lux does not guarantee that any Index accurately reflects future market performance.

Neither Lux nor any of their affiliates, makes any recommendation to buy or sell any security or any representation about the financial condition of any company. Investors should undertake their own due diligence and carefully evaluate companies before investing. The information contained herein is provided for informational and educational purposes only, and nothing contained herein should be construed as investment advice, either on behalf of a particular security or an overall investment strategy. Advice from a securities professional is strongly advised. All Rights Reserved.