Crypto investment specialist 21Shares has launched two new ETPs on SIX Swiss Exchange offering investors inverse and low-cost, core exposure to Ethereum.
21Shares offers inverse and low-cost, core products on both Bitcoin and Ethereum.
The products have come to market after Ethereum, the leading venue for the deployment of smart contracts, underwent a long-awaited “hard fork” last week.
A hard fork is defined variously but broadly refers to a change in blockchain protocol or what happens when a blockchain diverges into two potential paths going forward.
Ethereum’s hard fork saw its blockchain split from a proof-of-work (PoW) protocol into two chains, one governed by the existing PoW protocol and another by the more energy-efficient and scalable proof-of-stake (PoS) protocol.
Commenting on the new listings, Arthur Krause, Director of ETP Product at 21Shares, said: “Today, 21Shares launched two new products that mirror existing 21Shares products – but provide exposure to Ethereum, rather than Bitcoin.
“Our successful bitcoin products – Short Bitcoin and Bitcoin Core – were built in response to investor demand for more ways to access Bitcoin in a professionally managed product. Now, especially given the level of interest in Ethereum today, we wanted to provide investors with more options to enter the asset class with different products.”
The ETPs
The 21Shares Short Ethereum ETP (SHETH SW) provides the inverse (-100%) daily return of the price performance of Ethereum.
The ETP obtains its short exposure through borrowing Ethereum and simultaneously selling it on an execution platform, similar to the existing 21Shares Short Bitcoin ETP (SBTC SW).
Investors who are contemplating inverse exposure to Ethereum should be mindful of the recommended holding period. Due to the product’s daily resetting, for periods longer than one day, the ETP’s return will not be the same as the total return performance of Ethereum multiplied by a factor of minus one.
SHETH comes with an expense ratio of 2.50%.
21Shares’ second launch is the 21Shares Ethereum Core ETP (CETH SW) which is the world’s lowest cost directly-backed Ethereum ETP with an expense ratio of just 0.21%.
The price tag is 44 basis points cheaper than its closest rival, the Global X Ethereum ETP (ET0X GY), and 128 basis points cheaper than the largest Ethereum ETP which is also offered by 21Shares – the $180m 21Shares Ethereum ETP (AETH SW).
Similar to the 21Shares Bitcoin Core ETP (CBTC SW), which debuted in July as the world’s cheapest directly backed bitcoin ETP, CETH’s low price tag is achieved by participating in collateralized lending agreements which serve to cover operational costs. Loans are executed through institutional-grade partners, are overcollateralized, and are monitored daily to protect the interest of the ETP’s shareholders.
While the low price tags of CETH and CBTC may be appealing, rival crypto ETP provider ETC Group has issued a warning regarding these products, noting that their lending practices potentially carry significant risks to investors.