TCAP: The Total Crypto Market Cap Token
Launched by Cryptex Finance in 2021, TCAP tracks the value of the entire crypto market.
Updated March 22, 2022 • 3 min read
The Total Crypto Market Cap token (TCAP) is part of a growing wave of crypto financial products that provide exposure to a broad range of crypto assets. TCAP functions as a token that tracks the value of the total market capitalization, an index incorporating thousands of crypto assets. TCAP and the wider Cryptex Protocol are governed by the CTX token, which is used to propose and vote upon changes.
A Total Crypto Market Cap Index Token
Total Crypto Market Cap (TCAP) is an Ethereum smart contract that tokenizes the total market capitalization of all cryptocurrencies and tokens listed via established crypto data providers. The market capitalization (market cap) of a cryptocurrency is calculated by multiplying the number of tokens or coins in circulation by the price of an individual token or coin. The TCAP token represents the market cap of the entire crypto market.
Index tokens like TCAP are a growing sector of the decentralized finance (DeFi) landscape. TCAP provides investors with exposure to the wider crypto market — by tracking an index representing thousands of crypto assets — without the full risk that comes with owning those individual assets. While individual currencies may be prone to volatility, TCAP offers stability in the law of averages. In this way, TCAP could be considered similar to an exchange-traded fund (ETF) or index fund in traditional finance.
TCAP was developed by Cryptex Finance, a company founded by former investment manager Joseph Sticco, Ethereum developer Preston Van Loon, and Thomas Matzner. TCAP is produced via the Cryptex protocol, a set of smart contracts that are built on Ethereum. The Cryptex protocol is governed via CTX, an ERC-20 governance token.
Track the Total Crypto Market Cap With TCAP
The price of TCAP is calculated by a simple metric. It takes the total market capitalization of several thousand cryptocurrencies, then divides by 10 billion. Thus, if the total crypto market cap of the TCAP token index is $350 billion USD, the price of TCAP would be $35. TCAP is designed to function like a stablecoin, tracking the price of the total market cap. Unlike fiat-backed stablecoins such as USD Coin (USDC) and Gemini dollar (GUSD), which are pegged to the dollar and maintain a rigidly stable price, TCAP’s value fluctuates with trends in the wider crypto market.
TCAP maintains its peg via over-collateralization, a mechanism similar to that of MakerDAO’s DAI. You can mint TCAP by depositing enough ether (ETH) or DAI into a vault smart contract to back the token with 200% collateralization. You must manually manage your collateral to keep its value above this ratio or you risk having your collateral liquidated. You can retrieve your collateral by repaying the borrowed TCAP, which will then be burned. The burning process has a fee attached to it that is allocated toward protocol development.
The CTX Token
The TCAP Token is a crypto financial instrument produced by Cryptex Finance, which is integrated with its own CTX Token. CTX is an ERC-20 token that entitles its holders to vote on protocol updates for TCAP in addition to future products developed by Cryptex Finance. CTX was launched with a 10 million token supply, which was divided between the Cryptex Finance team, advisors to the project, a protocol treasury, and community members. CTX can also be earned by providing liquidity for TCAP on certain decentralized exchanges (DEXs), such as SushiSwap.
Here’s how Cryptex governance works: You can propose changes to the Cryptex protocol if you hold more than 100,000 CTX tokens. You can also delegate your CTX to another user, who can vote on your behalf. This means that new Cryptex products and changes to its underlying code will require widespread support from its community of users. However, the Cryptex protocol is not wholly decentralized. The Cryptex Finance team holds “guardian keys” — multisignature admin keys — that can be used to pause deposits and TCAP minting in the event of a bug or hack. Using these keys does not prevent users from withdrawing their collateral.
With TCAP, Cryptex Finance is aiming to satisfy crypto investors’ increasing appetite for financial products that provide exposure to the wider crypto market as it continues to mature. In doing so, TCAP enters a fast-growing sector that includes competitors such as Base Protocol’s BASE, Synthetix’s sDEFI, DeFi Pulse’s Index (DPI), and PieDAO’s various index tokens. The result of this burgeoning sector of crypto derivative assets reinforces wider market stability and long-term crypto market maturity.
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