WisdomTree Launches Onchain Options Income Strategy with New Tokenized Fund

Global asset management firm WisdomTree has introduced a new digital asset fund that integrates a traditional options strategy into blockchain technology. This initiative highlights the increasing alignment between conventional asset management and blockchain-based financial systems.

Key Takeaways

WisdomTree launched the Equity Premium Income Digital Fund (ticker EPXC).
The fund aims to track the performance of the Volos US Large Cap Target 2.5% PutWrite Index, using a put-writing strategy.
The tokenized fund is accessible for both institutional and retail investors, enhancing liquidity and flexibility.
WisdomTree has been a pioneer in tokenization with 15 tokenized funds across various blockchains.
The financial industry, while slower to adapt, is beginning to embrace tokenization in response to the rise of digital currencies.

WisdomTree brings options income strategy onchain with new tokenized fund

Main Content

WisdomTree has unveiled a new digital asset fund aimed at merging a classic options strategy with blockchain technology. This innovative move demonstrates the growing overlap between traditional asset management and blockchain fintech solutions.

The WisdomTree Equity Premium Income Digital Fund, trading under the token ticker EPXC and the fund ticker WTPIX, aims to align with the performance and yield of the Volos US Large Cap Target 2.5% PutWrite Index. This benchmark is structured around a systematic "put-writing" approach, where the index sells cash-secured put options to generate income. Instead of directly writing options on the S&P 500, this strategy utilizes contracts linked to the SPDR S&P 500 ETF Trust (SPY), earning premiums by acting as the option seller.

Source: WisdomTree Prime

For investors wary of market fluctuations or downside risks, put-writing can yield a reliable stream of premium income and offer some protection in stable or slightly declining markets.

EPXC is available to both institutional and retail investors. Its tokenized nature provides access for cryptocurrency enthusiasts who can take advantage of the blockchain's infrastructure, which offers quicker settlement times and improved transferability compared to conventional fund structures.

Will Peck, WisdomTree's head of digital assets, highlighted that this launch aims to expand investment options onchain and represents a significant stride in the firm’s initiative to embrace tokenized assets.

WisdomTree's Early Adoption of Tokenization

WisdomTree has positioned itself as a frontrunner in the realm of tokenization, now managing 15 tokenized funds across multiple blockchains, including Ethereum, Avalanche, and Base. Their Government Money Market Digital Fund, a tokenized adaptation of a traditional government money market fund that invests in short-term US government securities, stands out as the company’s best-performing tokenized asset with over $730 million in assets.

In September, the asset manager also introduced a tokenized private credit fund, which provides investors with blockchain-based access to privately sourced credit and has received significant interest post-launch.

WisdomTree’s tokenization metrics. Source: RWA.xyz

While the financial and wealth management sectors have been comparatively slower to evolve, institutions like Goldman Sachs and BNY Mellon have only recently begun launching tokenized money market products. This trend is often seen as a reaction to the rapid adoption of stablecoins, which have emerged as standard cash instruments in many areas of the digital asset landscape.

In Conclusion

With its advancements in tokenized funds and options strategies, WisdomTree showcases how traditional finance can adapt to and benefit from the emerging blockchain ecosystem. This groundbreaking approach not only offers diversified investment strategies but also proves that the integration of legacy finance with innovative technologies is set to reshape the industry.