Is Securitize & Mantle's Crypto Fund Really the S&P 500 of Crypto?

Mantle MI4 Fund seeks to become the S&P 500 of crypto. Securitize currently commands a staggering 71% market share in RWA tokenization. At the same time, Mantle is garnering attention with its high total value locked (TVL). Before you get too excited thinking about how seamless crypto diversification will be, you need to take a reality pill.

Diversification Versus True Representation?

The S&P 500 is a snapshot of the U.S. economy’s large-cap stocks. It’s deep, wide, quite stable, and very carefully designed to mirror the market. Can any crypto fund truly replicate that? The MI4 Fund portfolio includes BTC, ETH, SOL, stablecoins and liquid staking tokens. Oh, absolutely — I mean, sure it’s diversified within crypto, but does that really cover the whole crypto landscape. I'm not convinced.

Think about it: the crypto market is a wild west of innovation. DeFi protocols, NFTs, metaverse projects, layer-2 scaling solutions — the list continues. Is the MI4 Fund truly leading the way in understanding the full breadth of this innovation? Or is it only dealing with the “blue chips,” which are still incredibly volatile by the standards of traditional equities. In narrowing our scope to established players, are we losing the opportunity for potentially explosive growth offered by newer, riskier projects? Are we trading away future savings for the illusion of safety today?

Here's where the unexpected connection comes in: it's like saying a basket of Apple, Microsoft, and Google stock represents the entire tech industry. This is a nice start, but it misses the mark entirely by leaving out the innovative, little startups that are always shaking things up. The same applies to crypto.

Liquid Staking: Hidden Risks Exist?

To juice the returns, the MI4 Fund uses liquid staking tokens such as Mantle’s mETH, Bybit’s bbSOL, and Ethena’s USDe. Mantle's mETH yields a tempting 3.78% APR. Who doesn't love extra yield? Here's where my anxiety kicks in.

Liquid staking isn't risk-free. We’re demystifying smart contract vulnerabilities and impermanent loss. Further, we’re looking into the potential for cascading failures when a large staking platform goes belly up. Remember what happened with Terra/Luna? What appeared to be a safe yield quickly morphed into an unstoppable failure.

The S&P 500 does not have this sort of tail risk baked in. True, companies can file for Chapter 11, but the systemic risk is not the same. This is why referring to MI4 as the “S&P 500 of crypto” is quite disingenuous.

Centralization Undermines Decentralization?

Securitize, essentially a centralized platform, is the one tokenizing these real-world assets and this crypto fund. Mantle, though a DeFi protocol, introduces some degree of centralization into its governance and operations. Is this really what decentralization is supposed to be about?

S&P Dow Jones Indices, which administers the S&P 500, This index consists of any publicly traded, publicly held company where governance structures are considered relatively clear and beholden to shareholders. So can we say the same for all of the underlying assets in MI4 Fund? Are there unexamined or undocumented dependencies on centralized exchanges, custodians, or other third-party assets that might threaten the integrity of the fund?

My point is not that the MI4 Fund is bad in and of itself. This alternative may well be the best fit for institutional investors. It provides a much safer avenue for them to dive into the world of crypto. With BlackRock's involvement in Securitize through the BUILD fund (over $2.5 billion in net assets!), it's clear that big players are interested. As we’ve noted before, institutional investors are highly motivated by the search for yield. Digital assets are an exciting new frontier in which to seek out yield.

Let's be clear: this is not the S&P 500 of crypto. The reality is that it’s a highly curated basket of crypto assets with its own separate and distinct risks and limitations. Don't let the marketing hype fool you. Do your own research. Understand the risks involved. And always keep in mind, crypto isn’t truly “safe.”