ETT tracks an index by directly buying the underlying tokens of the index, replicating the performance of an index as efficient and accurate as possible.
How to achieve that?
Build a portfolio of tokens by weighting them with the same percentage as the index does. By rebalancing the ETT on a regular basis, the rate of return can always be kept consistent with the index, before deducting the service fees.
How it works
1) Initial Issue
OK06ETT will be available for subscription by USDT in the initial issuance. Users will be required to set the reservation time and amount. After all the reservations are full, the system will count the number of valid subscription orders. Then, it will calculate the units of ETT each user can get based on the net asset value (1 USDT) at the scheduled settlement time, charge the amount already on hold, and credit the units into the users' accounts.
2) Subscription in USDT
Under regular circumstances, all subscriptions in USDT will be settled every hour. The number of units a user can get = subscription amount / NAV. The USDT used for subscription will be transferred into the ETT account for buying the underlying tokens of the index after settlement.
3) Redemption in Underlying
If you have selected to redeem in underlying, you will get Σ【units】×【the underlying tokens】. Currently, redemption in underlying will be performed instantly.
4) Redemption in USDT
If you have selected to redeem in USDT, our system will first redeem the units into the underlying tokens, then sell them for USDT based on our advanced formula, and credit it into your account. Currently, redemption in USDT will be performed every hour on the hour.
5) Net Asset Value (NAV) Calculation
The net asset value is the value of a unit calculated after settlement. It is calculated by averaging the weighted average buying price and the weighted average selling price, then 【Total ETT value】=Σ【Settlement prices of the underlying tokens】×【amount of the tokens】, and 【NAV】=【Total ETT value】/【Settlement units】
6) Rebalancing Process
Rebalancing is required over a certain period of time. Because there will be adjustments on the subscriptions, and constituents and weightings of the index. It will lead to a difference between the index and the ETT. To rebalance the ETT, we will have to do the followings:
- Retrieve the data of the constituents and their ratio of the ETT and the index;
- Calculate the difference between the constituents and their ratio of the ETT and the index: 【Ratio difference】=【Constituents’ ratio of the index】-【Constituents’ ratio of the ETT】 (The difference value can be negative);
- Calculate【Total absolute difference】=Σ|【differences of all underlying tokens】|；
- Calculate【Adjusted total trading volume】=【Total ETT value】×【Total absolute difference】；
- If【Adjusted total trading volume】does not exceed【Trading limit】of the next minute, our system will implement the trading plan of the next minute according to the【Adjusted total trading volume】:【Trading volume of a token】=【Adjusted total trading volume】×【Ratio difference of the token】;
- If【Adjusted total trading volume】exceeds【trading limit】, of the next minute, our system will implement the trading plan of the next minute according to the【Trading limit】:【Trading volume of a token】=【Trading limit】×【Ratio difference of the token】；