The World s First Well Diversified Crypto Asset Indices

The World s First Well Diversified Crypto Asset Indices

Outline I. Crypto Assets Investment Universe II. III. IV. Why BB Index Overview Methodology V. BB Index & Traditional Asset Allocation VI. VII. BB Matrix Roadmap 2

I. Crypto Assets Investment Universe Blockchain:The first nonviolent revolution in human history Blockchain Blockchain is a new application of computer technologies such as distributed data storage, peerto-peer transmission, consensus mechanism, Blockchain AI Big Data encryption algorithm. Consensus Mechanism is noted as algorithm enabling mutual trust and interests exchange among nodes in blockchain system. Big Data changes relationship among machines AI changes relationship between human and machine Blockchain changes relationship among people credibility,recognition function. 3

I. Crypto Assets Investment Universe Bitcoin:The first crypto currency enabling Completely trustworthy memory in human history Primitive Money Gold Banknote Bitcoin Cryptocurrency No memory in cash transaction Limited time in credibility of bank accounts(reliance on stability of government operation) Definition of traditional currency does not apply to crypto currency which requires no government endorsement 4

I. Crypto Assets Investment Universe Smart Contract = Cash + Bank Accounting + Financing Cash, Accounting, Financing comprise modern financial system, which will be gradually replaced by smart contract Cash Accounting Financing (Equity,Bond) Cryptocurrency Broad application prospect for smart contract (Equity, Bond,FX transactions, Fund,FOF & other financial assets) Smart contract could eliminate counterparty risk, allow direct investment in target asset, reduce bid-ask spread and ensure enough liquidity. 5

I. Crypto Assets Investment Universe New Technology Revolution Technology Revolution greatly improve production efficiency and utilization of resources. Blockchain technology is the first nonviolent revolution in human history. The First Revolution Steamer The Second Revolution Computer The Third Revolution AI,Big Data, Blockchain 6

I. Crypto Assets Investment Universe Crypto Assets:Digital currency,infrastructure, Token, issued on Blockchain, P2P transferable, secured by cryptography Asset Type Description Example Prospect Digital Currency Infrastructure Token Cryptocurrency that allow users to have access to the Blockchain Cryptocurrency that allow users to run the Dapps built on top of Blockchain Infrastructure Cryptocurrency that depends on another cryptocurrency as a Infrastructure to operate Cryptocurrency will become the general equivalent in crypto market and in the long term a few cryptocurrencies will account for the majority of market cap, exposed to high policy risk. Infrastructure is similar with FANG or BAT. Subject to scale effect, most capital will be attracted to only a few infrastructure, exposed to mild policy risk. Token will become the crypto asset with various functions and enormous quantity. Most of tokens, however, will experience a short life cycle and only a few tokens can survive and share the broad future. Source: From coinmarketcap.com as of Dec. 9, 2017 7

II. Why BB Index Shrinking market cap percentage of Bitcoin Bitcoin s market cap percentage is shrinking over time In Jan, 2013,Bitcoin market cap represented 95% of crypto market In Jun, 2017, before China s prohibition of ICO, Bitcoin market cap represented 60% of crypto market As of Dec 8, Bitcoin represented 67% of market share due to the demand from institutional investors(cboe, CME future) In the long term,bitcoin market cap will only account for 5-10% of the market Next Generation Blockchain will be better than Bitcoin Smart Contract: Ethereum Cheaper and faster: Raiden Network, Plasma More Environment Friendly: PoS 8

II. Why BB Index B7Index : higher return than Bitcoin Far more upside ahead In Q4 of 2017,B7index outperformed 60% more than Bitcoin In the long term,bitcoin s market share is expected to fall constantly. If compared to gold, Bitcoin is still expected to grow 12 times larger in the future. Other cryptocurrencies will account for 90% of market, exhibiting much higher return than bitcoin B7 includes more second generation coins, third generation coins, which features higher security level, faster transaction speed and fits in more real-life application. Source: All returns in USD from www.coinbbindex.com 9

II. Why BB Index B7 Index:High Return + High Vol + Low Correlation = Well Diversified High Performance Portfolio High Return/High Volatility Crypto Assets are extremely volatile with volatility ranging from 60% to 200%, compared to 12% of S&P and 6-8% of a balanced portfolio. Therefore, Investing in crypto assets could be 5-20 times riskier than investing in traditional equities. Source: All returns in USD from coinmarketcap.com Low Correlation Low empirical daily correlation Crypto Assets differ in consensus mechanism, mining algorithm, and utility functions, targeting at different user group and trader group and further supporting fundamentally the low correlation among crypto assets B7 covers 80% of total market cap in crypto market 10

II. Why BB Index B7 Index : Passive investment in crypto market 90.00% 80.00% 70.00% 60.00% 50.00% 40.00% 30.00% 20.00% 10.00% 0.00% 8.70% 28.30% Buffet Betting Agreement 2008-2017 62.80% 2.90% 7.50% 22.00% FOFA FOFB FOFC FOFD FOFE Hedge Fund Avarage 85.40% S&P500 Passive Investment Thumb of rule of investment is asset allocation rather than timing In longer run, index always outperforms active strategies Currently crypto assets still account for tiny portion in the capital market with huge upside potential Source: Letter from Warren Buffet to Shareholders 11

III. Overview BB Index is a family of crypto indices grouped by cap, category, and strategy Blockchain Index by Market Cap No. Name Ticker Description 1 Blockchain Top 7 Index B7 Mega 2 Blockchain Top 7 ex Bitcoin Index B7X Mega ex Bitcoin 3 BlockChain Top 20 Index B20 Large Cap 4 BlockChain Top 20 ex Bitcoin Index B20X Large Cap ex Bitcoin 5 BlockChain Top 20 ex Top 7 Index B20XX Large Cap ex Mega 6 BlockChain Top 50 Index B50 Large & Mid Cap 7 BlockChain Top 50 ex Bitcoin Index B50X Large & Mid Cap ex Bitcoin 8 BlockChain Top 50 ex Top 20 Index B50XX Mid Cap 12

III. Overview BB Index is a family of crypto indices grouped by cap, category, and strategy Blockchain Index by Type 9 BlockChain Currency Top 7 Index BC7 First Tier Currency 10 BlockChain Currency Top 20 Index BC20 First & Second Tier Currency 11 BlockChain Currency Top 20 ex Top 7 Index BC20XX Second Tier Currency 12 BlockChain Infrastructure Top 7 Index BI7 First Tier Infrastructure 13 BlockChain Infrastructure Top 20 Index BI20 First & Second Tier Infrastructure 14 BlockChain Infrastructure Top 20 ex Top 7 Index BI20XX Second Tier Infrastructure 15 BlockChain Token Top 7 Index BT7 First Tier Token 16 BlockChain Token Top 30 Index BT30 First & Second Tier Token 17 BlockChain Token Top 30 ex Top 7 Index BT30XX Second Tier Token 13

III. Overview BB Index is a family of crypto indices grouped by cap, category, and strategy Blockchain Index by Market Cap and Type No. Name Ticker Description 18 BlockChain Top 20 Currency Index B20C Large Cap Currency 19 BlockChain Top 20 Infrastructure Index B20I Large Cap Infrastructure 20 BlockChain Top 20 Token Index B20T Large Cap Token 21 BlockChain Top 50 Currency Index B50C Large & Mid Cap Currency 22 BlockChain Top 50 Infrastructure Index B50I Large & Mid Cap Infrastructure 23 BlockChain Top 50 Token Index B50T Large & Mid Cap Token 24 BlockChain Top 50 ex top 20 Currency Index B50XXC Mid Cap Currency 25 BlockChain Top 50 ex top 20 Infrastructure Index B50XXI Mid Cap Infrastructure 26 BlockChain Top 50 ex top 20 Token Index B50XXT Mid Cap Token 14

III. Overview BB Index is a family of crypto indices grouped by cap, category, and strategy 15

IV. Methodology Proprietary Methodology to construct the Crypto Asset Indices Cap Weighted Adjusted Innovative weighting scheme for crypto asset s exponentially rising market cap Categorized based on crypto asset universe(digital currency, infrastructure, token) Truly Diversified No trivial allocation Not dominated by Bitcoin Customized rebalancing method regarding to 24/7/365 transaction mechanism in crypto market Live All BB Indices are updated every 3 minutes on the website https://www.coinbbindex.com BB Index Family Indices for ETF/Hedge Fund Indices for Coin/Token/ICO 16

IV. Methodology A typical example of portfolio construction using BB Index Portfolio(%) With lower policy risk, BI7 will be bullish in the long-term Although facing higher policy risk and more strict regulation, BC7 will be bullish in the short-term Tokens(BT7) are still in the early stage with huge upside potential BT7, 20 BI7, 50 BC7, 30

V. BB Index with Traditional Asset Allocation Allocating small portion of Crypto Assets will increase the Sharpe Ratio significantly Compare Two Asset Allocations 40 % Stock 60 % Bond Traditional Asset Allocation (TAA) 1% 39.6 0% 59.4 0% Stock Bond Bitcoin TAA+1%Bitcoin Risk Conservative Investors Return Volatility Sharpe Ratio 1 Asset allocations that include Crypto Assets will achieve higher returns and better Sharpe Ratios Investors with different risk preference can choose asset allocations with different weights on Crypto Assets Replacing Bitcoin with B7 Index will improve the Shape Ratio by ~30% BB Index provides systematic exposures to the different segments of Crypto Markets and better suited for different risk preferences of investors than Bitcoin Institutional investors may adopt BB index as an alternative beta strategy for their global asset allocation Source: risk free rate from http://www.global-rates.com/interest-rates three month libor monthly average value 18

VI. BB Matrix BB Matrix Institutional Investor Index Fund Providing Index Fund and customized index fund Client Management Real-time net asset value and risk exposure of client accounts Automatic trading and rebalancing Smart trading with multiple exchanges Rebalancing monthly Account Management Real-time net asset value and risk exposure Historical portfolio analysis Hosted Fund:BB Fund,Dingxin Fund,UB Capital,Peking University Alumni Foundation 19

VI. BB Matrix BB Matrix Investment Tracking BBIndex Investment Tracking Following the BBIndex or Customized index Low fee Low management fees without automatic rebalancing Trading through exchange API(Market Order, Limit Order) Security Using bifinance wallet or other cold wallet Portfolio Management Real-time net asset value and risk exposure Historical portfolio analysis Hosted active strategies:daily Coin,Supwin Momentum, Supwin Risk Parity 20

VI. BB Matrix BB Matrix My Portfolio Automatic Entry Loading trade log, portfolio, cash from exchange automatically Ranking My Portfolio Aggregating all investment(index investment, tracking investment, personal investment) Updating performance rank based on investor portfolios, high-rank investors are allowed to be tracked Share your portfolio and get the bonus 21

VII. Road Map Q1 2018 Sep. 17, 2017 https://coinbbindex.com 8 Indices Launched live B7 B7X B20 B20X B50 B50X BA7 BA30 Oct 18, 2017 2 Indices Launched live B20XX B50XX Nov 8, 2017 HK based Index Fund launched to track BB Index B7 12.30, 2017 6 Indices Launched live B20C/B20I B50XXC/B50XXI B50C/B50I Alternative Indexes to be launched Bitcoin Trading Advisor/BTA Index ICO Indexes / BCIO To launch BBIndex on Bloomberg/Wind Publishing BBIndex paper with academic leader 22

Appendix I: BBIndex Methodology with Others Industry popular/investable approach is setting up the upper limit for Bitcoin with cap weighted approach Cap weighted Index with max limit Poor diversification Lack of dynamic/ rebalancing Equally weighted Index Good diversification Small cap coins are illiquid B7 Index Good diversification combining market cap and liquidity, fully dynamic reflecting of Crypto Assets trend 23

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