Who can use this feature?
The Luno Large Cap Bundle is currently only available to customers in South Africa, Nigeria, and Indonesia.
To take the guesswork out of investing in multiple coins, we’ve teamed up with our trusted partner CoinDesk to provide the Luno Large Cap bundle - a collection of the largest and most established cryptocurrencies, all accessible with one simple purchase.
Ready to play the long game? Let’s get into the nitty-gritty!
So, how does it work?
CoinDesk tracks the market cap performance of all the biggest cryptocurrencies. In case you’re unfamiliar with the term, market cap refers to the price of a cryptocurrency multiplied by its supply. For example, if a coin’s price is $10 and there are a million of those coins in circulation, then that coin’s market cap is $10 million.
The coins that have the highest market cap – and that meet CoinDesk’s careful selection criteria – are then included in the CoinDesk Large Cap Select Index (DLCS). The Luno Large Cap bundle automatically keeps track of this index, so Luno customers can easily invest in a basket of the most valuable and established cryptocurrencies on the market.
CoinDesk’s smart algorithm analyses the performance of different cryptocurrencies as their market caps move up or down in value. To reflect these changes in the market, your Luno Large Cap bundle will be automatically rebalanced once every quarter.
Rebalancing adjusts the proportion of each cryptocurrency in your bundle to realign it with the latest market cap data. So the cryptocurrency with the highest market cap that quarter will make up the largest portion of your bundle, the second-highest will have the second-largest portion, and so on. If a previously excluded coin rises to become a top performer, it’ll be added to your bundle during the quarterly rebalance without you needing to lift a finger.
Tip
Learn more about how bundle rebalancing works.
What exactly is the Large Cap Select Index?
The CoinDesk Large Cap Select Index is derived from the Digital Asset Classification Standard (DACS). DACS defines and organises the industries of digital assets to enable each of the top 500 assets (by market cap) to be assigned to an industry based on its use case and technology.
CoinDesk ranks the market caps of those digital assets in the DACS list, then they apply various criteria to whittle down the list to just the top 5-10. These top coins are what make up the CoinDesk Large Cap Select Index – and, in turn, they’ll be included in your Luno Large Cap bundle investment.
How are the coins in my bundle chosen?
To be considered as a potential candidate for selection, a cryptocurrency needs to meet all of the following eligibility criteria:
- It must be ranked in the top 200 in the latest published DACS report
- Custodian services (i.e. secure storage services) for the coin must be available from Coinbase Custody, and the coin must be accessible to investors
- It must not be a stablecoin or a meme coin
- It must have been listed on an Eligible Exchange for a minimum of 30 days before the quarterly rebalancing date
All coins that meet these criteria are then ranked by market cap. The top 20 form the Selection Universe – basically a shortlist of semi-finalists in the coin selection race.
What follows is the constituent selection process, which determines which handful of coins from the top 20 will be included in the bundle. This process uses a formula which takes into account several factors, including each coin’s market cap, its price over the past 30 days, and its liquidity. Coins that were traded on fewer than three eligible exchanges are also removed from the running at this point.
The top 5-10 cryptocurrencies that emerge from this process are then weighted to determine how much of each coin should be included in the bundle. Their weights are calculated as a percentage of the total market cap of all the included coins. For example, if all the coins’ market caps added together total $600 billion, and Bitcoin’s market cap is $300 billion, then Bitcoin will make up 50% of the bundle.
This selection and weighting process takes place every quarter to rebalance your bundle and keep it up to date with how the market has changed.
The result of all this? You own a carefully curated bundle of some of the largest, most well-established cryptocurrencies, and as the crypto market evolves, your bundle will automatically evolve with it.
Tip
To gain a deeper understanding of the DLCS methodology, have a look at the CoinDesk Large Cap Select Index (DLCS).