Bitwise launches Web3 ETF
Bitwise has launched America’s second Web3 ETF, which invests in companies with blockchain-relevant business lines—what is called “web3”.
The Bitwise Web3 ETF (BWEB) is self-indexed and tracks the Bitwise Web3 Equity Index.
The index is made up of 40 companies which stand most to gain, in Bitwise's opinion, from the growth of Web3.
At least 85% of BWEB’s portfolio is made up of companies’ that are centrally involved in web3.
The fund charges 0.85%. The top 10 holdings are below.
|
NAME |
TICKER |
WEIGHT |
|
COINBASE GLOBAL |
COIN |
9.20% |
|
ROBLOX CORP |
RBLX |
8.22% |
|
EQUINIX |
EQIX |
7.51% |
|
UNITY SOFTWARE |
U |
7.18% |
|
META PLATFORMS |
META |
7.05% |
|
|
TWTR |
6.10% |
|
SHOPIFY |
SHOP |
4.75% |
|
CLOUDFLARE |
NET |
4.67% |
|
ELECTRONIC ARTS |
EA |
4.46% |
|
TAKE-TWO INTERACTIVE SOFTWARE |
TTWO |
4.45% |
Bernie’s commentary – it's quite expensive
There's been a lot of debate about what Web3 actually is. Elon Musk and Jack Dorsey have dismissed it as a marketing ruse. While others - especially Silicon Valley VCs - see it as the way to commercialise blockchain. For those wondering, the idea behind it is that we’re currently living in “Web2”, which is where big tech controls the internet and wields outsized market power. But coming to disrupt this is a new internet – Web3 – which is powered by blockchain and promises to unwind big tech’s stranglehold. As BWEB’s prospectus notes:
“Web3 imagines a future … internet… that replaces the system where a small number of companies can exert such a strong influence over internet users. Web3 refers to an evolution in… the internet that leverages blockchain technology to make the internet more decentralized.”
On the surface of things, this characterisation of Web3 may seem a bit at odds with BWEB's portfolio. Just look at the fund’s top holdings. Facebook, Twitter, Shopify all make the top 10. Then slightly further down the basket its Microsoft, Nvidia, TSMC and Cisco. There seems to be a bit of tension between describing Web3 as decentralising and disruptive on the one hand, and yet investing in all the incumbent internet companies on the other.
The other point of discussion is what's the difference between Web3 and the metaverse? Both are trendy VC buzzwords. Both go heavy on the video games, semiconductors and blockchain themes. I guess the difference is that the metaverse is most concerned with virtual and augmented reality. As part of this, the metaverse gives prominent pride of place to digital twins and 3D software getting sold B2B into architects, designers and engineers. Theoretically, you can have a metaverse themed ETF independent of any blockchain. Web3 by contrast is more narrowly about blockchain.
My final comment on this would be the fee: 0.85%. That's quite a lot for an index ETF -- and quite a lot for an active ETf these days in the US, too. I think Bitwise might hit some resistance to this.