Questions and Answers on EC10

Thanks to the highly engaged crypto community, we continue to be asked great questions. As a company that is highly supportive of transparency and regulation in this growing asset class, we thought it wise to share some of these questions and answers in one place.

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What is the EC10?

When you buy EC10, you buy the constituents and weightings of crypto according to the Top 10 Crypto Assets by market capitalisation. The Top 10 crypto is physically held, in your name, and in cold storage. The crypto is administered by DCX Capital.

For purposes of calculating the NAV of a single EC10, DCX employs an ERC20 token and smart contract on the Ethereum blockchain as a reconciliatory policy. These tokens are used as a measure of accounting only, and are not redeemable or transferrable. When a holder of EC10 disinvests, the underlying 10 crypto assets are sold and the ZAR proceeds are credited to the user’s account.

What happened to the DCX10 token? Why does EC10 only exist since 2020 when you claim that it has been in existence since Sept 2018?

The DCX10 Index of the Top 10 Crypto Assets was renamed the EC10 (EasyCrypto 10) Index, managed by DCX Capital. The DCX10 token is now the EC10. Nothing has changed except the name. The smart contract was upgraded at the same time.

In 2016 the EC10 could not have existed as many of the crypto currently held didn’t exist back then. How can you give a return or backtest returns?

Incorrect, in 2016 the Top 10 consisted of BTC, XRP, ETH, LTC, Dash, Dogecoin, XLM and more. Many fell out and were replaced by higher market cap assets.

Checkout this well known third party site for a thorough history and info on all crypto assets.

https://coinmarketcap.com/charts/

The number of crypto that exist numbers in the thousands and has been trading in the millions of dollars on exchanges, many of whom are well known names today, for years. Coinbase, Kraken, Bitstamp, Bithumb, Bitfinex, Bittrex, Poloniex, CEX, etc.

How is the EC10 token made up and where does its price come from?

The EC10 tokens represents an index made up of the Top 10 Digital Currencies based on Market Capitalisation. The calculation can be done like below.

Included in EC10 tokens in issue, are the tokens staged for daily minting or burning. EC10 tokens are minted (staged for minting) and credited to client accounts upon receipt of funds and confirmation of order. Tokens are verifiable as they exist as ERC20 tokens on the Ethereum blockchain. The price of the EC10 token is calculated in real time.

Where can I see the total number of EC10 tokens in issue?

You can check them out here https://etherscan.io/token/0x05D48A612Ca736b51521e3eD9353d4DC193aeECf

Ok, so where can I see the value of all the tokens in issue?

You can take the tokens on the blockchain and multiply them by the live token price.

Or easier, you can check the live value here.

https://www.dcx10.com/holding-details

But now I have multiplied the tokens on the blockchain by the live token price and there is a discrepancy? What gives?

We mint tokens once a day and update them on the blockchain.

If we had inflows for the day, tokens will be minted, if we had outflows, tokens will be burned(the number will decrease). The tokens issued/burned for the day will be the difference.

Why don’t you mint on the blockchain live, i.e. every trade in and out of EC10?

We see multiple trades in a day -thanks to the bull market, the Ethereum blockchain is very busy and transactions cost significant money. It therefore makes more financial sense (for our community and shareholders) to accumulate the net amount to be minted/burned and do a single transaction on the blockchain at a set time of day.

Why don’t I just buy the Top 10 coins myself. Why buy EC10?

Short answer, security and safety. If you buy directly you would have to set up a secure wallet for each of the underlying coins of the EC10 and keep the secret keys safe. As you add coins to your portfolio, so the risk of loss increases. With EC10, you simply leave your crypto with EasyEquities or DCX Capital.

Why does Bitcoin or EC10 look more expensive on DCX Capital and other local SA exchanges than if I do a Google search?

This is unfortunately beyond our control, subject to exchange control regulations, we deploy all ZAR deposits to the relevant underlying Cryptocurrencies that make up EC10 on SA exchanges. Crypto prices are generally a bit higher in South Africa, hence the apparent difference.When selling your Bitcoin or EC10 for ZAR again, the opposite applies and this premium works in your favour. This “arbitrage” or difference is not applied on a Google search quote or on foreign exchanges that simply multiply crypto prices by a delayed ZAR exchange rate. Thankfully as crypto grows in SA we are seeing the premium on crypto coming down. This premium is beyond the local crypto industries control as a whole.

DCX Capital says they hold the underlying crypto. Where can I see it on the blockchain? Is it not an industry standard to make public your crypto addresses?

No, due to reasons of privacy and security concerns from a number of our clients we decided to remove the function. Making public the movements of crypto, in real time is a security risk. While the beauty of Bitcoin, our largest holding, is that it is public and verifiable, Bitcoin is not anonymous — it is pseudo-anonymous. We agreed the display could therefore adversely affect privacy and security. It is not an industry standard to advertise crypto addresses.

We are in the process of migrating the AUM(the underlying crypto) to a registered and regulated custodian which will also enable us to create and maintain a register of ownership of each of the underlying coins that add up to the AUM. This will provide further protection to our EC10 holders as they are the registered holders of the actual ‘underlying’ Crypto’s and in the event of anything unforeseen circumstances with DCX, clients will have a direct claim on the crypto of the EC10.

Will EC10 change the weighting of the crypto? eg, I want more allocation to XRP and ETH and ADA.

EC10 is a simple market cap weighted, chain agnostic index. We do not judge or filter any coins except for stable coins (in terms of our index rules) Coins end up in the Top 10 because the general public believe it to have value, so regardless of what we think of a coin, if it meets the rules, it is included.

Check out our index rules here. https://www.dcx10.com/index-rules

What’s inside EC10 right now?

The constituents and weightings can be found here, and are rebalanced on the last business day of each week.

Is the EC10 regulated?

No, the EC10 is currently not regulated by any laws in South Africa. DCX Capital is committed to working together with the regulatory authorities in South Africa in respect of the regulation of crypto assets such as the EC10 and is closely following all changes in legislation in South Africa in respect of crypto assets.

Does EC10 plan to be a regulated “traditional” ETF?

Yes, check out here https://www.moneyweb.co.za/moneyweb-crypto/crypto-podcasts/ec10-plans-to-be-sas-first-crypto-etf/

We are very supportive of regulation as a way of getting rid of unscrupulous operators in the crypto space. We are excited by the work done by our regulators and eagerly await further information from them. We have a dedicated compliance officer and have registered with the Financial Intelligence Centre (“FIC”) as an accountable institution.

Does DCX conduct KYC on new clients?

Yes, DCX has established stringent know-your-client (KYC) policies and procedures to take steps towards the prevention of money laundering and terrorist financing. DCX only opens accounts for clients who have successfully passed through its KYC requirements.