The world has gone from a singular focus on Bitcoin to a much wider adoption of DeFi apps, distributed computing platforms, NFTs etc. As with the equity markets, categorization of sub asset groupings into sectors and more recently themes are important in the institutional adoptions of diverse asset classes. Classifications can be useful for identifying market cycles and quickly assessing which sectors are outperforming. It enables investors to exploit those narrative plays end enhance the alpha potential of their portfolios.

Defi is a term for digital assets that are used to support financial products and services that aren't run or controlled by a single entity. There are no barriers to entry or proof of identity needed to get these financial products and services. All DeFi tokens operate on platforms for smart contracts, offer open-sourced liquidity, and give token holders the ability to reserve governance rights.

Smart contract platforms host and execute smart contracts, similar to operating systems, like iOS or Android, that host and deploy Apple and Android apps. The MarketVector^TM diversified Smart Contract Indexes enable investors to measure and access the broader Layer-1 chains market without worrying about picking any specific Layer-1 chain.

The paper discusses the importance of decentralized infrastructure for the growth of the new decentralized internet, also known as Web3. It notes that these infrastructure projects, such as decentralized file storage, wireless internet, and cloud computing, are necessary to support decentralized software and prevent censorship, but it also highlights the challenges of scaling these projects, which require significant capital investment..

The paper explores the value proposition of CEXs, including their convenience, liquidity, and support, as well as the risks associated with using these platforms. It also discusses the emergence of exchange tokens and their potential impact on the industry.