Quick Start

Basic Usage

Buying and holding an index fund in your own Ethereum wallet is now easy with xFunds. To invest in an xFund, you will need:

  • An Ethereum wallet
  • Some Ethereum

Next follow the steps below:

Tip: In your wallet, set gas price to 4 gwei to reduce transaction fees. XFund transactions should cost 0.0001 Ethereum. If you are paying more it is because your gas price is too high.
  1. Click the xFund page you wish to invest in (links on the left menu) and find the Etherdelta link next to the token you wish to invest in. The tokens with "x" in their symbol (white tokens) track an index, while tokens with "xxx" (black tokens) provide collateral. If you'd like to invest in the S&P500 stock market index, look for the "xSPY" token's Etherdelta link.
  2. Follow a guide to set up Etherdelta and purchase the token. Reddit has a good collection of guides.
  3. Add the ERC20 token info to your Ethereum wallet so it can track your xFund holdings.
  4. You are now holding xFunds! You can trade the token on Etherdelta at any time or wait until the xFund settles to get an amount of ethereum equal to exactly the fluctuation in USD of the index the xFund tracks.
  5. If you have opted to redeem your token via the xFund's settlement, simply wait until the day of settlement and watch the banner on the xFund's page. The banner will tell you when the fund is settled. After settlement, send your xFund tokens back to the xFund contract. The instructions for which contract to send to are on the xFund's page. The xFund will send you back the Ethereum your tokens are worth.

Basic Market Making

If you notice that the price of an xFund token is too high on Etherdelta, you can also opt to create the token yourself. The caveat with this method is that xFund tokens are always created in equal amounts as pairs, so you will have to sell the token you don't want afterwards or you will be left with an investment position that is the same as just holding Ethereum.

That said, selling the token you don't want may be the most cost effective way to hold the token that you do want. To create tokens, simply send any amount of Ethereum to the xFund Contract address on the xFund's page and then use Etherdelta to sell the one you don't want.

Advanced Market Making: Taking Counterparty Premium

Most of the time demand for xFund white tokens will be higher than the demand for black tokens. When this is true, white tokens will sell at a higher price and black tokens will sell at a lower price. In this market condition it may be highly profitable and low risk to take the premium for keeping the black tokens. The fund will always pay a set rate of ethereum based on its indexes at settlement, so any premium for the white token is being paid to the counterparty. Since people are risk adverse, in many cases the counterparty premium will be worth more than the risk and will lead to consistent profit. To take advantage of these conditions, create tokens and sell the white token for a premium rate. Use the calculator on a xFund's page to see what the current "middle" rate is for tokens (if using Etherdelta, pay attention to the ETH Per Token column).

Advanced Market Making: Selling the Spread

If there is low liquidity on an xFund token's market, market makers on both sides of the order book (buyers and sellers with open orders) will have higher margins. A professional "Market Maker" is an entity that does not aim to keep a position in the market, but to only take a profit from providing liquidity to the market. To take advantage of these conditions, while liquidity is low, keep orders open on both sides of each token's order books for a good risk to reward ratio. Use the calculator on a xFund's page to see what the current "middle" rate is for tokens (if using Etherdelta, pay attention to the ETH Per Token column).