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What is a DTF (Decentralized Token Folio)?

Updated this week

A DTF is a digital asset backed by a basket of tokens with weights defined at creation. It gives exposure to multiple cryptocurrencies without managing many buys or a portfolio—decentralized and transparent.

Why do they exist?

  • Simplicity: one asset representing a full portfolio

  • On-chain transparency: composition, rules, and changes are public

  • Efficiency: protocol rebalances and enables mint/redeem at Net Asset Value (NAV)

Key features: permissionless mint/redeem at NAV, broad ERC-20 universe, Dutch-auction rebalancing, configurable fees (TVL and mint), and on-chain governance.

“Like an ETF… but on-chain”

Imagine an S&P 500 ETF: you buy a single asset and gain exposure to many stocks; the issuer maintains the weights, and there are creation/redemption mechanisms.

An Index DTF offers a similar logic in crypto: you buy one ERC-20 token and gain exposure to multiple tokens according to a target portfolio; minting/redemption is permissionless at NAV, and rebalancing happens on-chain in a transparent and traceable way.

Similarities (ETF vs DTF)

  • Diversified exposure through a single basket

  • Rules/weights maintain composition

On-chain advantages (DTF)

  • Mint/redeem at NAV without intermediaries

  • Transparent on-chain rebalancing (Dutch auctions with DeFi liquidity)

  • Open governance with 24/7 auditable history

Functioning and practical use

What can you do with an Index DTF

  • Explore composition: tokens and weights

  • Mint/Redeem: enter or exit at NAV (permissionless). It’s the way to enter or withdraw funds from the DTF. When new money enters the DTF, a new digital share is created to represent the buyer’s participation in the DTF.

  • Track rebalancing: cadence, auction parameters

  • Review fees & governance: who pays what, where fees go

More information in Index DTFs — Overview: https://reserve.org/protocol/index_dtfs/overview/

How is the value calculated?

Think of the DTF as a bag of tokens: it’s worth exactly what all the tokens inside are worth. That total is called the NAV (Net Asset Value). The price per DTF is that total divided by the number of DTFs issued.

For each token in the basket, we sum the amount the DTF holds (xi) times its market price (pi). The result is the total value of the basket.

Now, to know how much each DTF is worth:

What happens when you buy a DTF?

When you mint (enter/create), you deposit an amount (M). Based on the DTF price (PriceDTF(before)), it is determined how many DTFs you receive. After minting, the NAV increases (new value enters) and the supply increases (more DTFs exist). If the market hasn’t moved during the operation, the price per DTF tends to remain almost the same.

Example

Imagine the DTF basket is worth 1,000 USDC ⇒ so the NAV = 1,000.

→ If there are 100 DTFs issued, each one is worth 10 USDC (1,000 / 100).

Now you invest 200 USDC (no fee). The app divides your contribution by the current price:

Those 20 are the new DTF tokens you receive in exchange for your contribution.

After your operation, the NAV increases to 1,200 USDC and the supply to 120 DTFs. Since both grew proportionally, the price per DTF remains ~10 USDC (the market didn’t change).

Risks & considerations

These are the main risks and how they are controlled:

  • Underlying volatility

    The DTF rises or falls with the tokens in its basket. Control: mint/redeem at NAV, Dutch auction rebalances, and visible composition/weights in the app.

  • Smart contracts and network

    There may be failures in contracts or the base chain. Control: external audits, active bug bounty, and transparent on-chain code; also good user practices (reviewing transactions, using a hardware wallet).

  • Governance and parameters

    Changes in assets/weights/fees affect the DTF. Control: on-chain rules and roles with public history (timelocks, permissions). Check the Governance tab before entering.

More details and official disclosures

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