Smart contracts must meet the following eligibility factors for our algorithms to include them in index consideration on any given day. As applicable, the measurement date is midnight UTC of the previous trading day.

Eligibility Factors

Network

Only smart contracts deployed on supported and mapped blockchain networks are eligible. A list of supported networks is outlined in Appendix A. We expect this list to grow over time. Each index is restricted to one or more mapped networks, which are outlined in Appendix B.

Token Standard

For EVM (Ethereum Virtual Machine) compatible networks, only smart contracts adhering to the ERC-721 or ERC-1155 standards are eligible. An exception is made for the original CryptoPunks smart contract on Ethereum (which does not adhere to either standard) due to its significance.

For all other networks, only contracts adhering to standards that are similar to ERC-721 or ERC-1155 are eligible.

For future index products, we anticipate making eligible certain smart contracts that adhere to the ERC-20 (or equivalent) standard, as appropriate.

Market Capitalization

For a given day, only smart contracts ranking in the top (contract quantity times two) in terms of market capitalization for the previous day are eligible. So for the Forkast 500 NFT index, smart contracts in the top (500 x 2 = 1,000) in terms of market capitalization for the previous day are eligible.

Market capitalization is measured in terms of US dollars for ranking purposes and is calculated by multiplying the “basis price” of a smart contract times its total token supply. The basis price is a function of our proprietary algorithm that uses eligible transactions from the on-chain ledgers to calculate the estimated market value of a random asset from each smart contract at any given point in time.

For clarity, the basis price will always be equal to (or more likely greater than) the “floor price” of a given smart contract, because it accounts for assets whose attributes and/or utility produce a market value that is greater than assets that trade at the floor price.

Sales Volume

For a given day, only smart contracts ranking in the top (contract quantity times two) in terms of sales volume for the previous day are eligible. So for the Forkast 500 NFT index, smart contracts in the top (500 x 2 = 1,000) in terms of sales volume for the previous day are eligible.

Sales volume is measured in terms of US dollars for ranking purposes and is adjusted to exclude any sales that are determined to be “wash” transactions, or otherwise not arm's-length transactions, per our algorithms.

Blacklist

Any smart contract that appears on an index’s blacklist is ineligible for consideration in the index during the blacklisted time period. This time period can be fixed or indefinite, and smart contracts can be added to a blacklist at the discretion of Forkast Labs. Blacklists will only be used in the case of potential irregular activity on a smart contract that requires further investigation.

In order to capture the most accurate measurement of the overall performance of a tracked market or sector, the basis price movements of constituent smart contracts are weighted. The weighted movements then roll up into the overall index movement for a given time period.

Weighting Factors

Each constituent smart contract starts off with a weight of 1, and the weight may be adjusted upwards and/or downwards based upon the following factors.

Percentage of Median Market Capitalization

Smart contracts with a market capitalization below the median market capitalization of all constituent smart contracts are weighted downwards according to their market capitalization’s percent of the median. For those with a market capitalization above the median, no adjustment is made to the initial weight of 1.

Percentage of Median Unique Traders

Smart contracts with median base unique traders above the median base unique traders of all constituent smart contracts are weighted upwards according to their base unique trader’s percent of the median. For those with base unique traders below the median, no adjustment is made to the initial weight of 1.

A unique trader is defined as a unique address on a given network that participates as either a buyer or seller in one or more eligible sales transactions during the measurement period. For clarity, wash and other non arm’s-length transactions are not included as eligible sales transactions.

Base unique traders are defined as the greater of the count of all unique traders for the current calendar month and the count of all unique traders for the previous calendar month.

Overall Weight Factor

The overall weight factor is equal to the market capitalization weight factor times the median unique traders weight factor, both calculated above. This overall weight factor is multiplied by the basis price movement of a constituent smart contract for a given time period to determine its “weighted basis price movement.”

As the intent of each index is to measure the overall performance of eligible smart contracts, most, but not all, weighted basis price movements of constituent smart contracts are rolled up to determine the price movement of the given index. Weighted basis price movements at both the positive and negative extremes are excluded each day to remove the effect of outlier movements that are likely not indicative of the movements of eligible smart contracts as a whole.

The composition of smart contracts included in this adjustment is recalculated each day.

The complete transparency of the network on-chain ledgers combined with our robust indexing, aggregation and basis price engines allows us to programmatically rebalance each index on a daily basis. This ensures that those smart contracts that are most indicative of the measured market or sector as a whole are always selected for measurement, with the most appropriate weights, each calendar day.

Constituent Smart Contracts

At the end of each calendar day, each index is rebalanced to include those eligible smart contracts that rank in the top N for the previous calendar day based upon the above criteria, where N equals the fixed number of smart contracts included for measurement in a given index.

Weighting

Similarly, at the end of each calendar day, the measured weight of each constituent smart contract is recalculated and applied to that day’s price movements.

Born-on Date

Each index will be initialized as of a specific born-on date at a point in time in the past. The born-on date will be published on Forkast.xyz.

Initial Value

The beginning value of each index as of the born-on date will be arbitrarily selected by Forkast Labs and will be the basis upon which all subsequent price movements will be measured against.

It is not our intention to indefinitely perform retroactive index adjustments, but such adjustments may be necessary from time to time during each index’s initial roll-out period. Retroactive index price adjustments may be recalculated based upon such factors as refined methodology, adjusted born-on date, inclusion of new networks, additions to blacklists or identification of new irregular transactions.

Appendix A - Eligible Networks

• Ethereum
• Solana
• Polygon
• Cardano
• BNB Chain
• Arbitrum
• Avalanche
• Algorand
• Fantom
• Cronos
• OEC

Flow will be added as an eligible network during Q1 of 2023, with other networks soon to follow.

Appendix B - Mapped Networks

Forkast 500 NFT Index

• Ethereum
• Solana
• Polygon
• Cardano
• BNB Chain
• Arbitrum
• Avalanche
• Algorand
• Fantom
• Cronos
• OEC

Forkast ETH NFT Composite

• Ethereum

Forkast SOL NFT Composite

• Solana