Nowadays everyone knows ETFs as an form of safer investment for stocks. They index not only one stock but many. If you take the "Global Clean Energy ETF" for example, you will see it consists of 101 assets all somehow common because they are related to clean energy. This concept is nothing new. Within 27 years, the ETF industry has grown to $4 trillion in asset value as of 2019 in the US alone, and $6 trillion worldwide. Crypto ETFs are available on stock exchanges more and more, but it's often not related to a real blockchain anyway. Indexcoop tries to change this with the idea of creating Indexes with real crypto-currencies. It's a safer way to invest into a sector of crypto (DeFi, Metaverse, ...) than in individual assets.
Indexcoop explained with their first Index - DeFi Pulse Index (DPI)
"The DeFi Pulse Index is a capitalization-weighted index that tracks the performance of decentralized financial assets across the market. The DeFi Pulse Index is a digital asset index designed to track tokens’ performance within the Decentralized Finance industry. The index is weighted based on the value of each token’s circulating supply. The DeFi Pulse Index aims to track projects in Decentralized Finance that have significant usage and show a commitment to ongoing maintenance and development."
You can buy the DeFi Pulse Index token, DPI, at IndexCoop, Uniswap, Matcha or at TokenSets.
With such kind of Index your portfolio is diversified with just one token in it while saving costs of countless transactions. Not every token fullfills the criteria to get into the index for good reasons. It's categorized into four groups:
Token's Descriptive Characteristics:
- must be available on Ethereum blockchain
- associated with a DeFi protocol or dApp
- no wrapped tokens, derivates, synthetic assets, tokens tied to physicals, tokens representing claims
Token's Supply Characteristics:
- predictable supply over next 5 years
- at least 7.5% of five year supply currently circulating
- reasonable & consistent DeFi liquidity on Ethereum
- no locking, minting or other patterns that disadvantage passive holders
Project's Traction Characteristics:
- useful protocol or product - no Ponzi scheme, no competitive trading/holding, no entertainment only
- protocol must have significant usage
- at least launched 180days before ably to qualify for index
- not insolvent
Protocol's User Safety Characteristics:
- reviewed by security professionals or operating long enough to create trust
- if safety issues occured the team must have responded promptly, did the aftermath, made a documentation and gave overall transparency
- sufficient liquidity across several trading platforms
Index Maintenance
The Index is reviewed and maintained two times every month separated into the Determination Phase and the Reconstitution Phase. The Determination Phase takes place every third week of the month. Tokens being added or deleted from the index calculation are determined for reconstruction. Circulating Supply will be determined with reference to CoinGecko's supply numbers. After that any token weighted more than 25% during determination phase will be capped in weight at 25%. Any access will be distributed to the remaining components.
After publication of determination the changes will take place on the first working day of the following month.
Current weight of underlying tokens:
As you can see one DPI token represents e.g. ~3.5 UNI, 0.20 AAVE, ...
The DeFi Pulse Index is not the only index Indexcoop offers to buy. There are currently four more indexes:
- Metaverse Index
- Ethereum 2x Flexible Leverage Index
- Bitcoin 2x Flexible Leverage Index
- Bankless BED Index
Governance: The Index Token
INDEX is an ERC-20 token deployed on the Ethereum blockchain. It has a capped maximum supply of 10,000,000 tokens. INDEX is used to vote in changes to the Index Coop including but not limited to:
- Smart contract upgrades to the Index Coop
- How to allocate the Index Coop treasury
- Add new Index Coop products
Token Distribution Breakdown:
- 1% allocated to historical DPI holders
- 7.5% allocated to the Index Methodologist program over a period of 18 months, beginning 60 days after Index Coop launch
- 9% allocated to a 60 day liquidity mining program for the DeFi Pulse Index Set
- 52.5% community treasury (with 5% available immediately and 47.5% vested over 3 years)
- 28% allocated to Set Labs Inc
- 2% allocated to DeFi Pulse
Enough said here, overall it's a great opportunity to diversify you portfolio in choosen areas of the cryptoverse. The DeFi and Metaverse Indexes are very interesting in my eyes. My stock portfolio mainly consists of ETF's so why not do the same with my crypto portfolio?
if you have any questions, feel free to ask me, regards ntz
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remember im not a financial advisor
