Introducing PECO — The Polygon Ecosystem Index

Published in

Amun

4 min readOct 21, 2021

Today, Amun is excited to announce the launch of the Polygon Ecosystem Index — PECO. The PECO token is an index to provide investors an easy and low cost way to invest in Polygon’s vibrant and growing ecosystem.

Why We Made PECO

Network congestion on Ethereum has resulted in lower throughput and higher transaction costs. Layer 2 solutions attempt to solve for this in myriad ways, but Polygon’s approach has gathered significant traction. Recently surpassing Ethereum in daily active addresses, Polygon’s DeFi ecosystem has over $4 billion in total value locked in part thanks to native protocols such as Quickswap and Qi DAO.

Polygon initially was developed as a side-chain to enable computation and storage off the Ethereum network, but has evolved to become a more end-to-end solution. Today, Polygon is an interoperability and scaling platform for building Ethereum-compatible blockchains and launching applications, and it has become one of the most popular scaling solutions by total value locked:

https://dune.xyz/eliasimos/Bridge-Away-(from-Ethereum)

Index tokens are uniquely suited to provide investors with a vehicle to capture the growth of Layer 2 blockchain ecosystems. They can play an important role in enabling the ecosystem greater scale and reach by providing users a 1-click investment to the entire realm. Polygon was chosen as our first ecosystem index due to its early success in providing Ethereum users with a viable solution to achieve higher throughput and lower fees. We’re hoping that PECO can contribute to growing the Polygon network and advance its mission.

PECO Token

Created in collaboration with the Polygon Foundation and leading Polygon projects, PECO provides investors with an easy and low cost way to invest in Polygon’s vibrant and growing ecosystem.

The index targets Polygon-native projects only, rather than protocol tokens that have been bridged from Ethereum. This gives investors more targeted exposure to Polygon itself, rather than including projects that exist in both Ethereum and Polygon ecosystems.

To maximize its reach, we’ve made PECO available on both Polygon and Ethereum. A bridge allows you to bring your PECO across the two networks.

PECO gives holders an alternative to only holding MATIC and instead gives them a token that grows with the entire ecosystem, not just the base token. As PECO is an index token, there is no max supply. This token can be minted and burned at any time. To learn more, see our Whitepaper and Github.

Index Composition

Initially, MATIC will be 50% of the index composition. As the Polygon ecosystem matures, we expect to lower the percentage of MATIC to make room for other promising projects. The remaining 50% of the PECO token is composed of protocol tokens weighted using the averaged ratio of market cap and DEX liquidity. They must also satisfy the following criteria:

must be native to the Polygon network and contribute to the Polygon ecosystem.
must have launched on the Polygon mainnet for a period greater than 2 months, to eliminate transient, unsustainable projects.
must have organic adoption in liquidity and market cap.
must have sufficient DEX liquidity on QuickSwap and Dfyn. For a starting point, we look for DEX liquidity above $3 million.

How to Buy PECO

You can mint or swap for PECO on our platform, or you can swap for PECO on major exchanges. Depending on which network you prefer, we provide several options for purchase in both ecosystems.

For the lowest fees and slippage, we recommend buying PECO on Polygon by minting. You can toggle between minting & swapping in the Advanced Settings.

If you are buying on Ethereum, use swap for lower fees. If you are purchasing larger quantities, mint will reduce slippage but will cost ~$200 in gas fees. Minting or burning PECO on Ethereum takes approximately 2–3 hours to complete. Use this table to see the options: