At Amun, our goal is to make it easy to invest in web3 — the next chapter of the internet that’s powering exciting new applications across DeFi, NFTs, gaming, and more. We began our journey by providing blue-chip index products on Ethereum, launching the DFI and DMX tokens to capture the most promising projects in DeFi. More recently, we launched PECO on the Polygon network to bridge investors onto one of the most popular Ethereum scaling solutions.
Today, we’re excited to share that our next token will focus on the Solana ecosystem. This proposal is intended to share our mission and methodology behind creating an index token for Solana and to gather feedback from our community.
Mission
The Solana Ecosystem Index token (SOLI) aims to provide investors broad exposure to the native applications built on Solana. The eventual goal is to integrate SOLI into Solana projects to explore DeFi strategies and composability.
Thesis
Solana strives to improve the user experience of both builders and end-users with its novel consensus mechanism called Proof of History (PoH). As a complement to Ethereum, Solana has one of the most vibrant communities and a growing developer environment. Amun believes that as the Solana ecosystem scales, the index token will enable investors to participate in the growth of the Solana ecosystem in a diversified way.
Product Differentiation
SOLI is designed to capture the growth of the Solana ecosystem. The initial constituents have no overlap in our existing product line; DFI, DMX and PECO. The token’s intrinsic value is derived from the value of its underlyings. You can mint the token in exchange for SOL and burn to receive the equivalent underlyings or SOL.
Portfolio
The index token constituents are selected by a set of defined criteria and is balanced by a weighted average between the token market cap and decentralized exchange liquidity available. SOLI cumulatively captures a total market value of $1.99 billion or 1.31% of the current total DeFi market cap.
Draft SOLI Composition*
*subject to change
*subject to change
Methodology
The weighting of the index is driven by two key factors: market cap and DEX liquidity. 33% of the Index is assigned to SOL, Solana’s native token. The remaining 67% is a weighted average of the top 6 tokens accounting for:
1. The respective token market cap divided by the total market cap of all constituents
2. The respective token’s largest single pool liquidity divided by total liquidity of all constituents
This methodology aims to allocate greatest exposure to high market cap projects in the ecosystem and at the same time minimize price impact due to DEX liquidity for the token’s mint mechanism.
Inclusion Criteria
Solana Ecosystem Index (SOLI) selects projects based on the following criteria:
- The project must be native to the Solana network and contribute to the Solana ecosystem in expanding verticals such as DeFi, art, gaming, music and services.
- The project must have launched on the Solana mainnet for a period greater than 2 months, to eliminate transient, unsustainable projects.
- The project has organic adoption in liquidity and market cap.
- The project has sufficient DEX liquidity. For a starting point, we look for single pool DEX liquidity of greater than $3 million.
- SOL makes up 33% of the index composition. As the Solana system matures, we may lower the portion of SOL to make way for more project tokens.
- The remainder of the 67% is composed of 6 protocol tokens weighted using the averaged ratio of market cap and DEX liquidity.
- We expect that as the ecosystem scales, the composition may change. The constituents will be re-evaluated monthly.
Index Maintenance
- The index’s constituents will be re-evaluated and re-balanced monthly
- The index management fee is 1.5% annually, which will be waived for all token holders until the end of 2022.
Give us Feedback
We are deeply interested in building this product in tandem with the Solana community, and are eager to hear your feedback. At Amun, we believe in building out in the open and encourage anyone with thoughts to help shape the creation of this product. Reach out to us on Discord, Twitter, or Telegram and let us know what you think!
Updated 17/1/22
