SOLI — The Solana Index Token — The Definitive Guide
What is SOLI?
SOLI is an index token built by Amun that tracks the performance of 5–10 of the largest and most liquid tokens in Solana’s Ecosystem. SOLI provides investors with a low cost, automated, and easy way to gain exposure to the native applications built on Solana’s ever expanding ecosystem. Traditional finance has seen consistent growth in index fund popularity, SOLI provides this for Solana.
Why Buy SOLI?
SOLI has more benefits than it seems on the surface, these include; simple diversification, tax efficiency, automated rebalancing, and diversified risk amongst other reasons.
Buying an index fund, which provides exposure to various assets, is universally understood to be one the safest way to allocate capital in a volatile market. Whether someone is new to the market, or a financial veteran, index products are the great equalizer for those wanting to deploy capital.
Within an index, the holder never sells/buys underlying tokens and therefore rebalancing is not considered a taxable event. The smart contract carries out the rebalance, and there are no changes to the holders wallet. The token holder pays taxes only when the index token is sold for a profit.
In other words, SOLI will buy top performers and sell poor performers over time. If you hold SOLI for 1+ years it will then be subject to long-term capital gains, even though there were swaps within the year that added and removed positions in the index.
Tax laws and regulations will differ with each jurisdiction, so please consult a professional with tax assistance.
An index has the benefit of being managed by an external party, with SOLI this is also the case. This is managed by Amun’s smart contracts, and is fee-free until 2023. No more worrying about sending tokens to the wrong wallet, having funds stuck swapping, forgetting to buy a token that goes 100x. The smart contracts will handle everything.
If you would like to dive deeper into the management of SOLI and its constituents, please refer to the SOLI GitBook for more information.
$SOLI provides exposure to 5–10 of the top Solana projects with the safety net of not adding “all your eggs into a single basket”, this basket provides access to various assets. If a single asset is trailing behind, the rest work to support your investment, this links back to the universal sentiment of why deploying capital into index products is a safer choice.
Token Inclusion and Rebalance
The SOLI index adheres to a criteria from our GitBook, which outlines four requirements constituents must meet for inclusion with $SOLI. These are as follows:
- Must be native to Solana’s network, and also contribute to it
- Must have launched on Solana mainnet for a period greater than 2 months
- Must have organic adoption in both liquidity and market cap
- Must have sufficient DEX liquidity. Currently defined as a single LP larger than $3 million
The constituents are re-evaluated on a monthly basis. As Solana’s ecosystem scales and expands, this composition will be subject to change. The allocation for each constituent is determined using a weighted average ratio of market capitalization to DEX liquidity.
Inclusion criteria and rebalance rules can be changed with a governance vote. Coming soon.
How SOLI can be a Productive Asset
SOLI exists in the realm of DeFi (Decentralized Finance). There are clever ways projects have created use cases for tokens. Typically these applications are reserved for institutions or very high net worth individuals. Some examples are:
Liquidity Provision (LP)
Take your $SOLI and use it to accrue trading fees by providing it as liquidity on a DEX (Decentralized Exchange), in which your position forms part of the market.
Lending and Borrowing
In the near future, we plan to make SOLI available as collateral to be used to borrow other tokens such as stablecoins.
How To Buy SOLI
Amun makes buying SOLI a simple process. These are the ways you can purchase $SOLI.
Buy from Amun
Visit amun.com and connect your Solana wallet, select SOLI, and choose to swap either SOL or USDC for SOLI. Now you have a holding which provides exposure to Solana’s Ecosystem.
For buying or selling large amounts of SOLI (>$5,000) we recommend using the “Mint / Burn” function on Amun’s website. This will minimize the amount of slippage from the transaction.
Purchase from a Solana DEX