Jan 6, 2022
Are You $GMI? Introducing the Bankless DeFi Innovation Index
Index Coop is on a mission to make crypto investing simple, accessible, and safe for everyone.
Bankless DAO acts as a steward of the bankless movement progressing the world towards a future of greater financial freedom.
The two DAOs are collaborating once again on the Bankless DeFi Innovation Index (GMI). GMI offers anyone, anywhere passive exposure to cutting-edge DeFi applications.
The Bankless DeFi Innovation Index (GMI) utilizes an indexing strategy to offer broad, diversified exposure in a single token. The index will be represented by a fully collateralized ERC20 token and will be available for purchase on Uniswap v3, TokenSets, & More.
In this post, we will cover:
- Why buy the GMI Index?
- Methodology and maintenance
- Where to buy GMI at launch (+Incentives!)
Why Buy the Bankless DeFi Innovation Index?
By diversifying into an initial composition of twelve tokens, GMI allows users to de-risk their exposure to DeFi upstarts–which are often novel and risky, yet contain considerable upside.
A novel addition to GMI’s formulation is the allowance for the inclusion of yield-bearing versions of tokens. At launch, the index will include and automatically participate in the productivity of gOHM (Olympus Dao’s yield-bearing governance token), which generates an annual percentage yield of greater than 5,000%. It is expected that more components within GMI with attractive yield opportunities will be activated in the future.
There are 4 major benefits of using GMI:
Simplicity — GMI offers set-and-forget, continuous 1-click crypto exposure to DeFi innovation.
Risk-Management — Volatility of individual crypto asset classes is offset by holding an index. Bi-monthly rebalances prevent concentration, yet allow winners to run.
Cost-Efficiency — Reduced gas costs, tax-efficient rebalancing, and intrinsic yield.
Transparency — The index follows a set of transparent rules to assess tokens for inclusion and removal.
Further, in order to offer users best-in-class security of their funds, the GMI index is constructed and managed on Set Protocol’s battle-tested asset management infrastructure.
Furthermore, the rebalance trades occurring within the vault/product is believed to shield holders from triggering events that might typically incur capital gains taxes (please note that should one sell the index token itself at a profit, they are typically triggering a taxable event at that point). As with all Index Coop composite indices, the transaction fees for rebalancing are socialized across all participants, enabling a lower fee structure per unit.
GMI Methodology: What You Need to Know
The GMI index intends to achieve optimal performance for holders by utilizing a novel rebalance weighting formula which combines square-root market cap, relative decentralized exchange liquidity, and relative token emission rates. In addition, GMI offers continuous exposure to DeFi innovation through the implementation of a system to graduate tokens based on their inclusion in Index Coop’s flagship DeFi Pulse Index (DPI), or length of inclusion in the index (18 months). Moreover, GMI will have a stop-gap measure to swiftly remove tokens should they, or the applications they represent, pose or develop security risks.
The GMI index employs a 15% maximum weight for any individual token, however, it utilizes a bi-monthly rebalancing cadence in order to give successful tokens more runway to achieve outsize returns relative to a more typical monthly cycle.
GMI Composition at Launch:
Market Requirements
- Market Cap: >$30m, <$5b
- Ethereum Prioritized Roadmap
- DeFi Appropriate: Application or protocol facilitates or aids in the facilitation of financial products or services such as exchange, borrow/lend, derivatives, yield, etc. As opposed to application themes that fall outside of DeFi (e.g. keeper bot systems, oracles, staking services, MEV, bridges, etc)
- No Compound, Aave, or other money-market interest-bearing collateral tokens
- Assets are not synthetically issued
- Assets are not in common with DPI
- Traction: Relative to application category
Technical Requirements
- The assets must have sufficient liquidity for initial inclusion and rebalances.
- ERC20
Index Maintenance
GMI is maintained monthly in two phases:
Determination Phase
The determination phase is bimonthly and takes place during the fourth week of every month (1st phase is Jan 2022). It is the phase when the changes needed for the next reconstitution are determined.
Reconstitution Phase
Following publication of the determination phase outcome, the index composition will change to the new weights on the first Friday of the following month, when components will be added or removed.
Fees
GMI will have a streaming fee of 1.95% (195 basis points). The revenue generated from the streaming fee will be split 40% to Bankless DAO and 60% to Index Coop.
How to Buy GMI
At launch, GMI can be purchased at several venues, including:
Purchasing on Ethereum Mainnet:
Purchasing on Polygon
- Uniswap v3 (larger amounts e.g. >$1,000 may cause high slippage)
1. Head to https://app.uniswap.org/#/swap
2. Connect to Polygon network
3. Add the GMI Polygon contract address in the swap field: (0x7fb27ee135db455de5ab1ccec66a24cbc82e712d)
Reminder: If you purchase via the Dharma mobile app (New U.S. Users who use this link will get $50 in ETH for purchasing at least $500 worth of GMI)
Minting
In the case of high slippage for large trades on DEX, you can use issuance via TokenSets for better pricing. Minting guide here.
Incentives
Adding Liquidity
GMI needs liquidity! Rather than relying on a traditional liquidity mining program, GMI is testing out a new approach with a handful of unique incentives.
First, anyone who provides Uniswap V3 liquidity for the GMI/ETH pair will earn 50% of the index’s streaming fees for 60 days. In order to qualify for the rewards, LPs will have to provide liquidity for the full 60 days.
In addition to the streaming fees, there’s also an incentive program for the Top 20 Liquidity Providers!
Any 🐳 LPs in the Top 20 by amount of liquidity provided will also have the chance to win $25,000 of INDEX and a claim on this elite GMI hoodie. The same parameters apply as the streaming fees: LPs must provide liquidity for 60 days with only ~48 hours left to qualify!
The program will end on March 8th at 12 pm PST, meaning there are ~48 hours left to qualify for the rewards before the cutoff is closed.
Anyone who LPs and qualifies in the next two days, but decides to remove the liquidity at any point before March 7th will be disqualified and removed from the rewards pool. Get in now!
Single-Sided Staking
📅 Single Side Staking will go live on January 10th, at 12pm PST. You can find it here.
While providing liquidity is important, and the trading fees on Uniswap V3 can be rather lucrative during times of high volume, GMI is also launching with a single-sided staking contract where users can earn INDEX for staking their GMI.
Index Coop has allocated a total of 18,750 INDEX to a 60-day single-sided staking program. The first month will distribute 12,500 INDEX while the second month will distribute 6,250 INDEX.
In total, this represents over $350K in rewards for the 60-day program. APYs vary depending on the amount of GMI staked to the contract, so stay tuned!
How to stake GMI
If you’re interested in getting involved with the single-sided staking program, follow these steps.
- Acquire GMI via Uniswap or minting
- Head to the Index Liquidity Mining Page
- Once it goes live on Monday, January 10th, there will be an option for GMI staking, click “stake” and confirm all the transactions on your wallet.
- Once approved, you can deposit and you’ll start earning INDEX rewards!
