Beginners Guide to Data Economy Index($DATA)
What is Data Economy?
The data economy is an ecosystem of data-based products and services.
While decentralized finance (DeFi) is disrupting traditional banking and financial services, the data economy is disrupting the data monopolies built-in Big Tech over the past 20 years.
What is the Data Economy Index ($DATA)?
The Data Economy Index ($DATA) is a digital asset index capturing the growth of data-based products and services having significant economic activity.
It is a basket of 7 tokens designed to provide accessible, passive exposure to the second largest web3 sector, the data economy. It is also the first multichain index i.e includes non-ERC-20 tokens as well through the integration of Ren Protocol.
Who created it?
The Data Economy Index was created by Thomas Hepner and Kiba Gateaux and launched through Index Coop. Additionally, the creators of DATA Economy Index and Index Coop partnered with Ren for inclusion of Filecoin in $DATA by using the Ren protocol.
Index Coop: It is a decentralized autonomous organization (DAO) that exists to create and maintain crypto-native structured products built on DeFi asset management primitives. As a DAO, Index Coop is governed by INDEX token holders. Members use the $INDEX token to propose and vote on new products, the allocation of the treasury, and the future direction of the DAO. Index Coop has had a variety of successful products to-date, including: the Data Economy Index, DeFi Pulse Index, Metaverse Index, Bankless BED Index etc.
Data Economy Index: The data economy is an ecosystem of data-based products and services. It is growing exponentially in both usage and market value. Data economy protocol tokens have reached market capitalizations eclipsing those of even the most valuable DeFi networks.
Ren Protocol: Ren is an open protocol that enables the movement of value between blockchains. RenVM serves as a crucial conduit for the data economy by bringing non-ERC assets to Ethereum, so baskets such as the DATA index can function in a fluid and permissionless fashion. Moving forward, the DATA index will leverage RenVM to incorporate other non-ERC assets into the index.
How is $DATA multichain?
The creators of Data Economy Index partnered with Ren to include Filecoin, which is a non-ERC20 token in the $DATA by leveraging the Ren Protocol.
What is the token inclusion criteria for the Data Economy Index?
- Data-based Protocol: The protocol provides data-based services or products.
- Ethereum Token: The token must be available on the Ethereum blockchain. This will be revised if the Set Protocol infrastructure becomes multi-chain. Note: Inclusion of Filecoin(non-ERC-20 token) was possible using the integration of Ren Protocol.
- Organic Network Activity or Usage: The protocol must have organic network activity or usage. On-chain transaction volume, Total Value Locked (TVL), and/or revenue paid to service providers are all examples of metrics that can be used to demonstrate organic network activity.
- Market Capitalization: Circulating market capitalization must be over $100m.
- Decentralized Exchange (DEX) Liquidity: Protocol tokens must have sufficient DEX liquidity to support inclusion. If a token has insufficient liquidity, it will be removed from the index during the determination phase.
- History: Protocol must have at least 3 months history of operation and its token must have at least 3 months of price and liquidity history.
- Security: An independent security audit should have been performed on the protocol and results reviewed by the product methodologist. In the case that no audit has been performed, the methodologist applies subjective judgment of the protocol based on an assessment of the criteria above and communications with the team.
- Safety: In the event of a security issue the methodologist will work with the project team to understand the issue and any effects to DATA holdings. The team is expected to provide users of the protocol with a reliable solution and adequate documentation to ensure transparency about any incidents.
What are the tokens included in the $DATA Index?
- The Graph(GRT) is an indexing protocol for querying networks: The third most valuable Data Economy protocol saw its query volume grow 20x in less than a year, with growth accelerating to 20% MoM in 2021.
- Chainlink(LINK) is a decentralized network of oracles. The market capitalization of LINK now exceeds that of the most valuable DeFi project, Uniswap.
- Filecoin(renFIL) is a decentralized storage network. Filecoin’s network storage power has grown nearly 33x in the past year, from 0.32 EiB at launch to 10.52 EiB in September 2021.
- Basic Attention Token(BAT) is a blockchain-based digital advertising platform. BAT has seen stunning results since its integration into the Brave browser which has about 30 million monthly active users and 10 million daily active users.
- livepeer(LPT) is a decentralized video streaming network built on the Ethereum blockchain hedge fund built by a network of data scientists.
- OCEAN is a decentralized network protocol that enables large-scale data sharing and helps to unlock data, particularly for artificial intelligence systems.
- Numeraire(NMR) is a hedge fund built by a network of data scientists. Since its launch in September 2019, Numerai has beaten Aurum’s Quant Equity Market Neutral Index by 29.14% and AQR’s Market Neutral Fund by 34.41%.
Index Weight Calculation
$DATA will use circulating market capitalization to determine the weight of each token included in the index. The weight of each token within the index will be as follows:
The Data Economy Index caps each token’s respective weight at 25%. Excess weight for a given token will be redistributed to the remaining components of the Data Economy Index on a weighted basis. This same process will be repeated for every token exceeding the 25% allocation cap.
How to buy $DATA?
Additionally, Wintermute is the official market maker for Index Cooperative and the $DATA Index! It supported the launch of the $DATA Index with $1 million of seed liquidity for the launch on Sushiswap.
Why buy $DATA?
The $DATA index is data-centric and chain agnostic.
It is the first decentralized index to capture the growth of the data economy and also the first to include non-Ethereum-based tokens.
DATA includes tokens that provide data-based products or services across blockchains. This means that the success of Chainlink, the Graph, Filecoin, etc. is independent from Bitcoin, Ethereum, Solana, Cosmos, and other cryptocurrencies. These tokens are inherently multi-chain and grow along with the entire crypto industry’s success.
Note: Filecoin is a blockchain with its own native cryptocurrency that would not have been available in the DATA index without this partnership.
Beyond its core value proposition, there are 5 major benefits of using DATA:
- Simplicity — It is a convenient way for investors to gain exposure in a single ERC-20 token without having to constantly research and rebalance a portfolio.
- Uniqueness — It is the first index in the market providing exposure to the Data Economy.
- Efficiency — provides reduced gas costs and tax-efficient rebalancing.
- Diversity — The volatility of individual tokens is offset by holding an index and quarterly rebalances prevent overconcentration.
- Transparency — The index follows a transparent methodology to assess tokens for inclusion and removal.
How is $DATA maintained?
$DATA is maintained quarterly in 2 phases:
- Determination Phase
During the determination phase, the tokens being added and deleted from the index calculation are determined during the final week of the quarter and published before quarterly rebalancing.
2. Rebalancing Phase
Following publication of the determination phase outcome, the index composition will change to the new weights during the first week of the following quarter.
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Disclaimer: This content is for informational purposes only, and should not be construed as legal, tax, investment, financial, or other advice.