Elliott Watts
The Index Coop
Published in
26 min readNov 9, 2021


During October the DAO has seen a stand-out performance from MVI which has given an ROI of 113.6% coupled with exceeding $30m in AUM. Other products have also performed strongly over the last 30 days. This is in line with general market conditions in the cryptosphere with new ATH’s being hit by Ethereum and Bitcoin generally giving the impression of strong bull market conditions. As a result, we have seen substantial gains across all products when reviewing TVL. But it should be noted that the actual dollar flow which is analyzed below shows a slowdown from September highs. We have recently celebrated our first birthday on 6th October. This marked one year since the creation of the Index Coop and our flagship product DPI. We have completed a full analysis of our first 12 months here.

Financially the DAO has seen continued growth throughout October. Gross profit has continued to show a positive uptrend with the first month of the new fiscal year showing $632k GP up 21% from September, this is a direct result of improved capital efficiency and increased product offering.

The DAO treasury remains strong however has seen a reduction in value given the drop in $INDEX prices compared to last month. The total treasury balance currently stands at $51.8m. INDEX price closed at $23.14 which has decreased by 38.1% since September. The treasury holds $39.4m in INDEX tokens (75.96%), $9.7m in USDC (18.76%), $724.14k in DPI (1.40%), $1,384.87k in ETH2x-FLI (2.67%), $156.92k in BTC2x-FLI (<1%), $149.3k in MVI (<1%) and $1.38k in BED (<1%). The treasury also has holdings within the operations account of ETH/WETH 22.36k (<1%), WBTC (<1%) and liquidity within the BED:WETH Uni v3 Pool $292.13k (<1%).

The Index Coop is continually looking at ways to diversify and strengthen our treasury balance. We have completed the strategic raise target with regards to stable coins which is explored within OTC placement. We are actively looking at ways to make this holding productive in order to grow this balance in order to further insulate the DAO from adverse market downturns.

Key takeaways;

  • Index Coop first Birthday
  • Listing of DPI as a custodial asset on Coinbase
  • Annual financial accounts release
  • Index Coop business model
  • Integration with ParcelDAO
  • Introduction of the F.Nest a first for the DAO
  • MVI performance over the last month
  • Index 2.0 workshops
  • Community strategic raise
  • Treasury second year vesting contract
  • Stable coin strategy deployment for the operations accounts

Business model

The DAO has been thinking about its business model and clarifying this into a visual which is easily understood by the community. We have split this up into 3 sections: innovative engineering, customer needs, and successful solutions. This encapsulates both our marketing needs, our development success, and also captures the engineering requirements of developing products that emulate the market.

Our business model is constantly evolving and developing to ensure general alignment with the markets and DeFi ecosystem. We are proud to be the market leader in crypto native index products and are committed to continued growth in our product offering.

Key events

Index coop first Birthday

We celebrated on 6th October the First birthday which marked the inception of the Index Coop as a DAO and also marked the launch of our first product DPI. We had a powerful and invigorating Discord/twitch celebration, with 100+ guests who showed up to the party.

Highlights of the celebration:

  • There were two chances to claim one of a kind Index Coop POAP’s created by our very own Creative & Design Working Group
  • For many in our broader community, this was the first event of its kind, but not only that, we were able to platform some amazing budding leaders/influencers in our communities and celebrate what we want to see repeated throughout the Coop in the coming months.
  • We set a tone/created an appetite for future culture-shifting/building events, as well as elevating specific messaging we want to see as dominant themes in the Coop — story/narrative, Women/Non-Binary in Index, inclusion, and access for ALL, the DAO as a force for impact on humanity/society at large.
  • We celebrated DATA launching by airdropping it into the hands of a few lucky winners

We also were able to share with the community our first annual financial statements accompanied by a deep dive analysis video.

Listing of DPI on Coinbase as a custodian asset

Launched in 2018, Coinbase Custody offers clients access to the secure, institutional-grade offline storage solution that has been used by Coinbase’s exchange business since 2012. Coinbase Custody is an independent, NYDFS-regulated entity built on Coinbase’s crypto-first DNA, offering the most sophisticated and reliable custody solution in the world’ — https://custody.coinbase.com/faq

The DAO is excited to announce that we have successfully listed DPI on Coinbase as a custodian asset. This is one of the first steps taken to move towards our products being listed on one of the biggest centralized exchange platforms. Coinbase allows people to buy digital assets with fiat currency, and trade those digital assets on its platform. It acts as a “bridge,” an onboarding platform for anyone who wants to come from traditional, centralized finance into the decentralized financial ecosystem. We expect this to have a significant positive effect on inflows from centralized finance encouraging a wave of traditional finance net $ inflows into Index Coop products. The listing allows institutions to diversify their portfolios into DeFi, opening the door to and making DPI more accessible and a valid option for companies and individuals to diversify.

Treasury funding

The treasury received funding from a perioding vested token contract. The one-year vesting contracts have been exhausted and the treasury now moves onto the second-year vested contract which has a total value of 1,425,000 $INDEX tokens and 950 $INDEX in year 3. The 1-year vesting contract started with a balance of 2.38M INDEX tokens and has been drawn down periodically as tokens are made available. The table below details the remaining balance within the 2nd year vesting contract that will be released to Index Coop treasury. At today’s prices ($23.14), the remaining balance within the total vesting contract is $54.96m. The Index Coop uses these funds to create products, fund working groups, and promote the DAO. These funds are used to secure the future success of the organization. Amounts vested can be seen below note that this is represented in round thousands;

Operations account and Partnership with Parcel DAO

An important milestone within the treasury working group has been reached with the successful implementation and creation of the operations account and subsequently a proposal to allow the F.Nest ability to deploy its stable coin reserve strategy. Allowing parts of the treasury to become productive, generating a return of the stable coin holdings. The main vision is that the operations account will be able to fund and manage working capital. We have recently implemented as part of the index 2.0 work a hive up of funding council roles into the accountability vertical within the F.Nest this has passed IIP here

As part of the Index 2.0 workshop for the finance of the future, the community identified an overlap between the Funding Council and the function of the Treasury working group (Now F.Nest). It was seen that the FC was more of an administrative function which is responsible for the distribution of working group proposals and performing budget reviews. It was widely accepted during the workshop that the FC should be dissolved and its function absorbed by the F.Nest and operations multi-sig. The contributor rewards distribution for October will be the last the FC distributes from its wallet.

As part of improving our contributor rewards process and also aligning the DAO in ensuring we are on top of our spending, we are moving to a model where most distributions should take place through the operations account wallet. In order to make this as seamless as possible, we have integrated with ParcelDAO to provide us with a holistic payment system that integrates well with our contributor rewards distributions and bulk payments.

Index Coop and Parcel DAO are looking to partner on building out a new treasury operations program focusing on managing our contributor reward spend and helping to provide useful insights.

What is the Vision?

This partnership aims to aid the DAO in automating the accounting (from a transactional tracking basis), payroll and compensation processes. In addition to providing useful insights on spending over time. Thus aiming to create a more efficient and robust system that is future-proof as the organization scales.

What are we looking to develop?

As part of this partnership Parcel and Index Coop will be co-creating a system that allows the DAO to run their payroll and rewards process without the use of spreadsheets. With the vision of setting the standards for organizations across the ethereum ecosystem.

We intend to scale our involvement with ParcelDAO as their functionality and innovation grow. We look forward to seeing what the next few months bring.

In addition to the integration with Parcel the operations account will also be involved in:

  • Identify the primary sources and uses of funding
  • Set and maintain target levels of stable coin and high-quality liquid assets like ETH
  • Provide alternative responses or remediation plans to various scenarios
  • Plan to deal with temporary, short-term, and long-term INDEX price disruptions
  • Operate within working capital risk tolerance levels with oversight from the F.Nest

This stable coin reserve follows our initial analysis of funding usage and begins the process of establishing a working capital management program. Further reading around specific strategies and guidelines can be found within the stable coin asset management guidance.

Key financial statements

P/L analysis

The Index Coop profit or loss account continues to improve monthly with streaming fees for October ting an all-time high at $632k, the DAO since trading has exceeded $3.2m in total revenue to date. We have recently started a new financial year, with October representing the first month of FY22. We have chosen to include the previous 3 months for comparative purposes along with representing total protocol revenue since genesis. October saw ETH2xFLI totaling ~$400k in fees, a 16.2% increase from September. The remaining products which were revenue-generating in October were DPI, BTC2x-FLI, MVI which saw growth across the board, DPI up 7.1%, MVI up 87.6% with BTC2x-FLI performing well with revenue generated increasing 122.9% although from a lower base (Refer to product performance below for more detail).

The P/L currently shows a GTD (Genesis to date) loss of $7.5m. This is largely a result of LM incentives since genesis which were initially needed to bootstrap new products to enhance user experience. The community has decided to reduce incentives on a scaled basis; the main discussion points are around the sustainability of liquidity mining programs. As of October, there are currently no liquidity mining incentives on DPI. The community has just authorized 2,400 Index to incentivize liquidity migration from UniV2 to UniV3.

When excluding liquidity mining costs from the P/L, the Index would be generating a loss to date of $1.88m, this is a positive outlook for the future given that the first three months since genesis streaming fees were very low in comparison to October. We have a strong product pipeline that is set for strong revenue growth creating the building blocks for a successful financial future.

We have also seen a general uptrend in contributor reward spend which is the second-largest cost to the DAO for October this totaled $504k up 10.4%. This is mainly a result of growth in working group sizes along with personal development within the DAO with many contributors taking on lead roles within working groups as we scale and grow. We see this as a positive spend for the Index Coop, whilst the overall objective is to create products with excellent market fit, we also need to develop the team to implement, market and grow the products.

Due to the nature of DAO accounting the Index Coop currently only records transactions in the P/L when tokens have left the IC wallet i.e cash accounting. In the coming months, the DAO is working to implement the accruals basis to ensure better accuracy, accountability, and transparency by adopting this model. We dive deeper into the analysis of contributors in the key cost review section below.

The Income Statement above is presented in USD and records the USD value of each transaction at the time each transaction occurred. For instance, if INDEX tokens are transferred from the treasury to a merkle contract for distribution to contributors, the USD value of the transfer to the merkle contract is recorded. The tokens are priced using CoinGecko USD closing price on the day the transaction occurs.

The streaming fees for each product are detailed below:

  • DPI streaming fee is 0.95%. This is split 70/30 between the Index Coop and DeFi Pulse. The total streaming fee has been shown within Revenue within the income statement, and the DeFi Pulse share is shown as a cost.
  • ETH2xFLI and BTC2xFLI, the Flexible Leverage Index series, each have a streaming fee of 1.95% (195 basis points) and a 0.1% minting/redeeming fee. The revenue generated from the streaming fee is split 60/40 between the Index Coop and DeFi Pulse respectively. Similar to DPI income, revenue has been shown in totality, with the DeFi Pulse portion shown as a cost.
  • MVI streaming fee is 0.95%
  • BED generates revenue for the DAO through a streaming fee of 0.25% (25 basis points). This is split 50% to Bankless DAO and 50% to Index Coop
  • Data Economy Index (DATA) will have a streaming fee of 0.50% (50 basis points), a mint fee of 0.10% (10 basis points), and a redeem fee of 0.20% (20 basis points). Split 70/30 with the index Coop and Titans of Data respectively

Balance sheet review

The index Coop is pleased to present the balance sheet. We have adopted best practices with relation to cash accounting in order to create this statement. We have made a number of assumptions that are detailed below;

  • Cash and Cash equivalents are stated using the EOD translation at the end of the financial year using the latest Coingecko price
  • Paid in capital is the initial community allocation at the launch of the Index Coop token which traded at a price of $3.55 on 07th October (3,625,000x$3.55014)
  • Unrealized price movement on tokens is included within Capital and reserves as a balancing item

We have seen a reduction in total assets held from the prior month as a result of adverse token price movement in the Index Governance token. However other assets such as our own product holdings have grown in line with positive asset price movement.

Token Flow Statement

The below token statement has seen some interesting movement since genesis. We have separated out $INDEX transactions and stable coin transactions. The remaining tokens within the treasury do not have significant movement month on month, these will be shown in the full token flow statement in due course.

The token flow statement $INDEX section mainly shows the disbursement of contributor rewards from the Index Coop wallets along with liquidity mining incentives. The receipts represent mostly Index token amounts distributed from the vested treasury working group wallet. It is worth noting that the inflow and outflow are denoted in $INDEX tokens.

When reviewing the stable coin token flow all transactions are in relation to the treasury diversification which completed a raise of $7.75m in mid-may through June with a further raise in October that is discussed below totaling $2.25m. There is a nuance within the token flow statement due to the nature of the financial backing system that shows internal transfers as disbursements and receipts, an example of this is the movement of $500k from the treasury to the operations account.

N$F statement

Net Dollar Flows (N$F) is the measure of “new money” being spent to purchase index products minus the amount that is leaving or “cashing out”. Daily N$F is the product of the average daily price and the net supply change. N$F provides a more accurate measure of growth than TVL or AUM because it only focuses on the attraction of capital, not index performance.

October saw smaller movements in N$F given that September saw significant inflow to our products, September was the 2nd highest month for N$F in the Index Coop’s history, attracting over $61m in capital to its six products. $38.5m was attributable to DPI alone.

In October MVI and the leveraged index saw the largest increase in N$F, MVI saw increases of $2.7m, ETH2x-FLI $3.9m, and BTC2x-FLI $2.8m. N$F analysis has become a key performance indicator, and it will continue to play an important role as we try to measure our ability to attract capital in all market conditions. As the chart shows, N$F is volatile which is a potential indication that customers are trying to time the market. With the FLI-series, this is an expected outcome, and to a lesser extent sectoral indices may be “timed.” As the number and variation of products increases, it’s likely we will see N$F become less volatile in aggregate and show steady month-over-month growth.

OTC Placement

Since launching as a DAO on 6th October 2020, $INDEX has raised $10m through private placement during 2021. The initial raise was executed on-chain May 2021 totaling $7.75M from community participants 1kx, Galaxy Digital, Defiance Capital, Assembly Capital, LD Capital, Wintermute, and Laconia Ventures. Index Coop has a very active and thriving relationship with all major investors and this has led to strategic initiatives such as Wintermute providing Market-Making services for various Index Coop products. There are numerous other initiatives being worked on and will contribute to the medium to longer-term growth. This is especially the case as the community seeks to explore avenues into more traditional markets.

During October this year, the DAO welcomed Sequoia Capital India, Blockchain.com Ventures, and White Star Capital into the community through a $2.25m placement. This was approved by the community via IIP-84 and 92,759 INDEX was distributed at a price of $24.26 USDC per token during the month. The conditions of sale include 18-month linear vesting with a 12-month cliff. During this time investors are able to actively participate in Index Coop’s governance process with the full holding.

These funds are to partly ensure the community is well funded in the event of any prolonged market downturn whilst also continuing to support aggressive growth strategies. At the time of writing, there are eleven community-driven products within the pipeline ranging from feasibility assessment to early stages of development. Index Coop is very well positioned to be bringing a range of innovative products during Q4 of 2021 and well into Q1 of 2022.

KPI Review and Product performance

The Index Coop is continually improving on Key Performance Indicators (KPIs) month on month. We can see detailed below the KPI’s and north stars, with AUM growing to $460.8m. DPI continues to be a key contributor at $190.4m, however, for the first time, ETH2x-FLI has a greater AUM with a current market value of $203.9m. BTC2x-FLI has increased to $19.6m AUM, the Metaverse Index (MVI) has seen impressive growth over the last month with AUM now standing at $40.5m. BED has seen continued growth since its launch on 21st May and now totals $4.1m. The latest product DATA which was launched on 21st September with AUM of $1.7m significant growth since launch.

The general uptrend in AUM is in line with positive price movement seen across all products in the DAO’s product portfolio. This is supported by minimal inflow in $ terms when reviewing our N$F analysis detailed below. We expect TVL to grow significantly in the future especially given the recent bull market conditions, coupled with an increase in product offering expected in the coming months.

Product price analysis

All index coop products have provided our users with significant positive price movement over the last 30 days. This is attributable to strong market conditions within the ecosystem, ethereum has reached new ATH’s within the month, we have also seen incontrovertible growth in MVI which continues to hit new ATH’s on a daily basis. We have summarized to the right product returns over a 30 day period (prices and gains/(loss) correct as of 2nd November)

Total Unique holders

We have seen total unique supply holders increase over time to an all-time high of 26,945 on the 31st of October which shows an average holding across all products of $17,099.79. This is impressive growth, AUM along with individual address holdings is expected to increase in the coming months, significant assets have been allocated to growing the DAO along with new product releases in the pipeline.

Product Revenue — DPI, ETH2xFLI, BTC2x-FLI, MVI, BED, and DATA

We have seen growth across all products over the last few months with revenue generated for the month hitting an all-time high of $632k. DPI whilst it is the DAO’s flagship product it does not on a monthly basis generate the most revenue for the Index. The leveraged trading series — most notably ETH2x-FLI which has seen fees surpass that of DPI. Generating ~ $400k. Increased market optimism will likely see further growth in this product for years to come.

At the point of generating our Q3 financial report, we extrapolated our annual income with total revenue expected to exceed $2.0m for the financial year to September 30th YTD when taking a forward-looking view on the DAO. We have since far exceeded this goal with GTD revenue in excess of $3.2m.

Whilst product performance for the leveraged series is promising it is worth noting that there are additional costs not captured in the Index Coop’s financial statements. Currently, rebalancing and gas costs for the leveraged series are paid for and maintained by Set Labs, however, are expected to be passed to the Index in due course. The treasury team is currently working through a cost analysis to measure the impact this is likely to have monthly on the profitability of the products.

Product pipeline

The underlying goal of the DAO is to ‘create and maintain the world’s best crypto index products’ to date we have created 6 products that have generated a good product-market fit and have allowed us over the past 12 months to emerge as a clear market leader in crypto native index products. We have a number of products in the pipeline with various methodologists. We are excited to present below current products in the pipeline;

JPG — JPG Index

Description — The NFT Blue-Chip Index (JPG) is a market-cap-weighted portfolio of blue-chip NFT collections. The index provides diversified, liquid exposure to the top NFTs through a single liquid token. According to Index Coop, an NFT Index token is its most frequently requested product and this token can address that demand.

Stage of development — Product review phase by EWG — progressing towards DG2

PAY — Pulse Aggregate Yield

Description — PAY is designed to capture the best risk-adjusted yield on USD stable coins within DeFi. PAY aggregates yield across DeFi into a single ERC20 token that can be readily traded.

Stage of Development — Product negotiation phase with DFP

LDI — Llama Diversified Index

Description — The Llama Diversified Index (LDI) is a productive and diversified crypto index that optimizes returns relative to risk across various sub-asset classes within the crypto ecosystem.

Stage of development — DG2 and commercial discussions

PDI — Polygon Diversified Index

Description — The Polygon Foundation and members of Index Coop would like to re-propose the Polygon Diversified Index (PDI). The index will showcase the top-performing projects built on Polygon based on a new risk-adjusted methodology that provides exposure to the polygon network eco-system. The index will serve to give holders exposure to the leading protocols deployed on Polygon

Stage of development — DG1 has passed — this will now be reviewed by EWG and commercial discussions and fee split will now take place

GMI — DeFi Growth Index

Description — The Bankless DeFi Growth Index (GMI) seeks to capture the performance of emergent DeFi application themes. By relaxing some considerations for selection into Index Coop’s flagship DeFi Pulse Index, GMI seeks to provide exposure to experimental DeFi project tokens which are further out on the risk curve

Stage of development — Scheduled for a DG1 vote on snapshot

DRI — DAO Revolution Index

Description — (DAOs) is a digital asset index capturing and supporting the growth of decentralized autonomous organizations and open value networks. The DAO Revolution Index tracks leading DAOs with significant on-chain activity organizing a set of valuable assets.

Stage of development — Proposal and governance forum discussion

TTI — Token Terminal Index

Description — A price to sales ratio (P/S) weighted smart beta index by Token Terminal (TTI).

Stage of development — Proposal and governance forum discussion

iRobot — The Robot Index

Description — The Robot Index (iRobot) aims to become the 1st decentralized Robo-Advisor launched by Index Coop, responding to the surging demand from digitally natives for a product that can unlock the potential of crypto diversification and quantitative trading — in a single token.

Stage of development — Up for DG2 vote

Key Cost review

Contributor rewards

Contributor rewards remain a significant cost to the IndexCoop. The total contributor rewards since genesis total upwards of ~$2M. Currently, contributor rewards account for 28% of total expenditure. We have seen a reduction from August to September, ($887.8k) in August to ($446.8K) in September. The reason for the higher cost in August was the direct result of the full-time contributor retention plan which includes vested tokens, some of which hit their 6-month cliff in August. A number of tokens were withdrawn from the contract and as a result, appear as a cost during the month of August. The total cost of this to the DAO at the date of the transaction was $419.5k (11,158 * $37.6). Without the vested tokens, there was still a 4.58% reduction from August to September in contributor rewards.

We can see below a visualization of rewards since genesis.

The DAO has 7 contributors who have been employed by the DAO on fixed-term stipends which include a vested token amount, we have for granularity detailed the individual costs at the time of issuance of the vested tokens vs the year-end. (it should be noted 2 have left this contract to become full-time methodologists of the metaverse index)

In summary, the compensation package is $5k per month, plus vested tokens (two-year lock-up period) at 0.15% (0.075% for 0xmodene) of total supply over 2 years for each contributor (total 0.975% of INDEX supply allocated to 7 Index Coop members). Three members hit their 6-month cliff on 28th August and have claimed their tokens, as discussed above. It should be noted that two of the full-time members — Dark Forest Capital and Verto have given up their full-time rewards and have chosen to become full-time MVI methodologists, being remunerated through this incentive program. More information can be found below here.

An estimate of the full-time reward per member is estimated in the below graphic.

Analysis of contributor rewards payment structure

Currently, contributor rewards are shown at the token’s value on the date the transaction is made. An example of this is September rewards paid in October (paid on 12th October) with additional payments throughout the month, creating a disparity between the award amount, which is determined using a 20-day moving average, and the actual token price on the date of payment. This has been analyzed in the table to the left.

As we can see from the analysis, there are several different payment dates within the month. October showed downward price movements in comparison to the 20 day moving averages the awards were granted on. As a result, the actual cost to the index as reflected in the financial statements is $504,028k. This has resulted in contributor rewards being $10,269k lower than at the time of the reward. The Index is planning to release a schedule that shows the impact of this price movement. From when contribution rewards have been granted vs actual payment date to determine net effect throughout the year. This contributes and explains to an extent why we see large swings in contributor rewards.

The DAO is currently looking at ways to incentivize our contributors and retain the top talent within the Index Coop. We have had initial discussions around an incentive plan as part of Index 2.0 workshops, in line with the need to increase community ownership of the DAO, this looks to address this issue and distribute tokens to core contributors based upon owl levels and token holding, rewarding continued contribution and ‘skin in the game’.

Contributor rewards model

The DAO is currently looking to outline a holistic redesign of Compensation (salary) and Community Ownership (equity) at Index Coop. On August 25, 2021 Index 2.0: Autonomy Next Steps 5 kicked off the ongoing transformation process. “Compensation & owl levels” was one of the workshop themes.

A workshop was held on the 23rd of September (slides here, video here) to open this topic as a community. From the discussion, it was realized that there was significant overlap with the “Genesis Distribution” topic and so these themes should be addressed in parallel. We have set up a cross-functional group as part of a merging of the Compensation & Owl Levels and Token Distribution lanes of Index 2.0. It is the beginning of a solution — one that we aim to be community-informed and supported.

The redesign of the compensation model has a number of goals;

  • Competitive Web3 Compensation — Providing competitive compensation packages for both part and full-time contributors in order to reduce poaching and increase contributor retention.
  • Community Token Ownership — Sustainably increasing contributors’ ownership in the protocol they have helped (and will help) build by allocating a fixed proportion of the total Index to be distributed to the community for years 1–4.

This contributor reward suggested distribution seeks to outline a multifaceted model which will be explored through a series of upcoming posts and workshops. The topic is large and complex, but this thinking is what is needed to address both of these core challenges. The compensation working group intends to publish further guidance and thinking in due course with the main aim of how to sustainably build community ownership of the native token in a way that does not significantly impact the INDEX token price, through a variety of remuneration techniques such as an airdrop of tokens or through a staking model.

Liquidity mining

Liquidity mining in October was nil given that there were no incentives for index coop products. In October the community pivoted on the MVI liquidity mining strategy, offering 2,400 INDEX to incentivize the transition to Uniswap V3, which is expected to go live during November. LM from a business perspective, enables our customers to buy our products easily, with low friction, as close to the NAV as possible with the lowest cost, including gas, slippage, and price impact. The move to Uniswap V3 requires much less liquidity, between 3x and 5x less looking at MVI and DPI, to deliver that same experience. Thus, allowing costs to be reduced dramatically, providing more capital efficiency for the Index.

Since rewards were halted on DPI, we have seen un-incentivized supply remain relatively consistent, suggesting that the TVL of the DPI-ETH V3 Uniswap pool is more greatly influenced by price movements than the QTY and ultimately the reward value of LP token within the pool.

Impression mining

Impression mining costs have fluctuated significantly month on month, with the current spending totaling $1,432 a sizable decrease from September; the decrease is a result of lower impression mining claims within the month.

The rewarded amounts are being refined on a monthly basis and change regularly with social impressions reducing from $10 per 1,000 impressions to $8. This month there was a sprint on MVI impressions where this was increased to promote content including MVI. A team is working on creating a database tracking impressions and the impact this has on key metrics. Measurable targets are essential to ensure impression mining is growing public knowledge of and interaction with Index Coop products. Metrics such as conversion rates to purchase products, website visits, Discord interaction, and ultimately return on investment are all being considered.

Impression mining is seen as a tool to further the success and overall exposure of the Index Coop to ensure future longevity of the DAO and product success for years to come.

Governance and token distribution

Index Coop’s governance token distribution is akin to that of a startup, but there is no “founder” with over 50% of the tokens to serve as a legitimate representative of the “employees” (contributors). While this is more “decentralized”, this opens up the possibility of governance-based attacks on the DAO as well as governance legitimacy crises” post regarding index distribution

As part of the initial distribution of Index tokens the founders allocated 52.5% of all INDEX tokens to a community treasury. 5% of these tokens are available starting 6th October 2020 with the remaining tokens (47.5%) being vested linearly at every Ethereum block over a period of 3 years (starting 6th October) in-line with the schedule below.

  • Initial: 500,000 tokens upfront with no vesting
  • Year 1: 50% of the treasury tokens vested (2,375,000 tokens)
  • Year 2: 30% of the treasury tokens vested (1,425,000 tokens)
  • Year 3: 20% of the treasury tokens vested (950,000 tokens)

The total balance will be drawn down this month to conclude the initial 12 month vesting period. In total over the first financial year, 2,875,000 $INDEX. There is $54.96m in total locked up in vesting contracts when considering contracts after the initial 12 months. The Index Coop will use these funds to further the growth of the DAO by rewarding its contributors, incentivizing liquidity, funding impression mining, and expanding/improving existing and future projects.

As part of our current Autonomy discussions as a DAO and the launching of Index 2.0 governance and token ownership is at the forefront of the conversation. At the Index Coop there are a number of stakeholders in the protocol those most notably are as follows;

  • DeFi Pulse
  • Set Labs
  • Index Coop Community members
  • External Institutional Investors
  • Market purchases by anyone in DeFi

Between this group of people and organizations, we hold the voting power to the DAO, recent work by the analytics team and a number of contributors have highlighted the concentration of voting power to a small pool of people and organizations. The index is currently discussing ways to redistribute some of the ownership of the DAO to its contributors to enable more community ownership.

The DAO faces a number of issues in relation to the above distribution there is significant control by a number of entities that are not directly involved in the day to day runnings of the Index Coop, for example, if most key actions ratified through IIPs that require token votes, but those same actions are executed by contributors, who only own 0.5% of the total INDEX supply. Situations could therefore arise where large token holders can override the views of the DAO’s contributors as a whole which threatens the effectiveness of the organization. The DAO is working together to openly discuss a way to best approach this issue.

Other developments within the month

Authorization for use of Rari capital

As part of the operations account the DAO and F.Nest intend to make our USDC reserves productive. IIP-70 authorized depositing $500K of USDC reserves into the Operations Account. Per the Stablecoin Asset Management Guidelines, the Finance nest recommended these funds be made productive. In order to actively manage these reserves, the finance nest sought autonomy to act over the balances. Which is scheduled to go live on 8th November. This can be found here.

Having this blanket authority will allow the Finance nest to act nimbly when managing the liquidity of the Operations Account as market conditions or the state of the Index Coop’s operations evolve.

The Operations Account presently has the ability to deposit stablecoin held within the Operations Account into Aave, Balancer, Compound, and/or PoolTogether. This proposal seeks to extend this to include DPI, as well as adding the lending protocols Rari Capital to the list of protocols the FN can deposit and withdraw from.

The Finance nest recommended adding Rari Capital to the list of protocols that Index Coop can earn a yield on assets from within the Operations Account.

As some background on Rari. Its Fuse pools are forks of the Compound code base and although they hold around $1B in funds, the contracts at Compound are well battle-tested and are also in use by Cream. Rari offers two yield aggregator products, for USDC and DAI, that aggregate yield across the Fuse pools. This, therefore, presents an opportunity to the Index Coop as the current ROI is just beneath 20% and represents the yield of depositing across multiple fuse pools. This becomes increasingly more lucrative if Rari Capital was to offer Liquidity Mining rewards. Index Coop already has an existing relationship with Rari Capital having founded Fuse pool 19 together. In addition, this transferring DPI to the Operations Account enables the assets to be put to productive use. Currently, DPI is held within the Treasury wallet and is not earning any yield for Index Coop.

For any insights that you wish to be seen within this article please reach out to @Elliott within the Index Coop discord forum and we will endeavor to include this in our next iteration.

Disclaimer — The information presented in this report has been generated using information from Etherscan, Coingecko and internal Index Coop documents as of 31st October 2021. This article does not constitute investment advice and should not be relied upon. The information within has not had an external audit.



Elliott Watts
The Index Coop

Core contributor at the Index Coop with a background in TradFi - Chartered Accountant