Introducing the Index Cooperative
- Today, we’re announcing the Index Cooperative (“Index” or “Index Coop”), a global community that will launch and maintain the world’s best crypto index vehicles
- With community leadership, Index has the opportunity to develop into the world’s largest crypto capital allocators
- INDEX is the Index Cooperative’s native token that enables community ownership and governance, of which 70% is allocated to the community
- On top of an initial INDEX distribution to past DeFi Pulse Index holders (as of Ethereum block #10980212), there is an initial DPI/ETH Uniswap liquidity mining pool.
The Index Cooperative
With the resurgence of token issuance led by the DeFi renaissance, there is a deep need and market for native primitives which enable:
- Easy access to sectors without purchasing all the underlying tokens individually
- Methods to hedge against a particular sector
- Exposure to an asset class without deep knowledge by a broader audience
Index Coop is the first community-led decentralized organization focused on enabling the creation and adoption of crypto index primitives. To achieve this, we hope to see the Index Coop collaborate with the world’s best traditional finance experts, crypto experts and brands to launch/maintain desirable indices, govern critical system parameters with growth in mind, and embed the protocol into as many distribution channels as possible.
The first primitive governed by the Index Coop is the DeFi Pulse Index which was jointly launched a few weeks ago by DeFi Pulse and Set. The DeFi Pulse Index has garnered $2M in assets locked and 1.3k unique holders, demonstrating early product market fit.
The Community’s Opportunity
In the traditional financial world, ETFs and index products are the most widely traded instruments, and companies such as BlackRock ($7.4T AUM) & Vanguard ($6.2T AUM) are the largest asset managers in the world with trillions of assets under management. Currently, we think there is a clear opportunity for the Index Coop, as the first mover, to grow and scale into being a leading provider of crypto index primitives.
As communities have been critical to the growth, development, and sustainability of crypto’s most important projects including Bitcoin, Ethereum, MakerDAO, and Uniswap, the strength of the community will be vital to the future of Index Coop’s success.
If the community works together effectively, we believe the Index Coop’s community has the opportunity to guide one of the most important decentralized financial primitives to widespread adoption.
The INDEX Governance Token
The Index Coop has launched with a native token (ERC20) called INDEX that binds the Index Coop with its holders, enabling community-led ownership and governance. To facilitate sustainable growth, INDEX holders are responsible for important decisions including:
- Adding Indices: INDEX holders are responsible for sourcing, developing, and supporting new index strategies that have broad market appeal.
- Controlling the Community Treasury: To attract a robust set of participants and methodologists, INDEX holders will devise incentive programs to attract and retain index methodologists, liquidity providers, marketers, community, developers, and other experts.
- Updating Fee Configurations: In the traditional financial world, index vehicles monetize through an expense ratio/management fee and/or via asset lending. To enable sustainability, the community will be responsible for finding the correct balance in deploying value accrual mechanisms.
- Enhancing Indice Performance: As components in indices can be used in governance, staked, or lent, INDEX holders will be responsible for determining how to best allocate constituent assets for achieving greatest yield, proper influence, or to satisfy other community-determined goals.
There will be a total supply of 10 million INDEX tokens with the following distribution:
- Community: 70% that is allocated across an initial distribution, liquidity mining program, index methodologist program, and community treasury
- Team: 30% that is allocated to Set Labs and DeFi Pulse
There will initially be a distribution of 1% of all INDEX tokens (100,000 tokens) to past holders and liquidity providers (on Uniswap and Balancer) of the DeFi Pulse Index snapshotted at Ethereum block #10980212 where rewards are based on the following tiered structure:
Set and DeFi Pulse contributions(larger contributors to DPI market cap and liquidity) were removed from the initial distribution. The snapshot was taken at a randomized block in the past, and the distribution tiers are geared towards preventing large ownership from whales or rewarding spam accounts.
If you are eligible, head here to claim your tokens.
Liquidity Mining Program
9% of all INDEX tokens have been allocated to a liquidity mining program. This program will run for a period of 60 days (starting at 12:00PM PDT on October 7th, 2020), and INDEX tokens released under this program are not subject to vesting. More details below.
Index Methodology Bounty
7.5% of all INDEX tokens have been allocated to an 18 month program (beginning at the end of the DPI liquidity mining period) to attract and reward index methologists a share of emitted tokens based on the success of their indices. Rewards are distributed pro-rata monthly based on the total fees contributed to the cooperative by the methodologists’ indices (counted every Ethereum block).
52.5% of all INDEX tokens have been allocated to a community treasury. 5% of these tokens are available starting today with the remaining tokens (47.5%) being vested linearly at every Ethereum block over a period of 3 years (starting today) in-line with the schedule below.
- Year 1: 50% of the treasury tokens vested (2.375 million tokens)
- Year 2: 30% of the treasury tokens vested (1.425 million tokens)
- Year 3: 20% of the treasury tokens vested (950,000 tokens)
28% of the total INDEX supply will be allocated to Set Labs Inc. (the company that builds Set Protocol and TokenSets) and 2% will be allocated to DeFi Pulse. These tokens will be vested linearly every Ethereum block over a period of 3 years on the same schedule as the community treasury.
Liquidity Mining Program
A DPI/ETH Uniswap LP token and staking-based liquidity mining program will begin at 12:00PM PDT on October 7th, 2020. The liquidity mining program will run for a period of 60 days.
Initially, the Liquidity Mining Program works as follows:
- Interested users will need to acquire the DeFi Pulse Index (DPI) on TokenSets. A simple UI to do so can be found here, but this is merely an interface layer, and more sophisticated users can interact directly with the smart contract on chain
- Once you have some DPI tokens, head to the Uniswap page for the ETH/DPI pool
- From here, users can add liquidity to the ETH/DPI Uniswap pool in order to mint Uniswap liquidity provider (LP) tokens
- Once you have provided liquidity and received your LP tokens, head to the Index Coop website here
- Connect your wallet and then head to the Farms section
- Here, you can approve your Uniswap LP tokens for staking and then hit Stake to deposit your LP tokens
- INDEX tokens will immediately start accruing to you as reflected on the UI
- When you’re ready, you can simply hit the Claim button to claim your accrued INDEX tokens
Note that, while the Index Coop website provides a simple user interface to interact with the Index Coop farms, it is only a user interface, and sophisticated users can also interact directly with the Index Coop smart contracts on-chain. Over time, we expect and hope to see other UI’s and integrations to emerge for the Index Coop community to utilize.
The Index Coop will follow the principles of progressive decentralization. To that end and to ensure a safe and secure transition that allows the community time to adopt governance responsibilities, there will be an initial transitionary period where the Set team has the ability to make technical and safety-related decisions via multisig before governance is transitioned completely on-chain and over to the community.
What we imagine the governance process could look like:
- Discussions begin on Discord (anyone can bring up a governance topic)
- Proposals can be moved over to the forum for formal discussion if there is enough interest from the community
- Eventually, proposals can then be moved to Snapshot.page for token holder voting (non-binding)
- For now, the multi-sig will implement changes that reach both voter quorum and minimum threshold (which will eventually be moved to on-chain token voting)
Note: These smart contracts have not been audited, but are currently using minimally modified Solidity code utilized in the Uniswap and Compound codebases. Ensure you understand any modifications made by using tools like YieldFarming.info’s contract diff checker.
INDEX Token: 0x0954906da0Bf32d5479e25f46056d22f08464cab
Index Coop Multisig: 0x9467cfADC9DE245010dF95Ec6a585A506A8ad5FC
Uniswap DPI/ETH Pool: 0x4d5ef58aac27d99935e5b6b4a6778ff292059991
Uniswap DPI/ETH StakingRewards: 0x8f06FBA4684B5E0988F215a47775Bb611Af0F986
Merkle Distributor: 0xDD111F0fc07F4D89ED6ff96DBAB19a61450b8435
- Check out the official Index Coop website here
- The liquidity mining program begins at 12:00PM PDT on October 7th, 2020
- Join the community on Discord by clicking here