The Index Coop is a decentralized autonomous organization (DAO) that exists to create and maintain crypto-native structured products built on DeFi asset management primitives (e.g. Set Protocol). As a DAO, Index Coop is governed by its community members. Collectively, they propose and vote on new products, the allocation of the treasury, and the future direction of the DAO. This is where $INDEX comes in.
Whether you are an $INDEX holder today, or are considering participating in the Index Coop community for the first time, this basic overview is designed to help you understand how $INDEX functions within the Index Coop community. Let’s go!
What is the $INDEX Token?
$INDEX was introduced in October 2020 to facilitate voting and community ownership of the Index Coop DAO and its products. And, it is used to reward community members who contribute to the DAO, as well as methodologists who create new products.
How Does $INDEX Facilitate Governance?
Most DeFi protocols require governance — a collective decision-making process that culminates in a formal vote by token holders. Depending on the protocol, governance can center on anything from token economics to hiring new team members, adjusting protocol-specific parameters, composition/direction of the community treasury, and any number of other proposals designed to ensure protocol sustainability.
A community member’s voting power is determined by the number of $INDEX tokens they hold. Each $INDEX token represents a vote; so the more $INDEX you hold, the more voting power you have.
How Does $INDEX Facilitate Metagovernance?
Beyond voting on Index Coop proposals, $INDEX holders can also vote on the proposals of some other protocols as well. This is known as “metagovernance.” Today this voting is possible for a subset of the protocols held in the DeFi Pulse Index (DPI).
The $DPI holds the tokens of its constituent protocols. $INDEX token holders can vote on how Index Coop as a whole votes on constituents’ governance proposals (hence the “meta” in metagovernance).
This is similar to how traditional finance asset managers, such as Fidelity and BlackRock, hold shares in public companies. Unlike the traditional finance asset managers, the Index Coop is decentralized so the voting power is delegated to the community.
What are the Tokenomics Behind $INDEX?
The $INDEX token has a max supply of 10,000,000 units and follows a 3-year vesting schedule.
70% of the total supply is reserved for the community, and the remaining 30% has been allocated to the DeFi Pulse and Set Protocol teams. The specific distribution breakdown is listed below:
- 1% allocated to historical DPI holders
- 7.5% allocated to the Index Methodologist program over a period of 18 months, beginning 60 days after Index Coop launch
- 9% allocated to a 60 day liquidity mining program for the DeFi Pulse Index Set
- 52.5% community treasury (with 5% available immediately and 47.5% vested over 3 years)
- 28% allocated to Set Labs Inc
- 2% allocated to DeFi Pulse
At the time of this writing, about 17% of the total supply has been released. Inflationary issuance is delegated toward liquidity mining, the methodologist program, and community rewards, with the remainder accruing directly to the community treasury.
How Can I Acquire $INDEX?
You can acquire $INDEX in three different ways:
- You can purchase $INDEX on a decentralized exchange (DEX)
- You can participate in liquidity mining programs
- Or, you can contribute to Index Coop
For more information on acquiring $INDEX or participating in the Index Coop community join our Discord and drop your question in the #help channel!