[Interview] 10 Questions & Answers with P.O. Jay of NEOPIN Index
“Automated investment diversification products will be the next big thing in DeFi”
Hello, this is NEOPIN.
Today, we’re hosting Jay, the project owner of Index Products, to answer 10 questions about Index Products. We hope this will answer many of your questions about index products, which allow you to diversify your investments across multiple cryptocurrencies in a stable way. 😀 Thank you!
Q1. Please introduce yourself briefly.
A1. Hi, I’m Jay, the P.O of Index Products at NEOPIN. I hold a degree in Data Science from the University of Washington and have gained extensive experience in market and corporate analysis, as well as in blockchain technology and digital asset markets across various companies. At NEOPIN, I am currently focused on developing innovative decentralized financial services, with an emphasis on data-driven risk management and transparency.
Q2. Can you briefly introduce index products?
A2. NEOPIN’s index product is similar to traditional financial ETFs in that it tracks a specific index and automatically diversifies investments across different crypto assets. For example, the newly launched products adjust asset allocation based on market capitalization, allowing for diversified investments across multiple cryptocurrencies.
It’s the next generation of the existing DeFi products, which primarily focus on single or paired asset investments.
In short, NEOPIN takes care of the complex parts of investing for you. (Get the index token, sit back and let it handle the rest.) It diversifies your investments across different assets, rebalances them periodically to manage risk, and allows you to follow the latest trends without needing active market research. Unlike traditional ETFs, index tokens are on the blockchain, ensuring transparency and security, while also being usable across various DeFi services.
The products have been launched in three main categories: RWA, Ethereum, and AI.
RWA Project INDEX(RPI)
▲MakerDao (MKR) ▲Ondo Finance (ONDO) ▲Pendle (PENDLE)
▲Mantra (OM) ▲Propy (PRO)
Ethereum Family Index(EFI)
▲Ethereum(ETH) ▲Ethena (ENA) ▲Pendle (PENDLE) ▲Metis (METIS)
▲ether.fi (ETHFI) ▲Lido DAO Token(LDO) ▲Uniswap(UNI)
AI Titans Index (ATI)
▲Artificial Superintelligence Alliance(FET) ▲The Graph (GRT)
▲Worldcoin (WLD) ▲AIOZ Network (AIOZ) ▲Arkham(ARKM)
▲Zignaly (ZIG)
After transferring ETH, USDT, or USDC to your NEOPIN wallet, you can access the products in the Index section on the NEOPIN website or app. You can check the allocation of each cryptocurrency and the price trend of the index product. There is no lockup period, so you can trade on your own schedule. Please note that index products are like investing in any other token, and if the value of the index token falls, it will cause the loss of your principal.
Q3. Why did you decide to launch an index product?
A3.In the stock market, ETFs (Exchange Traded Funds) such as the U.S. S&P 500 and Nasdaq 100, which allow for diversified investments, have gained immense popularity. However, in the realm of crypto assets, there are still no prominent diversified investment products, leaving investors to bear the risks of high volatility.
DeFi, on the other hand, continues to innovate and evolve, from staking to yield farming, liquidity staking and re-staking, constantly breaking new ground. When index products are integrated with blockchain technology, they offer even greater benefits in terms of security and transparency, suggesting significant growth potential in the future.
That’s why NEOPIN has developed and launched its own index product. This product is recommended for users who find it challenging to select and invest in individual crypto assets, those who want the convenience of managing a diversified portfolio in one go, or investors who want to reduce risk through diversified investments.
Q4. I haven’t seen many diversified index products in DeFi that use smart contracts, is that right? What is the differentiation of NEOPIN Index?
A4. That’s correct. There are still very few players in the market offering decentralized index products. You could say it’s an emerging market at this stage. NEOPIN’s unique value proposition stands out in three key areas.
The first key point is trust and stability, which we believe are the most important aspects of any investment.
Since 2017, NEOPIN has been actively involved as a validator for various global blockchain nodes, including Ethereum, Tron, Cardano, Cosmos, and Klaytn, building expertise and technical capabilities in the blockchain space. We consider ourselves to be one of the most qualified node validators in the global market. Notably, from 2018 to date, we have maintained a 0% incident rate, 99.99999% block production rate, and 0% slashing rate, successfully managing node validation and network operations for a variety of blockchains.
Last year, we were recognized for our compliance and expertise by being selected as an innovation company by the Abu Dhabi Investment Office (ADIO) in the United Arab Emirates (UAE). This was a rare achievement for a blockchain company, securing direct and indirect investment from a government entity. More importantly, in collaboration with Abu Dhabi’s financial hub, the Abu Dhabi Global Market (ADGM), we are pioneering the world’s first DeFi regulatory framework through a public-private partnership, further strengthening trust among a wide range of stakeholders.
The second key point is convenient UI and UX.
NEOPIN’s services are primarily divided into two categories: DeFi and Wallet. Setting up a NEOPIN wallet is incredibly easy. Simply download the NEOPIN application from Google Play or the App Store. For your convenience, here is a link to guide you through creating a NEOPIN wallet with ease!
Once you’ve downloaded the NEOPIN app and set up your wallet, accessing DeFi products within the app is just as simple. You can explore a wide range of DeFi products, including Index, Staking, Yield Farming, Swap, and Derivatives. NEOPIN also supports multi-chain networks, making the platform even more convenient.
For those who prefer a bigger screen, NEOPIN’s web interface offers an even more convenient way to engage with DeFi. You can easily connect your NEOPIN wallet or use external wallets to access the platform.
One of the standout features of the Index product is how easily you can check the asset allocation of each index and perform actions like minting and swapping tokens. Everything is designed for simplicity and ease of use.
Our in-house UX design team is always focused on delivering a seamless UI and UX experience. They carefully analyze user behavior to ensure that with just a few taps, users can execute actions easily. They make sure the navigation between buttons is smooth and that services are designed based on how users actually interact with the platform.
Setting up your wallet is simple, and using it is even easier, so we highly recommend you give it a try.
The third key point is the ease of use of highly attractive DeFi services. Index tokens tokenize the user’s stake through the blockchain, allowing them to be freely traded within the same network or used across different DeFi services.
NEOPIN’s index products are designed to provide token holders with attractive ways to leverage DeFi. With the Mint/Redeem options, which allow component tokens to be swapped individually, and the Swap option, which allows instant trading of index tokens within a NEOPIN swap pool, NEOPIN recommends the best option based on the user’s transaction volume.
A liquidity pool is essential to this, and index token holders can deposit assets into the liquidity pool to receive additional swap pool rewards.
Not only do these features enhance the user experience and provide additional rewards, but the two products also create synergy. The more users contribute to the swap pool, the greater the volume of transactions that can be processed with less price impact. This allows users with different investment levels to participate, creating a virtuous cycle where rewards increase as the number of users increases.
In addition, arbitrage opportunities may arise between the Swap price and the Mint price.
Finally, when redeeming Index tokens, users can choose to receive ETH or the component tokens, making it a suitable product for those who want to immediately use the component tokens in other DeFi services.
Q5. I’m interested in the backtesting results of diversification on NEOPIN Docs. Are RWA, ETH, and AI still showing the effectiveness of diversification as shown in the backtesting results after the launch of each index product?
A5. Our previous backtesting results showed the theoretical diversification effect of index tokens, and after the product launch, we were able to see the same effect.
For example, below is the price change of the RPI product, holding the component tokens lost around -5.69% to -18.31% in a downtrending market condition, but the holding RPI token hedged the risk at -11.69%.
Table 1. Comparison of PnL for holding the RPI token (blue) and each of its component tokens during the downtrending market condition 29 August — 7 September.
In addition, during the uptrending market condition, the price change of the component tokens have ranged from -0.19% to 51.63%, with the RPI token performing moderate at +21.24% from its previous dip.
Table 2. Comparison of PnL for holding the RPI token (blue) and each of its component tokens during the uptrending market condition from 7 September to 23 September.
EFI is also up about +13.01% since launch, which is a relatively modest increase compared to the 2.95% to 26.62% increase in the prices of the component tokens. While ETH, the largest component token, is up 9.47%, EFI is up 13.01%. In addition, we can see that EFI has been able to diversify risk in a downtrending market, making it less volatile than other tokens.
Table 3. EPI token (blue) vs. PnL for holding each component token from 10 September to 22 September.
Likewise, ATI performed with a modest decline in downtrending market and relatively risk-hedged behavior in uptrending market since its launch.
Table 4. ATI token (blue) vs. PnL for holding each component token from 10 September to 22 September.
Q6. I understand that rebalancing is important for index products. Cryptocurrencies are very volatile compared to stocks. Do you think the current rebalancing cycle of index products is suitable?
A6. The rebalancing period is a critical factor in our Index product. Given the highly volatile and ever-changing nature of the crypto scene, we have excluded assets with very small market capitalizations when selecting crypto assets for the Index. This is because assets with small market caps could pose a greater risk due to higher volatility.
Currently, the rebalancing cycle is set on a quarterly basis, taking into consideration the gas fees and swap fees associated with rebalancing. The price volatility has been set at an appropriate level based on backtesting. However, should the need arise — whether due to changes in market conditions or issues with any of the component tokens — the operations team may adjust the rebalancing schedule after notifying the NEOPIN community. Please note that our team monitors assets in each category to ensure there are no abnormal signs.
You can check the rebalancing history on NEOPIN’s docs. Here’s a link to the history of the RPI token, one of our representative Index products. It’s an important indicator of how our Index products are managed, so be sure to take a look!
Q7. While it’s true that NEOPIN’s Index reduces risk by diversifying investments, it also potentially lowers returns — something that can be seen as both an advantage and a drawback. In the traditional stock market, this approach has worked well and is expected to continue doing so. However, crypto investors tend to pursue high-risk, high-return strategies, so do you think there will be strong demand for Index products?
A7. While crypto investors have historically leaned toward high-risk, high-return strategies, I believe the trend will shift toward seeking more stability over time.
The nature of crypto is gradually transforming into a true investment asset. This year, Bitcoin and Ethereum ETFs have been approved, and U.S. presidential candidate Donald Trump has even announced that he plans to hold Bitcoin as a reserve asset, indicating a change in how crypto assets are perceived.
Interest in crypto is growing, but the volatility remains high, which is driving an increasing number of investors to seek safer and convenient ways to invest in a range of crypto assets. That said, beyond Bitcoin and Ethereum, there aren’t many products that allow for diversified investments in altcoins.
In this context, NEOPIN’s Index products offer a valuable solution.
In centralized finance (CeFi), issues like misuse of user assets or bank runs frequently occur, but DeFi, powered by smart contracts, is free from such asset misuse risks.
Additionally, NEOPIN’s Index products mitigate the risks associated with crypto’s high volatility while still offering the high returns that can be experienced in the crypto market compared to other markets. For these reasons, we expect the demand for Index products to grow significantly in the future.
Q8. Can you give us a hint about the theme of upcoming Index products?
A8. I am personally looking into utilizing major tokens in the market such as Bitcoin, but since the logic needs to be performed on the Ethereum network, there are some constraints that require thorough consideration.
Moving forward, we aim to continue conducting research and selecting hot, theme-based tokens from the market, so we can regularly provide our users with a variety of exciting products based on data-driven insights.
If you have any great ideas, feel free to propose them through the NEOPIN community, and our research team will be happy to review them!
Q9. Which of RWA, ETH, and AI is your favorite as an index P.O. and why?
A9. I love all three products, and it’s a very difficult question to choose just one, but if I had to choose one, I would say the RWA Project INDEX product, which was the first to be released. NEOPIN has been expanding its RWA business since last year. In addition to partnering with various RWA projects, we have launched various products for RWA tokens within NEOPIN, and we are planning to launch a specialized RWA platform. In the future, as our team is pondering how to create synergy between the RPI of NEOPIN Index and the NEOPIN RWA platform, I think I have more affection for the RWA Index product.
The RWA market is poised for high growth. According to the Boston Consulting Group (BCG), the RWA market is expected to exceed $16 trillion by 2030. We have selected major crypto assets with high market capitalization in categories with expected growth, so please check it out as it is a stable diversified investment product.(Go to RWA Project Index). 🙂
Q10. Is there anything else you would like to say or emphasize as an index P.O.?
A10. The NEOPIN Index product is an innovative solution that simplifies crypto asset diversification. It protects against the misappropriation of customer funds often seen in CeFi, while NEOPIN, the index provider, is recognized for its reliability and stability. The entire process is decentralized and transparent. It’s rare to find a product that lets you diversify your investments with a combination of assets from MakerDAO, Ondo Finance, and Pendle, but NEOPIN makes it effortless 👏.
We believe that the benefits of index products will bring great results for NEOPIN users and contribute to the growth of the NEOPIN community and ecosystem eventually. Stay tuned for more exciting index products in the future!
We hope this answers your questions about NEOPIN index products! If you have any questions about index products, please feel free to reach out to us via our social channels. Until next time 😍
Visit NEOPIN Index: https://app.neopin.io/index/
