What are Index Minting Events?

As you probably know by now the core products offered by YDragon are first and foremost indexes: second-order assets whose prices depend on the assets they are meant to track. Before we get to explaining what minting events are let’s go over how indexes come to be in the YDragon ecosystem.

Index crystallization

If we were to have an index that represents 50% of Bitcoin and 50% of Ethereum (call it the Bluechip2 Index, or IndexB2), its price would be derived by taking the mean price of Bitcoin and Ethereum, weighed equally and divided by the number of index tokens issued. That’s the price you would pay if you were to purchase IndexB2 tokens. But what do you actually own? How do your IndexB2 tokens actually retain exposure to BTC and ETH when their respective prices change over time? If BTC and ETH both appreciate in price 2-fold, your IndexB2 token’s price should as well.

For the above to work, the index issuer (in our case, the YDragon protocol) actually needs to hold the underlying assets that the index is representing, purchased using investor funds. This is what we call collateral, and why these indexes are said to be collateralized. When you purchase $1,000 of IndexB2 tokens, YDragon actually takes that $1000, buys $500 of BTC and $500 of ETH in your name, and mints IndexB2 tokens for you that represent those assets. Your $1000 is now frozen into BTC and ETH, held by YDragon, and you now hold index tokens representing those assets. Should BTC and ETH appreciate in price, the IndexB2 tokens appreciate as well. It follows from the above that when investing in an index, you are actually indirectly investing in the underlying assets.

Index Minting Offering (IMO)

Indexes, among other things, are meant to reduce the cost of doing business in more than one way. Instead of buying multiple assets, you buy one asset (the index). Instead of having community members buy the asset multiple times (thus paying X amount in fees, Y times), we purchase the assets as few times as possible. In order to optimize fees, build hype and visibility for our project, each index that YDragon will be issuing will undergo what we call an Index Minting Offering, or IMO. The IMO will run for a pre-established amount of time, during which investors will be able to lock up their funds that will be used to ‘mint’ the index once the time expires — this collateral will be used to purchase the underlying assets. Note that you can always invest in the index once the IMO expires, but participating in the event gives you some added perks, to be disclosed as IMOs are announced. Some of the potential perks that we’ve been discussing internally include:

• Fully-funded YDR token allocations
• YDR token airdrops
• Slashed fees
• Bonus index token allocations
• Partner token airdrops

An IMO is a way for YDragon to gain traction, exposure, and by consequence keep offering exciting and complex new ways of investing in cryptocurrencies. We hope to see you there.

Yield to the Mighty.

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