View from the Nest #28
Overview
Keeping up with the progress in a DAO can be hard work! Our newsletter aims to share what we’ve been up to week by week in the Coop, highlighting progress across products, governance and the Index community as a whole.
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Weekly Summary
Surviving the chaos 📉
DPI on KuCoin 📈
Liquidity mining strategy 🧠
Saying goodbye to $CGI 👋
Delegation of FLI parameter updates ⚡️
Assets under vault: $197.1m (-40.2%)
Across 4 products:
$DPI: $290.18 (-48.7%) | $ETH2x-FLI: $127.43 (-60.3%)
$MVI: $38.69 (-49.7%) | $BTC2x-FLI: $31.67 (-50.9%)
Index token: $54.74 (-17.0%)
Figures correct as of 23rd May (7 day change shown in brackets)
Surviving the chaos 📉
It’s been a hell of a week for crypto, and not in a good way! The one positive we can take away from the action is that our products are doing their job and either protecting on the downside (DPI, MVI) or providing leverage without liquidations (ETH2x/BTC2x FLI).
You may have seen the analysis that @Lavi and @AcceleratedCapital published right here on Index Insights, diving deeper on how our products performed. Meanwhile in the background, the engineering team at Set worked tirelessly over a 48hr period to ensure the FLI products stood up to the test, monitoring the rebalances and taking action when needed. Happy to say FLI holders were not in the $8.5b of liquidations that took place over the two days, but that is perhaps that’s little consolation given the price action!
DPI on KuCoin 📈
After weeks of waiting DPI finally hits KuCoin exchange for trading, just in time to pick it up at bargain prices!
With gas prices soaring to over 1800 gwei in the recent volatility, having somewhere to cheaply ‘catch the knife’ is nice. Trading volume has started out slowly, with just $17k in the last 24hrs. It will be interesting to see if this picks up to the level of other DeFi products on the exchange such as AAVE - $12.8m & COMP - $2.8m, or if DPI just isn’t a traders token, in which case perhaps we spend future listing budget elsewhere.
Liquidity mining strategy 🧠
Product working group lead @OverAnalyser prompted a discussion on the forum this week regarding our liquidity mining rewards and the plan going forward.
It feels like the next few months will be a turning point for protocol incentives as Layer 2 solutions come online and Uniswap V3 gets up to speed (and deploys on Optimism). We need to design something that incorporates all these changes and takes advantage of any improvements for our customers/LPs. This won’t be easy and of course there will be an element of ‘wait and see’.
The Index Coop currently spends roughly $700k/month to incentivise $50m on Uniswap V2 (95% of that being DPI), but with Uni V3 being roughly 10x more efficient this leaves a lot of room for improvement, and potential to reduce our expenditure.
Saying goodbye to CGI 👋
Some things just aren’t meant to be, and after a modest launch followed by consistently low liquidity on the wDGLD gold token, CGI is being retired. IIP-43 was proposed on the forum to enact the process.
Lessons learnt here:
Change of product prioritisation rubric to better reflect these risks on future products
Ensure initial liquidity and follow up plan to grow the product, virtuous cycle with more buyers growing mcap allowing larger buyers
Take account of market conditions, crypto is currently risk-on, perhaps not the best time to launch a product containing gold.
Delegation of FLI parameter updates ⚡️
OverAnalyser was a busy owl this week, also proposing the Coop forms a group to quickly enact updates to the FLI suite of products. It makes sense given we’ve already raised 6 IIPs in the last two months just on raising caps for ETH and BTC2x!
There are times when governance by community is super important, and there are times when it can slow us down. ETH2x FLI in particular has been trading at >30% premium to its Net Asset Value because new units can’t be minted while we are hitting the unit cap. This remains the case until the IIP to lift the cap gets voted in. Having the ability to make changes quickly, by delegating decisions to a trusted team, would certainly help product performance in this respect.
If you have an opinion on how this could work, or simply want to check out the proposal, head over to the forum to check it out!
We always welcome new members to the community, if you like what you see come and join the discussion in our social channels. @darkforestcap