Hi, good folks at rari capital!
This is a proposal to add the $DEGEN index from indexed.finance, as well as our governance token $NDX, to the fuse lending protocol as a collateral asset. We suggest to add it to Pool 3, which is the pool managed by the Rari DAO.
Recently, the $DEGEN index added $RGT, which is a project I’ve been following/supporting for a long time.
With $2m in on-chain liquidity, split between Uniswap V2 and Sushi (+ $1m on Quickswap) the proposed values for DEGEN are:
- collateral factor: 35%
- Reserve factor: 30%
For $NDX, with $5.5m of liquidity split between Bancor ($5.1m) and Sushi & Uniswap we equally suggest:
- collateral factor: 35%
- Reserve factor: 30%
Indexed Finance is a protocol for developing passive portfolio management strategies (a.k.a ETFs). The first product developed by Indexed Finance is a set of capitalization-weighted index pools designed to replicate the behavior of index funds, which historically have returned better and more consistent returns than actively managed funds on the stock market.
Index pools simplify asset management on Ethereum the way that index funds do for the stock market: by creating a single asset which represents ownership in a diverse portfolio that tracks the market sector the index represents. Each index pool has an ERC20 index token which anyone can mint by providing the underlying assets in the pool, burn to claim the underlying assets, or market buy & sell on a decentralized exchange where a market for the index token exists.
The total value locked in Indexed Finance currently stands around $26m across several indices like DEFI5, CC10 & DEGEN each tracking different market sectors.
The core difference between Indexed and something like $DPI (IndexCoop) is that Indexed.Finance indices are 100% automated.
The tokens sit in multi-token AMM liquidity pools and re-balance based on a Uniswap mkt.cap oracle. The DEFI5, DEGEN index tokens etc are really just LP tokens representing a share in those AMMs. Since they are LP tokens, it also means the assets are constantly generating yield for their holders.
Indexed projects have grown tremendously in popularity over the last couple of months. They are especially attractive for crypto beginners/newcomers who don’t have the time to actively manage their portfolios and spend hours researching new projects.
DEGEN is the first index originating from Indexed’s Sigma Program aimed at deploying new indices at a faster pace and without going through governance. The Sigma committee is a 3/5 Gnosis multi-sig that can deploy new indices and allocate rewards for their staking pools. The signers were elected by the Indexed finance community.
As the name implies, the DEGEN Index aims to seek out alpha via higher risk/reward emerging projects with exceptionally high growth potential, predominantly in the DeFi sector. Candidate members have strong communities and large total addressable markets, with circulating market capitalisations ranging from US$50 million to US$2 billion. If any constituent tokens fall out of these bounds, they will be replaced via periodic re-indexing by the largest market cap tokens drawn from a list of alternatives. In this way, the index will constantly evolve to capture upside from tokens during their most rapid growth phases.
It consists of smaller cap token projects which have more growth potential but also more financial risk.
check precise weightings at: https://indexed.finance/index-pools/degen-index
MOTIVATION FOR DEGEN
DEGEN is the first of its kind. It seeks to give anyone with a higher risk appetite access to new protocols that have huge potential. Eventually people seeking to get exposure to protocols with huge upside potential will gravitate towards DEGEN as it is increasingly becoming impossible to keep up with the rate of innovation and protocols being launched everyday.
This gives DEGEN a sort of first mover advantage and a unique opportunity to capture a large market share in this category of the crypto index market.
If this proposal is accepted and passed, Rari capital will be the first protocol to list DEGEN as collateral. This will attract new capital to Rari as investors with exposure to DEGEN will seek to use their DEGEN index tokens to get leverage. With increased utility, DEGEN should also attract more capital creating a positive feedback loop.
MOTIVATION FOR NDX
NDX is the governance token of the Indexed protocol and held by close to 6000 DAO members. As always establishing a lending market for a governance token can be interesting for a) people who want to short it b) people who want to borrow it for voting. On the lending side, NDX will soon be stakeable for a claim on protocol revenue, however we would like to see another avenue for those that wish to utilise NDX productively without locking it up for an extended period of time.
For : Add DEGEN and NDX to Fuse as a collateral asset
Against : Do not add DEGEN and NDX index to Fuse as a collateral asset