Authors: Dr Laurence E. Day, 0xb1.484, Palis
Proof of 0xb1.484: https://etherscan.io/verifySig/2519
Summary: we’re formally proposing the launch of the 484 Fund as part of the Sigma pilot program.
The 484 Fund
Description:
The 484 Fund (Twitter cashtag: $ERROR) is an index comprising assets selected by following the most-Tweeted projects of 2020 by Twitter persona 0xb1.484, aiming to act as a way to invest alongside (and take advantage of the insights of) one of decentralized finance’s biggest players, without surrendering your assets to a centralized service. 0xb1’s Twitter favorite YFL will also be added, pending their internal proposal for a token swap.
Unlike our other instruments, this index will not make use of a square-root market capitalization weighting. Rather, per request, we will be weighting assets within the index via a barbell strategy over the circulating market capitalizations: for example, an index with six assets will be ranked by circulating market capitalization and then weighted percentage-wise as: 25-15-10-10-15-25.
This is a strategy that you’d more typically see applied to bond portfolios (where the weightings are applied to the tenor of the bonds), but does have some adherents within the universe of stock selection. It’s an approach that gives equal priority to high-risk and low-risk investments (insofar as you can apply those terms to crypto), whilst paying relatively little heed to the ‘middle ground’. It’s… slightly experimental in nature, but that’s what the Sigma program is for!
What follows are the percentage weightings that would be assigned to members of an N-asset portfolio under this strategy (these are figures chosen by the Sigma committee):
3: 40 | 20 | 40
4: 30 | 20 | 20 | 30
5: 25 | 20 | 10 | 20 | 25
6: 25 | 15 | 10 | 10 | 15 | 25
7: 20 | 15 | 10 | 10 | 10 | 15 | 20
8: 20 | 15 | 10 | 5 | 5 | 10 | 15 | 20
9: 17.5 | 12.5 | 10 | 7.5 | 5 | 7.5 | 10 | 12.5 | 17.5
10: 15 | 12.5 | 10 | 7.5 | 5 | 5 | 7.5 | 10 | 12.5 | 15
Governance
Given the more personable nature of this index, selection of assets is being made solely by following 484’s Twitter activity, and with their knowledge.
In each instance - and bearing in mind their wish for anonymity - we will consider a signed wallet message from the 484 address sufficient for making a request to hold a snapshot vote for removing or adding an asset. This would result in a snapshot vote where $ERROR LPs decide to accept or reject the new token. In the absence of such requests or evidence, the assets within the index will remain unchanged, with the exception of YFL who we are already planning to add pending their token swap.
As with other Sigma pools, a circuit breaker will monitor the fundamentals of the underlying assets, halting swaps within the underlying pool in the event of excessive (≥10%) shifts in either the token price or total supply from one block to the next as a security measure. Circuit breaks can be lifted by approved addresses belonging to members of the Sigma committee.
As is the case elsewhere, reindexing will occur after three weekly reweightings, which may move assets currently within the index along the barbell depending on relative performance. However, should 484 explicitly request it (and, to be blunt, provides the ETH to pay for gas), the Sigma committee reserves the right to force reindexation of the 484 Fund pool in order to introduce or remove assets ahead of schedule.
The 484 Fund will not contain a wider ‘candidate list’ of assets beyond those that are currently marked for inclusion: there will only ever be a minimum of 3 and a maximum of 10 assets, either already included or pending inclusion on the next reindex.
Initial Value
We will target an initial price of US$5,000 for the 484 Fund token. During the bootstrapping phase, 100 tokens will be initialised by 484 to reach a total value of US$500,000. Once this value is reached, the pool will be deployed, giving anyone the ability to mint new $ERROR tokens.
Rewards
In the interest of full disclosure, it is the opinion of the Sigma committee that this index should not receive a significant reward pool for LP provision. Our reasoning is as follows: while we are grateful that 484 wishes to partner with us in producing an index, the reality is that they are enough of a whale to - if they so chose - dominate liquidity provision to the extent that any NDX pool that we offer is effectively theirs for the taking by staking several millions of dollars worth of LP tokens.
We have been assured that 484 will provide the initial US$500,000 of $ERROR tokens minted as Uniswap liquidity themselves, and as such, the need to incentivise bootstrap liquidity is not as strong as it might be otherwise. This is not to say that there will be zero rewards for liquidity provision: the current thinking of the Sigma committee is to provide roughly 7,500 NDX per month for three months, for those that wish to copy-trade 484’s current ‘basket du jour’ but still want to put the tokens to work.
Token Criteria
The only true criteria for asset inclusion here is that they’ve been marked for inclusion by 484. However, there are some standard rules which still apply:
- No major vulnerabilities have been discovered in the token contract.
- The token’s supply can not be arbitrarily inflated or deflated maliciously.
- The control model should be considered if the supply can be modified through governance decisions.
- Sufficient liquidity is locked in the Uniswap market pair between the token and WETH.
- The token does not have transfer fees or other non-standard balance updates.
- The token meets the requirements of the ERC20 standard.
- Boolean return values are not required.
The 484 Fund Composition
Market caps pulled April 1, 2021.
1. Alpha Finance (ALPHA)
TVL: $441,419,384
CoinGecko: alpha-finance
Alpha Finance is a cross-chain DeFi platform which aims to address the underserved markets within the crypto community. The first challenge is the limited availability of products outside the Ethereum blockchain. The second challenge is the lack of liquidity on decentralized exchanges which leads to common issues such as price volatility. By addressing these issues, Alpha Finance hopes to expand the use-cases of DeFi and eventually improve DeFi’s adoption rate amongst the general populace.
Website: https:// alphafinance .io
2. Badger DAO (BADGER)
TVL: $336,923,465
CoinGecko: badger-dao
Badger DAO aims to create an ecosystem of DeFi products with the ultimate goal of bringing Bitcoin into Ethereum. It is the first DeFi project that chose to focus on BTC as the main reserve asset rather than using ETH.
Website: https:// app.badger .finance
3. KeeperDAO (ROOK)
TVL: $133,924,077
CoinGecko: keeperdao
KeeperDAO system automates aspects of providing liquidity to decentralized exchanges (DEXes) as well as capturing profitable trades across trading platforms (arbitrage) and liquidating undercollateralized loan positions.
Website: https:// app.keeperdao .com/
4. Big Data Protocol (BDP)
TVL: $74,972,646
CoinGecko: big-data-protocol
BDP is the governance token for the Big Data Protocol. Big Data Protocol powers a liquid marketplace for commercially valuable data.
Website: https:// bigdataprotocol .com/
5. yAxis (YAX)
TVL: $11,490,045
CoinGecko: yaxis
yAxis markets itself as a meta yield farming aggregator that is able to switch the underlying assets when deploying strategies. Yield farming strategies are governed by a DAO, where token holders vote regularly to implement the best strategy out of a selection of strategies provided by multiple yield aggregators.
Website: https:// www.yaxis .io
