Authors: Redphonecrypto, 0xBay
Summary: We’re formally proposing the launch of a DEGEN Index as part of the Sigma pilot program.
The Degen Index (DEGEN)
The Degen Index/category is an alpha-seeking index of small- and medium-cap Ethereum-based protocol tokens. An initial list of 30 tokens was curated from the community including many of the most active investors in DeFi. We removed some of the larger-cap tokens from the original list to focus on smaller-cap names and avoid overlap with existing Indexed indicies and products from other leading index platforms. All future index components will be selected with input from DEGEN index holders and the NDX community. We will also encourage everyone who voted on the original DEGEN list to become active in the NDX community.
As its name implies, the Degen category aims to find higher-risk, higher-reward assets by seeking out emerging projects with exceptionally high growth potential predominantly in the DeFi sector. It’s compents all have strong communities and large total addressable markets. Market caps range from $50 million to $2 billion. If a token’s market cap outgrows the index, it will be automatically replaced with the largest market cap token on the pre-existing list of alternates (described below). In this way, the index will constantly evolve to capture upside from tokens during their most rapid growth phases. To maximize upside potential, interest-earning version of tokens will be held over non-interest-bearing versions when ample liquidity is available. In the event that a token in the index is compromised or impacted by a bug, trading of the DEGEN token will be halted until it can be replaced in order to protect the index’s value. To protect against market manipulation, a token must have sufficient liquidity on its ETH trading pair.
Governance will handled by Indexed Finance’s existing framework including the forums and
Snapshot Discord. The existing Degen Discord group will be encouraged to migrate over to the Indexed Finance Discord where the community can discuss ideas for index components moving forward. Snapshot votes will be held semiannuallyThe Sigma committee will add or remove tokens from the index or alternate list regularly based on community feedback. Votes may be held more frequentlyExamples of changes may be adding new tokens if the alternate list is in danger of being emptied or adding or removing tokens from the index due to material changes in tokenomics or project direction. Community members can also create a proposal to add or remove propose adding or removing a token from the active index or the alternate list at any time.
Initial value of DEGEN
We will target an initial price of $5 for the DEGEN token. During the bootstrapping phase, 100 tokens will be crowdfunded to reach a total value of $500 (or $5 per token). Once DEGEN reaches its target value, the pool will be deployed giving anyone the ability to mint new DEGEN tokens. The pool will maintain capitalization-root-weighting.
The index has the following criteria for inclusion:
- The token has a market cap ranging from $50 million to $2 billion (as calcuated by a rolling 14-day TWAP on Uniswap).
- This token is at least a week old.
- 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.
- 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.
At least $300,000 worth ofSufficient liquidity is locked in the Uniswap market pair between the token and WETH.
- This does not apply to WETH.
- The token is one of:
- Protocol token for an Ethereum-based project.
- Governance token for a DeFi project.
- Wrapper token for a blockchain’s native currency.
The Degen Index Composition
Market caps pulled Jan. 29, 2021
1. Sushi (SUSHI or XSUSHI)
$1 billion market cap ($1.9 million in SUSHI-ETH Uniswap liquidity)
Sushi is the governance and fee-earning token on the Sushiswap decentralized exchange (DEX) and it’s growing number of crypto-related services. Daily trading volumes on Sushiswap regularly exceed $300 million.
2. THORChain (RUNE)
$763 million market cap ($317,000 in REN-ETH Uniswap liquidity)
THORChain is a decentralized exchange (DEX) that enables trading of native assets across various blockchains (i.e. bitcoin to Ethereum or Polkadot to Monero).
3. REN (REN)
$492 million market cap ($12 million in REN-ETH Uniswap liquidity)
RenVM makes it simple for projects to issue tokens on other blockchains creating inter-blockchain liquidity for decentralized applications (dapps).
4. Curve DAO Token (CRV)
$381 million market cap ($4.8 million in CRV-ETH Uniswap liquidity)
Curve operates a decentralized exchange (DEX) that’s optimized for swapping assets with similiar values (i.e. stablecoin-to-stablecoin swaps or pegged coin-to-pegged coin swaps). Daily trading volumes regularly exceed $100 million.
5. Alpha Finance (ALPHA)
$292 million ($992,000 in ALPHA-ETH Uniswap liquidity)
Alpha Finance Lab is building an ecosystem of DeFi products that will interoperate and accrue value to ALPHA tokens. It’s products include a leveraged yield farming platform and a decentralized exchange (DEX) for perpetual swaps.
6. Ocean Protocol (OCEAN)
$226 million market cap ($2.9 million in OCEAN-ETH Uniswap liquidity)
Ocean Protocol operates a data marketplace where users and decentralized applications (dapps) can swap high-quality data.
7. Mirror Protocol (MIR)
$131 million ($921,000 in MIR-ETH Uniswap liquidity)
Mirror Protocol allows the creation of fungible assets, “synthetics”, that track the price of real world assets. Mirror synthetics are intended to be used as key building blocks in smart contracts, and to bring the world’s assets to the blockchain.
8. KeeperDAO (ROOK)
$111 million ($6.2 million in ROOK-ETH Uniswap liquidity)
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.
9. API3 (API3)
$101 million ($3.8 million in API3-ETH Uniswap liquidity)
API3 connects smart contracts to real-world data that’s quantifiably secure. This data can be integrated into decentralized apps (dapps) on any blockchain.
10. Hegic (HEGIC or ZHEGIC)
$101 million market cap ($1.4 million in HEGIC-ETH Uniswap liquidity)
Hegic operates a protocol for decentralized, fixed priced options which can be used by end users or integrated into existing decentralized applications (dapps).
The Degen Index Alternates
Reserve Rights Token (RSR)
$333 million ($5.4 million in RSR-ETH Uniswap liquidity)
Reserve is a flexible pool of stablecoins designed to reduce risk through diversification and decentralized governance.
$285 million market cap ($870,000 in 1INCH-ETH Uniswap liquidity)
1inch operates a decentralized exchange (DEX) aggregator, which allows users to access the best deals simultaneously across a number of popular DEXes in a single trade.
Perpetual Protocol (PERP)
$133 million ($9.4 million in PERP-ETH Uniswap liquidity)
Perpetual Protocol offers decentralized perpetuals with up to 20x leverage for any asset.
Alliance Block (ALBT)
$92 million ($2.4 million in ALBT-ETH Uniswap liquidity)
AllianceBlock is building a regulatory-compliant decentralized capital market.
Badger DAO (BADGER)
$71 million ($603,000 in BADGER-ETH Uniswap liquidity)
Badger DAO aims build the products and infrastructure necessary to accelerate Bitcoin as collateral across other blockchains.
$65 million ($4.4 million in KP3R-ETH Uniswap liquidity)
Keep3r Network is a decentralized network that projects can utilize to streamline their development and outsource any routine, automated tasks.
$61 million ($9.8 million in POLS-ETH Uniswap liquidity)
The Polkastarter protocol enables cross-chain token pools and auctions, allowing projects to raise capital on a decentralized and interoperable environment based on Polkadot.
Axie Infinity (AXS)
$43 million ($793,000 in AXS-ETH Uniswap liquidity)
Axie Infinity is a blockchain-based game with more than 19,000 monthly users. The game is built around its Axie characters. Users can accrue and spend AXS tokens within the game.
$34 million ($4.2 million in MPH-ETH Uniswap liquidity)
88mph operates a decentralized tranched-debt platform that enables use to lend out funds at fixed APYs.
dHEDGE DAO (DHT)
$32 million ($0 in DHT-ETH Uniswap liquidity)
Built on top of Synthetix (SNX), dHEDGE is a decentralized asset management protocol connecting the world’s investment managers with investors on the Ethereum blockchain in a permissionless, non-custodial, trustless fashion.
$29 million ($4.7 million in WHITE-ETH Uniswap liquidity)
Whiteheart enables hedging contracts that help DeFi users to protect value of their holdings in ETH and WBTC.
Cover Protocol (COVER)
$25 million ($460,000 in COVER-ETH Uniswap liquidity)
Cover operates a decentralized insurance platform that can protect user funds in the event of a hack on a given smart contract platform.
$23 million ($507,000 in OCTO-ETH Uniswap liquidity)
OctoFi empowers users to invest in in thousands of DeFi investment opportunities from a single paltform/dashboard.
$3.8 million ($171,000 in SYN-ETH Uniswap liquidity)
Synlev enable decentralized trading of leveraged tokens on Ethereum.