Oracle Top 5 Token Index proposal

[pr0]

Oracle Tokens
This category tracks Ethereum-based oracle tokens.

Name: Oracle

Symbol: ORC

Snapshot
https://gov.indexed.finance/#/ndx.eth/proposal/QmdVmMefXUAUqU1xgfjeUie4o4Ud4cqFKwyABaQSBnQNG9

Criteria

• This category has the following criteria for inclusion:

• The token is at least 4 weeks 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.

• The token has a fully diluted market cap of at least $40 million.

• At least $500k worth of liquidity is locked in the Uniswap market pair between the token and WETH or approved stablecoins.

• The token is one of:

Protocol token for an Ethereum-based oracle project.

Terms
Fully Diluted Market Cap: Market price of one token in USD multiplied by the token’s total supply.

Protocol Token: A token used for some core aspect of a system, such as payment for services within a protocol or rewarding users maintaining a network.

Oracle: A system used to provide information from off chain or on chain components, for use by on chain smart contracts as feeds or information sources.

Index Naming Scheme
Indices deployed for this category should use the following naming scheme for the ERC20 name and symbol:

Symbol: ORC + Index Size

Name: Oracle Top + Index Size + Tokens Index

Example

Index Size: 5

Symbol: ORC5

Name: Oracle Top 5 Tokens Index

Note
Controller will be the current controller without a circuit breaker that can stop swaps, so any token that could have a supply based bug would be able to drain the pool. Though these tokens have been live long enough and with high enough market cap that this should be fine.

[G2theM]

I like it. Let’s get this one to a vote

[Norsefire]

To follow up here by ranking some the oracle platforms for context… list pulled from CoinGecko under ‘Oracles’ filter, sans some dross at the bottom of the barrel:

[EDIT: reflected fully diluted market cap rather than market cap, mea culpa!]

Chainlink (LINK)
$23.9 billion fully diluted market capitalisation
$96 million in LINK-ETH liquidity

UMA (UMA)
$1.1 billion fully diluted market capitalisation
$2.4 million in UMA-ETH liquidity

Band Protocol (BAND)
$929 million fully diluted market capitalisation
$1 million in BAND-ETH liquidity

Oraichain Token (ORAI)
$843 million fully diluted market capitalisation
$4.2 million in ORAI-ETH liquidity

API3 (API3)
$505 million fully diluted market capitalisation
$4.9 million in API3-ETH liquidity

Nest Protocol (NEST)
$382 million fully diluted market capitalisation
Basically zero liquidity - $1,700 on NEST-ETH

DIA (DIA)
$368 million fully diluted market capitalisation
$2.4 million in DIA-ETH liquidity

Augur (REP)
$108 million fully diluted market capitalisation
$969,000 in REPv2-ETH liquidity

DOS Network (DOS)
$68 million fully diluted market capitalisation
$558,000 in DOS-ETH liquidity

Tellor (TRB)
$57 million fully diluted market capitalisation
$758,000 in TRB-ETH liquidity

UTU Coin (UTU)
$42 million fully diluted market capitalisation
$514,000 in UTU-ETH liquidity

Zap (ZAP)
$42 million fully diluted market capitalisation
$69,000 in ZAP-ETH liquidity

[Norsefire]

Given the absolute mile and a half between LINK and UMA, it’s worth noting what a market-root weighting would look like for the top 5 of these presently (I haven’t checked if all the conditions are met, sue me):

On second take, this seems like a fairly decent snapshot, especially since LINK does indeed carry the can for the expectations of oracle projects…

[Tai]

Great idea. Lets get this going.

[Tai]

Excluding Link the biggest and by far most accepted oracle provider by far doesn’t make sense if you want to make an oracle index. Also it doesnt make sense to me to include 10 projects in the index for the sake of increasing diversification when the project has shown no traction. Specifically I’m looking at projects like Dia, Nest protocol, or Augur. The price performance for these assets over the last year reflects this. I think its best to include which in my opinion are the most promising oracles projects from your list as well as other types of Oracles such as prediction markets for example:

Chainlink
UMA
Band
API 3
Tellor

Possible non traditional Oracle inclusions:

Prosper
Bird.Money

[Norsefire]

Oh, I’m not suggesting that Link should be thrown out.

It’s such a dominant player in the space that it’s carrying half of the can even when you explicitly control for size discrepancy. That’s for good reason, mind!

[pr0]

Are these fully diluted mcap

[Norsefire]

They’re not. Let me make appropriate changes…

[pr0]

Given that uni controls large part for DEFI5, and that every market usually has 1 to 2 large players with many smaller, think that distribution actually captures what we want. It’s pretty much .5x safe bet .5x growth bets.

[pr0]

Chainlink (LINK)
$23.9 billion fully diluted market capitalisation
$96 million in LINK-ETH liquidity

UMA (UMA)
$1.1 billion fully diluted market capitalisation
$2.4 million in UMA-ETH liquidity

Band Protocol (BAND)
$929 million fully diluted market capitalisation
$1 million in BAND-ETH liquidity

Oraichain Token (ORAI)
$843 million fully diluted market capitalisation
$4.2 million in ORAI-ETH liquidity

API3 (API3)
$505 million fully diluted market capitalisation
$4.9 million in API3-ETH liquidity

These will be proposed as the init tokens

[John]

Everyone knows link is the most popular. Anyway its not good if busines or oracle service user rely only on one source of data.

DIAdata.org is a Swiss non-profit association that provides open-source access to crowd-verified financial data, enabling a fair and symmetric financial ecosystem.

[RickieJean]

1. (DIA) - I’m the most bullish on DIA right now. Great team and superb technology.
   Lots of room to grow, and at the moment ready to break to the upside.

2. (Link) - Obvious

[Tai]

Option Room is another oracle recently seems to be getting attention.

[koen]

I Like it, preferable we limit it to the Top5.

[Norsefire]

To be clear on this point (not directly @'ing you, just whoever reads this): the index will contain the top five at any given point [and at the time of writing, that was the contents of the list that @pr0 wrote].

There’ll be a wider selection of potential candidates to step into the void if they meet the ‘top 5’ criteria at the expense of an token that’s currently in the list.

Hence, the proposal is likely to include LINK, UMA, BAND, ORAI and API3 to start, with NEST, DIA, REP, DOS et al as part of the wider ‘universe’ for consideration whenever the index is reconstituted.

[beyob]

I would also vote for DIA and TRB. Is there a metric that tracks how the coins move with one another? Like if LINK and BAND price action have a 92% correlation in price movement? I do not know what this number is called but is this something that is taken into consideration when building an index?

[Noice]

I think SingularityNet should be considered for the next time we add tokens to this one. Its not only in oracles but that is a big part of it. I’m not a bagholder, for full disclosure, just trying to contribute where I can!

[Norsefire]

Are you perhaps thinking of beta?

Correlation in price movement between assets is called exactly that, whereas beta is used as a hedging measure for inclusion of assets, but there’s nothing quite so fancy in the current weighting mechanisms.