I strongly reject the premise that ‘we are focusing too much on tokenomics’. This is the first standalone proposal related to the NDX token and the power of the Treasury created since April (prior to which was dNDX and its implementation parameters). The claim that we’re too busy navel-gazing into the governance token given that I explicitly said “it is not my intent to make this post about the price of NDX” - isn’t accurate.
This proposal is about the liquidity for our products and where we source it from.
Nothing more, nothing less. It is not a ‘distraction’ to address a critical component of how users engage with our products and if/how we pay for it.
I’m going to preface the rest of this by saying that if there’s subsequent discussion to be had, it would be best to continue it in a new thread, rather than crossing the streams.
@DeFi_Whiskey - many thanks again for a well thought-out post. My responses follow:
I view this as another distraction away from what should be the primary focus of the team: creating, marketing, and selling crypto index funds that appeal to investors.
The amount of effort that goes into actually implementing what’s being discussed here is surprisingly minimal: a vote has to happen anyway, I’m simply suggesting a change to the parameters and subsequently engaging existing infrastructure through a potential partner.
I have one major objection here: index creation, marketing and selling should be the primary focus of the DAO, not the Core team: I believe that our specific role is that of enabling product functionality and ease-of-use. I will keep coming back to this point, somewhat relentlessly.
How does this proposal address the issue of zero growth in the core business? I believe it doesn’t, at least not in any long term, fundamental way. It may juice the token price briefly, but without growth in the core business, those gains will be short lived.
It does not, and it is not intended to. It’s also not intended to ‘juice the token price’: in fact the opposite may well happen, and I explicitly spelled this out in my concerns. Part of what I consider to be my job (which I’ve been defining as I go) is examining issues such as liquidity and Treasury management. This falls very much in scope.
Instead of the team focusing on this, why not address the lack of growth in AUM (TVL), something that is fundamental to the success of a protocol selling index funds to investors?
I’m going to work on the assumption that you periodically pop your head in and see what’s going on with Indexed rather than track every update we put out. And that’s entirely fair - there are only three of us who work on this full-time, but the information is available.
There are three reasons I ascribe to why I believe that a certain competitor is accruing steady additional TVL relative to us:
- The underlying technology is already fully established (Set Protocol),
- Network effects par excellence (in that they are heavily backed by several major DeFi institutions), and
- Hundreds of members of their DAO advertising their product/s.
The Indexed Core team is still in the process of building out the fundamentals of the protocol (seen most recently in this roadmap and this thread). This work is critical to our ability to create novel products with USPs, and is taking up all of Core’s time.
It isn’t unfair to say that we’re an upstart within the same field as an established entity with a horde of fans online - when everyone is talking about X, you tend to disregard Y and Z, especially within a field as staid as index investing. Core is currently working on changing that narrative (“they’re all the same”) through a protocol upgrade that we are currently working on and will be proposing to the DAO.
Most of the most vocal online proponents of our major competitor are members of their DAO. There appears to be an assumption that this does not or should not apply to us, and that all outreach efforts should be shouldered by Core (who are, again, a Solidity engineer, a React developer, and a researcher/protocol maintainer).
A few point-by-points now:
1 - No clear primary fund, equivalent to DPI . We have 2 funds that kinda sorta address DeFi (DeFi5 and CC10). Why do we need 2 funds? It’s confusing.
These were the two pools that were selected at Indexed’s creation, when it was still something of an experiment. We don’t ‘need’ two funds like this, but they exist and cannot be retired or renamed at this point. It is what it is at this point!
2 - Worse, DeFi5 has too few tokens! Why would a serious index fund investor invest in a fund with only 5 tokens? …
You have raised this point (and the rest of it) multiple times now in various fora. The fact that the DEFI5 has consistently been our highest product by TVL does somewhat neuter the “who would invest in it” and “it’s just wrong” points: it clearly has product market fit: even when unincentivised it’s been top of our pile. I’m not going to engage with the ‘serious’ part of ‘serious index investor’: we are all currently engaging with DeFi natives.
The FFF exists as a metaindex in the form you suggest (albeit a slightly narrow version due to overlap between some members), and I recall you being a major supporter of it when it was proposed and subsequently created. It has 22 tokens, and US$1.3 million in TVL. A competitors variant metaindex which holds 14 distinct tokens has US$1.8 million in TVL. Whatever the magic attractor is within crypto, it clearly isn’t purely linked to “number of tokens underpinning the index”.
If there’s a competitor-killer, clearly you don’t believe it exists yet.
So, what would it look like?
3 - When I go to Indexed Finance, “Vaults” are at the top of our site. Why? What do they have to do with index investing? …
This is admittedly something that I’ve been asking Connor to fix: the vaults are up at the top of the page simply because they were/are the newest component of Indexed. That’ll hopefully be shifted soon: this kind of thing happens when your UI designer and your UI developer are the same person (although I believe it may have been me that suggested that it goes where it currently is).
I would counter “it almost seems as if we are creating cool products, then looking for markets” by saying that yes, it may appear that way on our site, but this misrepresents things significantly. To quote the Nirn whitepaper:
Nirn was conceived - and built - for integration into the Indexed Finance platform ... enabling yield-bearing ETF tokens with a single wrapped proxy representing a given index constituent across multiple lending protocols simultaneously
The entire reason that the vaults were built is to convert our index products into yield-bearing variants of themselves: functionality that will be put in place once our Balancer V2 upgrade is complete. Nirn makes Indexed the only provider of index products that has the ability to earn yield on index pool liquidity without binding ourselves to a particular lending market for each asset, and is a key part of Core’s development of the protocol.
But again, that’s not clear on the site, and if you’re not following along with things closely, it’s an understandable view to take, so I’m actually on your side for this one.
4 - Is having business strategy driven by a committee really the best way to manage NDX in its early years?
Perhaps not, but we have no person to fill the role of Benevolent Growth/Business Strategy Dictator on a full-time basis right now. This was a role filled by Lito up until recently, however he has recently stepped down in favour of Hop Protocol, although he remains an advisor. The rest of the members of the IGC (whose mandate is to come up with ideas for growth and are given signing rights over a Treasury allocation to make happen) are all enthusiastic members of the DAO, but this is not their full-time job.
If you (or anyone else reading this) believe you know someone who would be willing and able to step into this role for the DAO on a full-time, paid basis: please introduce them to us all - we (Core) have been searching for additional manpower for purposes such as this for months. We can and do reward people that choose to step into these roles with NDX and a salary!
In the roadmap I actually went ahead and proposed two indices that I’d like to see us create (a stablecoin index weighted by vault interest and a hedging index weighted by the Crypto Fear & Greed Index), but our underlying protocol isn’t quite there yet in terms of capability. On Monday (tomorrow) I have a conversation with a fairly major presence in the DeFi space with mind to creating an index for them. We’re not doing nothing, but - and this must be the fifth time I’ve said this now - Core is currently engaged on the fundamentals.
A DAO is its community, and I would again ask that if you are unhappy with the current offerings, to propose one of your own that you believe would plug the gap. All we ask for is candidate membership and weighting strategy: then we can all talk about whether it’s something we can actually put into place immediately, or need to complete the protocol upgrade before we make happen. Similarly, if you have a good idea for how we should market things, suggest it!
You are as much a member of Indexed as the members of Core, regardless of NDX token allocations/holdings. The protocol (and the DAO) benefits if the responsibility for our offerings and their marketing is widely shouldered amongst its members. A DAO with everyone asking a handful of people to do everything themselves isn’t a DAO, it’s a startup in a glass office surrounded by shareholders.
I would now like this thread to return to the actual topic at hand: protocol owned liquidity via Olympus Pro bonds.
