I had been thinking about something like this too! I think this concept is great because it is pretty straightforward to understand. Why have just an index of 1INCH when you can have an index of x1INCH? I’d add xSushi to the mix too. The Uniswap liquidity seems like a roadblock for now at least though.
Adding another level, I think these x-tokens will be widely acceptable as collateral soon. For example, xShushi is available to put up on AAVE and Ruler. If we could have a strategy/vault that leveraged these xTokens to earn more yield on curve or yearn or something that would be pretty slick.
I think that’s space we should try and get into, here’s your basket of goods and here’s how we are using that basket to earn you more yield. And we could attack that from 2 fronts. First, continue efforts to make our assets like DEFI5 available to use as collateral and thus allowing users to create their own additional yields/strategies. And second, create new tokens that did it all for you. Take the xTokens in the " XETF" and leverage stable coin yields. This would add some extra sets of risks, but could be appealing.
As I’m writing I guess another strategy could be to keep the indexes themselves a bit simpler (and not leveraging them) but then to offer different vaults in house where users could stake DEFI5 into a yearn strategy for example. Users could pick and choose their strategies. I guess that would require Indexed using a compound/Aave fork or something to create the lending markets? I’m not sure if this is a bit what Vesper and others are doing? It’s not indexes but they are allowing users to deposit assets into a variety of interconnected vault strategies.