2x-FLI Operational Response, Challenges, and Next Steps

The Index Coop is on a mission to make crypto investing simple, accessible, and safe for everyone.

As part of that mission, we are responsible for ensuring product success. This means doing everything necessary to grow our products, keep users safe / informed, and maintain products properly.

The recent market volatility and effects on two Index Coop products - ETH2x-FLI & BTC2x-FLI - made it clear that we are not all the way there yet with our current slate of products.

While there may be an impulse to say that this style of event is unlikely to occur again soon or that we handled it well enough, one lesson to keep front and center is that growth comes from reflection. Reflecting on “brutal facts” is especially effective.

This post outlines a reflection on what went poorly from an operations standpoint, and the steps we will be taking to address those weak spots to better serve our stakeholders.

Here are the 4 operational weak spots we are looking at and addressing through action:

  1. Communications
  2. Education
  3. Governance
  4. IndexCoop[dot]com

Communications

Issue(s)

To put it bluntly, we failed to communicate quickly & clearly within our Discord & publicly via channels such as Twitter and Medium. Specifically:

  1. NAV Premium issues
  2. The status of FLI products after volatility
  3. How FLI products held up during that volatility

Multiple community members stepped up to field questions in Discord. However, they were not supported with clear messaging, information, or coordination.

The sporadic public communications that did go out were not enough to ensure FLI users were continuously well-informed.

Next step(s)

We are ensuring there are directly responsible individuals (DRI) tasked with executing on a to-be-created “urgent communications” checklist. Should a similar situation unfold in the future, we will have a coordinated, quick, and clear response.

This will include:

  • Coordinating communications amongst stakeholders
  • Quickly tweeting out a notice of the issue, and updating the Twitter thread as the situation develops
  • Living in the appropriate Discord channel to ensure the questions/sentiment surfaced there are addressed
  • Writing a blog post that outlines the current understanding of the issue(s), what users need to know, and what is being done

Further, we need to instantiate the general principle that we want to air on the side of over-sensitivity when it comes to warning users.

This means being sensitive to, and surfacing, issues you think users need to know about when you see them so that an intentional decision can be made. This does not mean calling everything an “urgent communication.”

Education

Issue(s)

We have not focused on putting out proactive educational content around FLI products, their parameters and current parameter status.

Next step(s)

We will be working to create a slate of FLI educational content to help users better understand the product itself. For starters, you can check out: Understanding the ETH2x-FLI Premium.

Further, we will test a recurring communication that serves as a “FLI Status Update” of important parameters.

We should also explore using Twitter bots to automatically send notices whenever supply caps are hit or liquidation thresholds are in danger. This may serve as a proactive monitor to allow users and Index Coop members alike to react to events which, today, are opaque.

Governance

Issue(s)

This is a particularly complex set of issues.

Key parameter updates that could have mitigated problems faced by FLI users were slowed from implementation due to governance procedure.

Further, two Index Improvement Proposals (IIPs) that could have reduced some of the issues (IIP-42, IIP-44) failed to reach quorum despite efforts to notify INDEX holders of the votes.

They were quickly resubmitted and eventually passed. However, that prolonged the challenges users faced by an additional 3 days.

Next step(s)

This is a complex challenge and there is no “silver bullet.” As such, this will be a work-in-progress for some time.

One step is already in progress: IIP-45 - Delegation of FLI parameters is designed to delegate FLI parameter management to a small team of subject matter experts & ensure the Coop can respond quickly when needed.

Beyond that narrow case, here are other immediate steps we are taking:

  1. Create a “Critical Vote” checklist and directly-responsible-individual to step up vote-whipping for mission-critical votes
  2. Spec out INDEX delegation
  3. When possible, having votes run during weekdays only

If you have additional, deeper thoughts on this topic, please share them here: Increasing community governance power

IndexCoop[dot]com

Issue(s)

Most users of Index Coop products use decentralized exchanges (DEXs) like Uniswap and Sushiswap.

Some, though, buy directly through the Indexcoop.com interface, and we recognize that we can improve the information displayed there to ensure those users are well-informed and that we have a single source of truth to point users to.

Today, the following information is not prominently displayed

  1. Net asset value (NAV)
  2. Premium to NAV
  3. Unit supply - current #
  4. Unit supply cap
  5. Leverage of the products
  6. Ripcord button
  7. Warnings when there is a premium to NAV or the unit supply is nearly reached

Next step(s)

More prominently display the-above information on the appropriate Indexcoop.com pages.

Conclusion

The purpose of this post is to ensure that we understand the challenges FLI users faced, how we responded, and how we need to improve.

When challenges like this surface, you learn the true colors of a community, and the Coop continuously proves to be honest, empathetic, and determined :owl:

Lastly, if you believe something is missing from this list or think there are other ways to address these problems, please add it as a reply.

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Thanks @gregdocter :pray:

It’s never easy to say “We could have done this better”, but improvement so often comes from such reflection.

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Thank you @gregdocter, again. And a big thanks to all who fielded questions on discord! Great to see these actions laid out here. Would have been very easy to let it be a DYOR episode.

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Thanks to @0xModene, on the IndexCoop.com website, when a 2x-FLI product approaches the supply cap, a warning saying so will appear.

This is important because if the supply cap is met, the FLI products may trade at a significant premium to NAV.


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