A Proposed Product Philosophy

The products a company creates define the type of impact it wants to have on the world. What separated the truly great, innovative companies is a strong sense for who they are and why they are building.

Previously, we haven’t really had a cohesive statement to define who we are. The closest we have gotten is reasoning by analogy and dubbing ourselves as the “crypto BlackRock.” But that’s reductive to who we are. What would be the point of forking the existing financial ecosystem if all we are going to do is build the same institutions that existed before?

We create assets that make finance accessible.

We understand that finance fundamentally describes the way by which we work together to achieve things as a society. Having the privilege to participate in financial markets means that we get to help guide where society allocates resources and thus benefit from the general wealth creation. That’s what makes accessibility so critical.

We chose to tackle accessibility from the fundamental financial layer because that allows us to make a bigger dent in the financial ecosystem. By only creating pretty UIs, we would continue to remain beholden to technology that others build and miss the true power the openness and composability of DeFi provides.

What’s so beautiful about the index fund revolution was that it disintermediated rent-seekers that would often charge high fees and capitalized on the ignorance of the customers they were supposed to serve. It was a huge leap forward in allowing the individual investor greater control over their own financial destiny.

Where Vanguard, BlackRock, and State Street went wrong was that they stopped innovating and they started actively hampering progress. They used their large governance power across industries to side with short-term CEOs and board members. They discouraged competition between any competing companies that they owned and that is not something we will ever stand for.

Yet another roadblock for these titans of the old world was the scope of things they could even build. It took decades for the first Bond ETFs to ever come to market due to onerous regulations, OTC desks and issuers clutching to their power, and the cost of building the underlying infrastructure. With DeFi, what took them decades would take us only a few weeks.

Not only that, the types of markets we can provide access to has absolutely exploded in scope. As an example, traditional banks typically have market making desks that profit from volatility when their lending businesses are doing poorly due to a bear market. They are able to remain well hedged, but it’s so much harder for an individual to do so. In TradFi, there is no way a market making firm would ever accept capital a single mother would be able to offer. Yet with DeFi, AMMs provide the same opportunity no matter who is providing the liquidity allowing people access to a financial opportunity that was unavailable before.

DeFi broadens the design scope by such an insane amount and gives us the opportunity to build products that have never been considered before. If we get stuck too much on sector indices, we’ll miss the larger opportunity coming with this financial revolution. It’s important to consider deeply the opportunities DeFi protocols are making possible and how we can make them accessible.

There are three main ways we can go through the product exploration process:

  1. Build For Ourselves: When we make products we ourselves would use, it makes it really easy to get the design right and we know that there is at least some market there (individuals like us). However, it’s easy to convince yourself that you would use the product, but when you are actually faced with it you wouldn’t so it’s important to be mindful of that bias.
  2. Identify Opportunities: Because all the data on-chain is publicly available, we can see who is using DeFi and for what reason. From that data, we can think about ways to make their experience way better. This also bakes in market research into the product discovery process.
  3. Listen to Others: Many of us are embedded in other communities within DeFi. It is always valuable to gain insights on what problems other people are facing. As simple as keeping an eye on a Discord channel. Pulling on these threads can often reveal massive opportunities.

Once we have insight as to a potential problem, there are a few attributes of a good solution we want to keep in mind:

  1. Reducing risk.
  2. Reducing operational overhead.
  3. Reducing costs.

If we can identify a problem and construct a solution that matches those attributes, we’ll know we have a real winner on our hands. The Set team is here to support and provide engineering feedback and implementation details.

As an example, I recently went through the process of exploring what an AMM product would look like. I Identified the opportunity by noticing how much un-incentivized TVL was locked in AMMs. It was massive! You can read about how I approached the initial framing here. I also considered how the product may evolve in the future as the DeFi landscape matures and we have more options for composability. [There is still a lot of work to do on this product, but if any of you find it interesting, please reach out].

I’m really excited to explore this design space with all of you and see what awesome products we can come up with. By the end of the year, we should aim to have 10 great products (DPI being 1) that each have at least $100M+ in TVL. In building these products, we honor the great innovators of financial markets like Bogle, Fibonacci, Scholes, Grant, and hope to provide the same level of value for the world.

We consider deeply the eventual end users: a middle aged factory worker saving for retirement, a father investing in a college fund, and the young woman daring to make a bet against the status quo. If we do our jobs right, we will greatly accelerate the pace at which DeFi is adopted and make a dent in the financial future of our world.

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@puniaviision this is a powerful statement. I strongly agree that our product philosophy needs to move beyond the next “Vanguard” or “Crypto Blackrock” paradigm. The scope of possible indexed products is so much larger than simply crypto large cap, small cap, DeFi etc.

In the linked essay you highlight how APY has remained stable for some of the core crypto LP products. I see Index becoming a platform that enables non-technical investors to access the same returns as highly technical crypto insiders.

The trick will be to identify and design those products. From my perspective the real opportunity for us will not be building market covering protocol indexes (i.e. ever more sector specific DPI equivalents) but Indices that cover Liquidity Pools and more complex products. For example an index that holds a range of stable coin pairs.

Excited to see where this conversation goes and to start building!

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I think this would be a great addition to the product philosophy. Leveraging the technical side of crypto to build a product designed to enrich the experience for the end user. Like a Steve Jobs kinda approach?

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@puniaviision This is excellent! I love how you describe what was beautiful about the Index Fund Revolution, but how the industry stopped innovating.

One area where I both agree and disagree with you is your comment about reasoning by analogy and describing what Index Coop is as the “crypto Blackrock” or “crypto Vanguard”. I agree with you that analogies like these are not a product philosophy or vision for future of the DAO and we need to develop those - so kudos to you for starting that here. Where I disagree with you is that analogies like “Index is the Vanguard of Crypto” or “DeFi Pulse Index is the S&P 500 of Crypto” condense the massive promise and potential of the Coop into a single sentence that anyone who saves money in a Vanguard or Fidelity IRA will be able to understand. And like you said, We create assets that make finance accessible. If we don’t speak to potential users and investors in a way they can easily understand, then are we doing our best to fulfill our own values and philosophy of making finance accessible?

I think calling Index Coop the “Vanguard of Crypto” is like how in the 90s Amazon was a “bookstore of the Internet” or the “Barnes & Noble of the Internet”. Eventually, those analogies outlived their usefulness and became unnecessary crutches. Amazon’s brand became so uniquitous that these anomalogies become wholly unnecessary.

I sure hope that Index Coop has that kind of success and hope to be a part of making that happen. :smiley:

@BigSky7 @MrMadila I agree with both of you that this statement is powerful and is a lot of what the Coop is trying to build. I think it should be incorporated into the product philosophy.

I see Index becoming a platform that enables non-technical investors to access the same returns as highly technical crypto insiders.

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This is excellent! I echo @TenaciousTerrier’s sentiment that as long as it doesn’t become the North Star, there’s nothing wrong with a highly communicative “Elevator Pitch.”

A somewhat tangential question: How do you see getting DeFi into the mind of the proverbial middle aged factory worker? Do you have any ideas on projects to push DeFi further into the mainstream consciousness as an option? Is it simply building a product that works and gets results and waiting for word of said results to trickle into the general population, or are there active media pushes you think we could/should be making to get people onboard?

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Great post @puniaviision,

Thank you.

While I want to briefly agree with @TenaciousTerrier re the current Blackrock/Vanguard elevator pitch being a useful communication tool, I really want to doubleclick on who we’re trying to help and how. I like this guiding narrative you offer:

“We consider deeply the eventual end users: a middle aged factory worker saving for retirement, a father investing in a college fund, and the young woman daring to make a bet against the status quo. If we do our jobs right, we will greatly accelerate the pace at which DeFi is adopted and make a dent in the financial future of our world.”

This resonates with me deeply - I work for a monster TradFi org atm which does effectively add value to this audience (not all do!). What excites me about the Coop - and DPI as its first product - is it does serve your aforementioned audience. While DPI isn’t super easy to buy at this time, a very normal man/woman/other can in theory buy DPI and simply hold for years it to gain efficient and elegant exposure to DeFi (and much more potentially in time, utility, yield, etc). I think DPI’s is pretty close to perfect product-audience fit for this audience.

I also really like @BigSky7 's vision statement: “I see Index becoming a platform that enables non-technical investors to access the same returns as highly technical crypto insiders.”. Your aforementioned audience isn’t technical, would love access to the returns that deep crypto natives source, but also won’t trust products it cannot at least conceptually get its head round.

I think remembering this audience and how they think is key - if this is indeed the Coop’s agreed audience! - and needs to be borne in mind when new product proposals are coming through and build resources are being allocated.

For example, while I look forward to hopefully soon using your AMM product and FLI, these products - while extremely innovative and intelligently conceived - feel like new tools for sophisticated, crypto-natives well ahead of the curve (and potentially already well-advanced in crypto wealth accumulation). On the other hand, DPI, CGCI and Metaverse feel like products the more numerous folks on Main St would either be more likely to use, period, or be more likely to use earlier in their crypto journey.

I am excited about all the product proposals coming through and would also hope to see 10 new products supported by the end of the year. I just think it’s important that at least more than one of these future 10 products (DPI) really appeals to the Main St audience you describe. I think CGCI, DPI, and Metaverse could strongly appeal to this audience, and hopefully more product proposals will too.

Again, great post and, at a minimum this will stimulate debate as to who our audience is.

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I echo everyone’s comments :grinning:

From my side, I’d like to ask the following question: between DPI, CoinShares Index and FLI, what is the common thread?

I see the first two as roughly falling under the banner of “we make crypto investing easy”. FLI, on the other hand, falls into the “built by crypto-natives for crypto-natives” category.

In my mind, it’s crucial that we figure out who we are talking to with our products. It affects the language we use across our materials, which partnerships we target, which growth initiatives we run and, obviously, the products we build.

To use some of the analogies above, choosing the “we make crypto investing easy” banner does make us the “Vanguard of Crypto”. The “built by crypto-natives for crypto-natives” banner would make us like “Bridgewater of Crypto”.

I’m curious about how others see it. Am I missing a common thread between these 3 products? Is there a category or a banner that encapsulates all 3? And if not, how do we operate under two banners at the same time?

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I would say the common thread is simplicity / easiness relative to the unbundled product.

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that makes sense. but they still target different end users. do you, for example, see the below demographic buying FLI?

I’m trying to think of like a banner or a slogan, per @Martin’s post, that can encapsulate all our products (incl. CoinShares and FLI). To run with your comment, it could be something like “we make crypto investing easy - no matter who you are”.

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I like that one.

edit: originally came up with some bad ones haha

I know I am a little late to the game here, but I have been pondering on this quite a bit, especially as I have been analyzing DPI holders. My thoughts are pretty simple: as long as we have identified a core set of users with a need/problem for each one of our products, I believe we should be fine.

The passion for the end user needs to come through with each product we consider. Who do we believe the end user is? Why does this product solve their problem? Will we be able to reach them?

All of our products don’t need to serve the same user base. In fact, they shouldn’t! But, we do need do develop a rigorous playbook that keeps us honest and accountable to being a user-centric, product-focused DAO.

In reference to the three main product exploration processes, I think we need to learn to lead with #2 (and partly #3). Trying to uncover pools of underserved users (via quant and qual) and then delivering to them is the best way to build strong products, imo. Once we have identified these users, then we keep in mind the three keys to a solution (risk, overhead, and cost) and we build a great product for them.

We have a great opportunity to serve both crypto newcomers and crypto natives with different products but the same playbook - really exciting times!

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Bumping this to the top of the forum - I’ve spend some time this week re-reading and thinking about. What @puniaviision is talking about here is important. When this topic first came up almost two months ago we were still extremely young as a community. Now may be a good time to revisit and further discuss.

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To those thinking about this, my framework here has changed a little. I found this article pretty helpful: How we accidentally invented Job Stories | Inside Intercom

Better than personas.

Love the Jtbd framework, this is a cool extension. As I see it

Situation: Multitude of options to allocate assets, some of the best ones have technical hurdle
Motivation: Protect and increase wealth
Outcome: Obfuscate technical aspect of the strategies that provide the best opportunities to protect and increase wealth

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Love the Jtbd framework, this is a cool extension. As I see it

Situation: Multitude of options to allocate assets, some of the best ones have technical hurdle
Motivation: Protect and increase wealth
Outcome: Can have resources planned such that I can provide for myself and my family

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I am late to reading this but it is the one of the most inspiring post I have read. This just re-enforces my commitment to helping indexcoop realize our vision. I spoke about this with @DarkForestCapital this week when looking at $FLI and another strategy I wanted as to tokenise the KeeperDAO MEV mining strategy. When I listened to the podcast about $FLI the token gave you access to leverage with out the downside of risk. It makes DEFI more accessible. So this is in the DNA of our products for sure. But we need to expand our product DNA into our on-boarding strategy that is why our partnerships are so important in executing our vision.

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I’m not sure what you mean by that. It’s 2x ETH downside risk, that’s literally the first thing I say when we start talking about FLI :laughing: Do you mean like the downside of being liquidated?

@verto0912 Apologies Yes :see_no_evil: I mean that reduces the risk of liquidation. I need to get my terms right when pumping our products :sweat_smile: