A simple product proposal. Part 2 (III)

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Thanks to all those who took time out of their busy schedules to indulge my previous post here.

A continuation on the theme of “BEDspiriation”

Our flagship product DPI has been our first index to make it into another index.

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And with that, the firing gun of indexes within indexes has been sounded. So without further ado, I present the triple Q of crypto: The Index (as in coop), Index, Index (III)

I know this is a little early as DATA is still in the pre DG2 proposal stage but, well, I just want to share my idea and get it out on the forum for discussion.

The first decision to be made is this:

  1. Do we include the big guns BTC and ETH? (aka CORE from part 1)
  2. Do we just stick with the 3 thematic products so far ($DPI, $MVI and soon :crossed_fingers: $DATA)

Proposal

a) Again a good old simple, monthly rebalanced, market-cap-weighted index. For clarification, by market cap, I do not mean the market cap of the product, but the combined market caps of the market they track. (IE for DPI; UNI + AAVE + MKR etc = $23B @ 26th Jul 2021)

OR

b) If we chose to include BTC + ETH, a hybrid, fixed, graded, proportional weight (see example bottom of the table below)

Versions dependant on previous questions:

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Weighing pros and cons

Pure market cap with BTC + ETH predictably gives a very top-heavy index.

The “hybrid” example is not strictly objective and therefore DPI, DATA, and/or MVI will by default be either at a relative advantage or disadvantage meaning the allocation would need to be closely reviewed to keep things fair.

Fees

0bps - Again following the public good mantra I believe if such a product is successful it would naturally drive AUM to our underlying products. Having been part of the BED fee split discussion it is apparent that the fee on top of fee aspect adds complication and reduces initial transparency for the end-user. Something I believe could be improved for future products.

Name

  1. The Index, Index, Index (III) - Unless my grammar is proven incorrect this is my personal fav.
  2. BEDDM - naaah
  3. Index of Indexes (IoI) - Ticker looks like LOL, good for meme, bit misleading.
  4. Other

Iterations and further idea’s for thought

  1. Productive version. A risk “tranche” style range of ib/a/c/wBTC, st/c/aETH etc (See PAY for inspiration) + any productive future versions of DPI, aDPI etc
  2. FLI 2x?
  3. Is it indexes or indices or can it be both? Any wordsmith out there able to clear this up? Been busting my head all day lol

Edits

@mel.eth, @IGdood. Yes absolutely add new thematic or similar products that are appropriate in the future.

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I’m 1000% in for the this! Love the ideas, supreme leader

I’m also here for this shit-housery

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The Three I’d Index? Logo is just Bran Stark being aloof

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The Index with Three I’s? :thinking:

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IIIndex
characters to fill 20c min

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Love the idea of a fund-of-funds for The Coop; especially given that there’s not enough liquidity in most sectors to spin up dedicated funds at the moment.

Components: I like DPI, MVI, DATA only . . . I question what happens when we capture more sectors. Would the goal here be to capture all of our sector-based products or just these 3 themes (DeFi-Metaverse-Services)? I’d prefer that this be expanded over time.

Weighting: Equal or MC+Capped - I prefer MC+Capped for future expansion purposes.

Name Suggestions: COOP, TOTES, OWL, LOT, ICE (index coop everything) . . . if we use a vault that generates yield (aka balancer) i like ‘ICY’ (index coop yield)

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This reminds me of Indexed Finance’s FFF (Future of Finance Fund) where they have BTC, eth, large cap, midcap, small cap all together.

If more sectors are captured in the future they should be added to III(?) as long as overlap is minimal

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Proposal b)
Could throw in BTC & ETH, then target it to existing $BED customers and just call it “double bed”. Still seems safe to investors then you could offer proposal a if it’s popular enough down the line.

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I like this idea, but I think containing BTC/ETH might make it too similar to BED. I like the names you picked. My entry would be IC3, based on the 3 indices, pronounced, “ice”, or “I-C-3”.

“3. Is it indexes or indices or can it be both? Any wordsmith out there able to clear this up? Been busting my head all day lol”

Both can be used interchangeably. ‘Indices’ uses Latinate suffix, and ‘indexes’ uses Germanic suffix. 'Indices" is traditionally used for finance and math, but modern English allows for both. For anyone curious, Latin based words sound ‘fancier’ due to the Norman Conquest of England in the 11th century, when Latin became the language of church and government, and English was relegated to a second-class language.

Examples:
Latin / Germanic
Amicable / friendly
inquire / ask
ancient / old

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Just an update here based on some feedback I have had so far as well as some reflections of my own since posting.

Product idea 1)
We are too early in the adoption cycle for BTC/ETH/DPI/DATA/MVI. Agreed. This is evident in the proposed weighting as all of the thematics combined would amount to less than 5%. (We are still early! :slight_smile: )

Product idea 1b)

“A hybrid, fixed, graded, proportional weight.”

I think this add’s a lot of complexity un-befitting of a simple product proposal.

Product idea 2)

~55% DPI, ~36% DATA, ~9% MVI

I feel this is by far the strongest contender. I know personally, I would buy it. I would love to hear other peoples thoughts. With DPI being pitched to institutional clients I’d be particularly interested in BD & IBD’s thoughts as to whether this might appeal to those with a little more risk appetite whilst also remaining passive?

Again I would like to confirm that yes such a product would look to include future simple thematic indexes where appropriate.

Productivity
I see this initiative as a simple wrapper / investment solution / vehicle for our existing products. Should we find a way to make productive versions of those we can simply wrap those in a similar way.

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Technically, the commas aren’t needed. So just “The Index Index Index” works…or would it be more grammatically correct to say “The Index Indices Index” - none of this is really important. The marketing/meme that we could get from Index Index Index (III) works in the favor of the #1 proposed name.

But I LOVE this idea and would 100% buy. Especially if we were to include the proposed polygon index in there eventually - which technically touches on multiple sectors on Polygon’s L2.

Equal weighting across all indices makes the simple product proposal simpler. We could even go with BTC2xFLI, ETH2xFLI, DPI, MVI, DATA, P10, PAY, llama index, DAO Jones (equal weighted).

Issue: streaming fee…since we are already taking streaming fees from ALL of the underlying.

Either way, love the exercise of what is possible. excited for the discussion to go further with this. Very interesting topic.

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Interesting stuff @MrMadila! I can see that people would love this product.

I have a few suggestions below.

With regard to the names, there are so many products out that have acronyms as their name. With the idea of reducing complexity to the consumer and minimizing the need to “educate” the public about the product, would it not be easier to name it something more intuitive?

Perhaps it might be better to finalize what the product does/is about before finding a very intuitive name for it. . Just a thought.

With regard to the proposals above, is it possible to have a shorter time cycle to rebalance the index? Do we really need to wait a month? Could we have it as a dynamically rebalanced product that rebalances the distribution of the index any time the data and analysis indicate that there is a new trend that we need to act on?

I think because of the very volatile nature of the crypto, it may require faster rebalancing.
After all, we do not want the customer to be in a bad position for a whole month.

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I think I’m generally in favor of the thematic index wrapper rather than BTC / ETH which is very close to BED. Overall I like the simplicity and appreciate this kind of progress towards straightforward structured products, because I wouldn’t be surprised if many people struggle deciding how many dollars to allocate to DPI, MVI and now DATA, and there’s some freedom to relegating that decision to an index, especially one that’s not trying to double-dip on fees (h/t to you sir)

One caution I have is the common route I see into crypto is CEX ETH, transfer to your own wallet, and then learn about DeFi and buy DPI (or MVI or DATA, as the case may be). Will there be marketing and awareness of this product so that the newcomers learn of it before they buy the underlying? Or is the hope that they sell their DPI/MVI/DATA in favor of this for a truly autopilot experience?

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