Summary
After some discussions on the first community call about Index Coop being boring but protecting our users and giving them confidence, I have been thinking about actionable ways to ‘be boring’. I had a couple of ideas and would expect to formalise the popular ones into IIPs, but for now I’ll lay out the framework below. For those who are just here for the Owl analogies, this post is about agreeing what the best sticks to build our nest with look like.
Motivation
I can’t speak for everyone here but my main reason for getting into crypto, and now diving headfirst into Index Coop is that I don’t like the way the current financial system works and I think we can do better. The Coop is looking to do something extremely ambitious and ‘become the next Blackrock’. While there is nothing wrong with this goal as stated, to me Blackrock has certain negative connotations, namely greed and crony capitalism. While we are all here to do good and get paid, the very fundamentals behind Index Coop and its creation are already vastly different to the status quo in traditional finance. I don’t want us to lose that over time so I suggest we bake-in doing good right from the start. The ideas below are an expression of that and hopefully there will be more from other members.
Abstract
1. Firstly low hanging fruit, implement a code of conduct. Industry standard seems to be this as linked from a currently active Yearn proposal. Simple and lays the groundwork for an inclusive and tolerant community, I will put this forward as an IIP.
2. Was thinking about what a similar thing to the code of conduct looks like for those who aren’t part of the community and just want to use the products. To me this is partly reflected by consistent branding, narrative and documentation, but what could a user refer to that gives them confidence in Index Coop and its’ goals? Possibly this involves coming up with a basic set of statements that community members (and therefore governors of the protocol) can all agree on and extends to perhaps a more detailed set of commitments from Index methodologists/delegators. Like a Code of Conduct this gives one statement to reference for all and should frame decisions going forward, we don’t want to pull a Google and move away from ‘Do no evil’ to ‘What moral compass?’. Can this be achieved by an About page on the future website?
Examples:
Vanguard 4 Principles
Blackrock Coincidently also 4 principles
State Street These guys have some of the most popular S&P 500 products, also 4 principles, I’m detecting a theme here
Two constants in the examples above are low fee/high performance and innovation, Index ticks both of these boxes. I also like the idea that we are data driven and certainly the team at DeFi pulse have shown that. The last principle should directly reference community. So a starter for ten would look something like this:
Index Cooperative Guiding Principles
Shared Goals - We aim to create a wide range of suitable indices by leveraging a diverse and knowledgable community, for the benefit of both users, and the wider digital asset space. We believe in constructive contribution and working alongside others to achieve success together
Innovation - Index Coop began with the first of its kind idea to create digital asset indices (I haven’t fact checked this am just assuming it) and we aim to lead in the creation and development of future products that continue to advance the space.
Performance - Our goal is to offer index products that represent simplicity and peace of mind. Indices are designed to help minimise fees and hassle, while maximising the breadth of choice for digital asset holders.
Data Driven, Community Governed - It is important that our decisions are driven by the wealth of market data available within DeFi. Combining the depth of this data with a passionate community we can make informed decisions quickly with a chance for everyone to contribute. This is a powerful strategy that will help Index Coop remain competitive in a fast-moving sector.
2.a Closely related to the above would be a simple ‘commitment of methodologists/delegators’. A couple of bullet points, something that looks like this:
As methodologist for this Index I/we commit to:
- Represent Index Coop in a professional and consistent manner in accordance with the Coop Code of Conduct
- Keep track of the latest developments in areas relevant to the Index, proposing additions/deletions to the community and taking action on the voting outcome
- Stay visible to the community and index holders to answer questions and act as a single source of the truth in relation to the specific index
- Respond to Index Coop community proposals relating to the Index
- Keep all documentation related to the Index up to date, tracking performance and sending out updates monthly/quarterly/yearly - delete as appropriate
Reading this back now it all seems a bit serious, but I think our space needs to grow up if we want to serve a wider audience and this is how we do it. So it goes against my usual instinct that rules are just guidelines and can largely be ignored, but I truly believe this stuff is important with what we are trying to achieve. Thinking about the recent events with Andre and Yearn, that community has turned pretty toxic and has been tearing itself apart. Setting a framework now and getting everyone on the same page gives us a clear direction.
3. Something a user asked in the Discord the other day got me thinking. The question was ‘what happens if the value of one of the tokens in an index goes to 0?’ The current answer is the index value drops by the amount equal to the value of the token in question, which while not ideal means that the loss is limited and not catastrophic. What if we put aside a portion of the future income/treasury as an insurance fund in case it actually happens?
There are certain protocols that already have entire tokens dedicated to this purpose (mStable with MTA as stablecoin re-collateralisation), and while the sale of Index tokens might not cover the entire amount it can go some way to making it back. Index can be sold to the market up to an amount voted on by the community and rewarded to affected users based on a snapshot at the time of the occurrence .
This will go a long way toward showing holders of Index Coop products that we are looking out for them and our responsibility doesn’t end when they purchase the token. This is the kind of forethought and open mindedness that separates Index Coop from tradfi giants. It may be that the better option is to go with an off-the-shelf product like Nexus mutual, interested to hear people’s thoughts on this.
4. Gitcoin grants. It was mentioned briefly on the forum but I recommend proposing a defined contribution to Gitcoin grant rounds. As it needs to scale a percentage is most appropriate, the question becomes how much. A vote can always be taken later to change it but we could start with 2% of treasury income?
To summarise:
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Will create IIP
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Welcomes community feedback before IIP
2.a Based on discussion I’m happy to formalise and include with 2. -
Welcomes community feedback
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Can create a vote with some options if required
Hopefully this represents some value add and most importantly clear direction before IC expands more rapidly. Equally if it’s all just wishy-washy crap let me know in the comments!