Building the Nest - laying strong foundations


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.


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.


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?


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:

  1. Will create IIP

  2. Welcomes community feedback before IIP
    2.a Based on discussion I’m happy to formalise and include with 2.

  3. Welcomes community feedback

  4. 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!


This is awesome! You got to it faster than me. 100% believe we need to have a set of values, cultures, and principles we collectively buy into - and this is a great start. I love that you brought in 3rd party reference resources and started proposing some principles.

Some values that come to mind are (not necessarily related to the product itself):

  • Growth and Improvement: We value growing as individuals, as a cooperative, and as a broader community. We seek to constantly learn from mistakes/failures by reflecting, reviewing, and making necessary changes. We recognize our current answer / plan can always be improved and that the world is dynamic and constantly changes - thus we collectively need to adapt and change too.
  • Long-term thinking : We do things for the long-term benefit of the cooperative, our users, and the community. We strive not make decisions for short-term benefits.
  • Fairness: We believe in fairly compensating actors for their contributions, whether they be methodologists, marketers, developers, etc. We believe in charging competitive, fair fees for the services the coop provides. When the Index Coop collaborates with 3rd parties, we seek win-win situations.
  • Empathy: Before speaking, we listen to all parties to really understand where they are coming from, their needs, their concerns, and fears. Through building common understanding, we are able to come up with solutions that address all concerns and work towards a shared goal.
  • Transparency: Our strength comes from the collective community, not from hiding information from one another. Of course, there are things that are sensitive (e.g. HR, Legal, etc.) which has to be kept secret, but we strive to work in the open and keep maximum information flow available to everyone in the community.

Another note - there’s a lot in this post, and I wonder if some of these can be separated out into different posts (e.g. principles/culture, recollateralization, methodologist standards).


Sure thing, I’ll split it out into different posts over the coming days. Main thing was just to get it all out there but didn’t want to spam the forum!

Appreciate seeing the values written out like that, I think they’re great and a lot less corporate than what I came up with. How do you see them being captured and made clear to community and users in future?


Fantastic post @DarkForestCapital - really value having you here as a part of the Coop to push such initiatives forward.


Awesome post @DarkForestCapital. This is clearly something we should define in the coming days, with a playbook to guide us when complicated decisions have to be made. We should also include it into a dedicated page « About us » on the IndexCoop website. I would aim at 4 values maximum, otherwise it’s too complicated.


@DarkForestCapital Fantastic post, I’m sorry I missed it earlier.

My initial thoughts:

Are we a better fit for Vanguard? Not quite a mutual structure?
Internal code of conduct - absolutely and the reference look great.
Externally visible guiding principles - Again agreed (I’ve not read the references)
External representive commitment - good idea.

I’ve wondered about a safety reserve / staking / ability to mint, and I wasn’t convinced of the need for INDEX. If one of the underlying protocols implodes, then the fund should drop inline with the change in index NAV. I don’t think blackrock compensated index holders when Enron collapsed.

The only reason I would see INDEXcoop being morally responsible if our actions caused holders to loose value. So maybe we do need some form of mechanism to raise additional funds. Collapse of another protocol is outside out control. We should perhaps be up front in stating this pubically.

One possibility is allowing INDEXcoop to do an emergency delisting of an asset (sell all for ETH?), however, if we panic sold and the token rebounded the index holders may not be impressed. Again something we need to make sure people are aware of.

Basically we need a policy for such cases, and ideally have them broadcast. There is an associated problem in that if we decide to delist / sell something, do be give advance notice. Our holders may decide that they want prefer advance notice so they can allocate capital to try and catcher the falling knife. However, public knowledge that $DPI plans to dump 1% of token X means that everybody can front run us…

@setoshi is there anything we can do to prevent us being front run with normal operations? I understand listings / delistings are decidesd few days head of the actions so the market will most likely be aware.

Finally on gitcoin grants. I’m a big fan of the grants (1st time funder in the last round) and I would support allocation of treasury cashflow to matching grants and it’s good for the eco system and good PR. However, I would strongly prefer to leave this until we have hit 1% and we are net positive for a few months before becoming more public minded.


+1 to everything. We are doing a lot of this already but that’s mostly because we’re early and small so codifying it now is great.

We should add something around ethics for adding a particular assets, ideally we will be moving a lot of money and shaping the market so I think we have a moral imperative to make sure it’s going to the right people that make the world better on top of earning profit. Making money is easy, doing the right thing is hard. E.g. don’t add tokens that are run by homophobic community members, seek out women founders, etc. If you really want to focus on money then recent market research shows socially motivated businesses have a premium on their brands and have higher profit margins.

I love Gitcoin and give money pretty regularly but if the intent is to “give back” we should put money towards real world non-profits instead of reinvesting into tech development via Gitcoin. I have a pretty extensive social impact network and can source a ton of awesome projects around the world for us to give to like regenerative farms, indigenous nations, climate change, refugees, etc.


I really like the idea of giving to projects outside of our own little bubble, can’t believe I didn’t consider that. It’s fitting too as the projects you mention are typically ‘unbanked’ which are the kind of people I hope this new financial system can reach and help.

Yeah I saw some data really showing high ranking ESG stocks outperforming recently, which suggests a trend that socially conscious businesses are beginning to outperform. Not a reason to do it, the reason should be intrinsic (do good then do well) but still nice to know.

I’m going to leave this here - Corporations Are Psychotic

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