Data Economy Index (DATA): Forward to DG2!

[Thomas_Hepner]

Data Economy Index (DATA): Forward to DG2!

IIP-55: Data Economy Index passed Decision Gate 1 (DG1) today with overwhelming support!

Snapshot

It even passed quorum, though this was not a requirement as it was a DG1 vote.

What’s next for launching the DATA index? Both @kiba and myself believe that launching quickly, iterating, and relaunching again and again, is the path to discovering product-market fit and growing assets-under-vault (AUV) for DATA.

Timelines

With this Midwit meme in mind, @kiba and I have communicated the following timelines to the Work Team and Business Development team.

1. Final DATA IIP: Forum post on Tuesday (7/27)
2. Decision Gate 2: Vote starts on Tuesday (8/3) and ends on Friday (8/6)
3. Product Launch: 9/1

Before we can post the Final DATA IIP to the governance forum, the following needs to be completed:

• Work Team Analysis: @puniaviision has committed the Work Team to completing ~90% of the DATA Work Team Analysis by Thursday (7/22). The final Work Team analysis will be completed after the subsequent Methodologist Compensation negotiations (see next bullet point).
• Business Development Team: We requested that the Business Development team negotiate the Methodologist Compensation structure. @BigSky7 committed the Business Development team to negotiating with us no later than 2 days after the Work Team Analysis is completed and posted in the governance forum. We request that this negotiation be led by the Business Development team, but take place on a community call for transparency and accountability.

Fee Structure Proposal

@kiba and myself are proposing a new fee structure for the Work Team’s consideration. We are proposing a 50 bps streaming fee with a 10 bps mint fee and a 20 bps redeem fee for the DATA index. Based on our analysis of MVI and DPI mint and redeem volumes as a share of TVL, we estimate that this fee structure will increase revenue by ~47% relative to the standard 95 bps streaming fee without sacrificing growth. See our DATA Revenue Model.

We think this will be a great way to test a new fee structure before making a major change to the Index Coop’s flagship product, DPI.

For more historical context on this proposed fee structure, check out the following conversations and comments:

• Proposal: Add 0.5% redemption fee to DeFi Pulse Index (DPI)
• @richard’s Analysis of DPI Mint/Redeem Volume
• @setoshi comments here, here, and here on issuance/redemption fees.
• @LemonadeAlpha suggestion for issuance/redemption fees.

Methodologist Compensation Structure Goals

Titans of Data is seeking the following in a mutually agreed upon Methodologist Compensation structure:

1. Positive-sum relationship between ourselves and other methodologists. It is of utmost importance that we have a positive-sum relationship with DeFi Pulse, as opposed to the current status quo.

2. Long-Term Incentive Structure: We are incentivized to keep working on DATA even if it takes years to reach $100m in AUM (hopefully not, but remember that it took BitWise 3 years to get to $100m in AUM!).

3. Shares risk and rewards with the Index Cooperative. We believe the Community Methodologist Program has little downside for Methodologists, but also has little upside relative to the existing Methodologist Program.

4. Fast time to market. Our goal is to launch DATA no later than September 1, 2021.

We think our initial proposal meets all of the above goals, but received serious pushback from the community here, here, and here.

We hope to see a counter-proposal from the Business Development team that meets all of the above goals and is both fair and reasonable to both Titans of Data and the Index Cooperative.

We really love working with the Index Cooperative and look forward to making financial products that are accessible to all with this great community!

[Thomas_Hepner]

Tagging team members for visibility.

Work Team: @overanalyser @jdcook @Metfanmike @puniaviision @catjam

Business Development Team: @BigSky7 @Mringz @fallow8 @Metfanmike @oneski22

[verto0912]

I’m strongly against the business development team negotiating the methodologist compensation here. The business development team has no deep context on product and the role of the methodologist plus has no context on any of the previous methodologist compensation negotiations. Having the business development team leading this is actually detrimental to the Coop.

I’m also against the methodologist explicitly requesting who they want to negotiate with.

[Thomas_Hepner]

@verto0912 Always happy to hear your constructive criticism!

@Kiba and I are trying to move quickly and not let misaligned incentive structures get in the way of a successful product launch.

We have put forth our intentions and incentives to the community transparently in many different contexts, from weekly standups, to Product Working Group meetings, to Autonomy discussions, and many different times in the governance forum to the Index Cooperative community.

Frankly, I am getting frustrated that we keep offering ways to move forward with the Index Coop and keep getting pushback without alternatives being offered. Continued delays cost us time which costs us and the Index Cooperative money.

@verto0912

The business development team has no deep context on product and the role of the methodologist plus has no context on any of the previous methodologist compensation negotiations.

Why does the Business Development team need context on these to build a good incentive structure that is beneficial to Index Cooperative? Negotiation seems like a core competency of the Business Development team and I am honestly confused that you do not agree with this.

Also, where did those prior negotiations with other methodologists take place and who conducted them? I’ve never seen this documented anywhere for the Index Coop community.

@verto0912

I’m also against the methodologist explicitly requesting who they want to negotiate with.

Okay, who should we negotiate with from the Index Coop? We’re open to suggestions.

What we’re not okay with is continued stalling on moving this product forward now that we’ve had a overwhelming show of support in the DG1 vote.

[verto0912]

I understand. Everyone is frustrated, me included. But forcing things can lead to rash decisions that also cost the Coop money.

@Thomas_Hepner

Why does the Business Development team need context on these to build a good incentive structure that is beneficial to Index Cooperative?

I would argue that context is crucial here and everywhere else, if we are trying to make big picture, high impact, strategic decisions for the entire community. We are talking about negotiating a break away from the methodologist bounty to a completely different way of incentivising methodologists. That has long term ramifications beyond DATA and if not negotiatied properly, can set the Coop back even more than the current program.

@Thomas_Hepner

Also, where did those prior negotiations with other methodologists take place and who conducted them?

The negotiations themselves have historically been conducted by @puniaviision. For the last 2 proposals (SMI and BED) myself, @Matthew_Graham and @MrMadila have worked with Punia to come up with a fair fee split.

@Thomas_Hepner

Okay, who should we negotiate with from the Index Coop?

I would like to see this discussed here and potentially on the org call, if needed. We do need to transfer the reponsibility here from Set to the Coop. However, Set has the most conext and Punia, Dylan and Greg are active members of the commuity. I don’t see an issue with Punia being on the negotiating team, with two community members like @BigSky7 and perhaps @overanalyser.

@Thomas_Hepner

What we’re not okay with is continued stalling on moving this product forward

Again, I understand. But the Coop has a lot on its plate and it’s unreasonable to expect everyone to drop things they are working on just to launch your product. I believe DATA was the quickest to go from proposal to DG1 so I’m not sure why you think anyone is stalling. Good things take time. We need to get the new compensation structure right or it could be detrimental to the Coop. If you wanted to go with the current methodologist compensation I think we could move this forward quicker.

[Thomas_Hepner]

@verto0912

@verto0912

I understand. Everyone is frustrated, me included.

Thank you for acknowledging.

@verto0912

That has long term ramifications beyond DATA and if not negotiatied properly, can set the Coop back even more than the current program.

I understand why this is a concern and why we proposed for the negotiations to be conducted via a public community call led by the BD team.

It is of utmost importance that whatever deal is struck be considered legitimate by the community, which includes yourself, so that we can pass DG2 and launch by 9/1.

@verto0912

The negotiations themselves have historically been conducted by @puniaviision. For the last 2 proposals (SMI and BED) myself, @Matthew_Graham and @MrMadila have worked with Punia to come up with a fair fee split.

I shared this plan with @puniaviision in the DATA Work Team Analysis Discord channel which includes @overanalyser , @Metfanmike, @jdcook, and @catjam. He did not push back on the BD team leading the negotiation: (@oneski22 )

@puniaviision also said he thought the Work Team and BD teams could execute against the timeline we proposed above:

Though he did note that he would push for product compensation structures to be heavily standardized:

@verto0912

Again, I understand. But the Coop has a lot on its plate and it’s unreasonable to expect everyone to drop things they are working on just to launch your product.

Actually, it is reasonable. DATA is the only Simple Index Product that has passed DG1 and simple index products no longer compete with FLI products for prioritization (per @puniaviision).

If after negotiations we ultimately went with the status quo Methodologist Program, then further delays make us lose more money that we would have earned as part of that program given that is of fixed duration (18 months).

Urgency is a great forcing function to make necessary changes.

@verto0912

If you wanted to go with the current methodologist compensation I think we could move this forward quicker.

I view this as a stalling tactic to get us to undercut ourselves in the negotiation.

[BigSky7]

I agree with @verto0912 point around timing and not rushing. Totally understand that you guys are chomping at the bit to get this Index launched. At this point we can be essentially certain that DATA will become an official Index Coop product within the next month and half.

The time constraints are not meant as an attempt to slow down the launch of this product but reflect the broader context that multiple conversations are ongoing around methodologist fee splits and the relationship between Index Coop and external methodologists. These are extremely important conversations that will seriously impact the future of the Coops’ business model.

I believe that we can complete negotiations publicly and transparently within the next two weeks. Which leaves more than enough time for a 9/1 launch. No-one is trying to put anyone in a worse position for negotiating. But the reality is that we are EXTREMELY busy on all fronts. These negotiations are a priority for me and I’m sure they are for @overanalyser as well.

Let’s work together to build a good framework around these discussions. Both product and BD have important roles to play here. Product from the fact that they are helping design these indices, and BD from the fact that our primary role at Index Coop is to negotiate with external parties around revenue generating activities.

@Thomas_Hepner and @Kiba you have my word that these discussions will not be stalled and that we will work hard to make them happen either this week or next. But I do ask for empathy for the extreme workload everyone is under right now and the nuances of other fee conversations that are happening in tandem.

[Thomas_Hepner]

@BigSky7

@TenaciousTerrier and @Kiba you have my word that these discussions will not be stalled and that we will work hard to make them happen either this week or next. But I do ask for empathy for the extreme workload everyone is under right now and the nuances of other fee conversations that are happening in tandem.

Completely emphathize with the BD team’s workload. We can definitely accommodate the timeline you’ve outlined above. Thank you, @BigSky7! Enjoy the weekend

[Matthew_Graham]

Hi All,

I am going to echo @verto0912 & @BigSky7 here. Let’s give the streaming fee and associated discussions adequate time to be flushed out. I think this may take a fair bit of going back and forth, with time in between to gather and consolidate thoughts.

I am expecting the Liquidity Mining, Seed Capital and the who does what post launch discussions to take time. Also, we know from BED - having little visibility into what is communicated/agreed with Bankless is not a great place to be. I suggest some kind of binding document captures what is agreed. We can not repeat past mistakes. We need to flush out all the details up front, document them and have something legally binding to protect each entity.

If this was a traditional business model an agreement between two entities like this would be captured in a contract. A frame agreement or something of the sorts. The days of little visibility into the T&Cs and having little to no supporting documentation around it are behind us. We need binding agreements and we need to ensure the integrity to agreement is honoured. This protects both parties.

The culture of the Index Coop community will always be too honour a contract negotiated in good faith and to have a really good relationship with the methodologist to facilitate any amendments in an open transparent, mutually beneficial manner.

[Tradespot]

What’s the rush @Thomas_Hepner? IMO the middle of the bell curve, planning/strategizing and market research to see if anyone would give a damn about DATA as an investment is exactly what we should do before launching a major product within the IC. Iteration is great but we shouldn’t skip the correct process on the IC side to work out all the implications of the streaming fee associated discussions that could set the precedent for future aspiring methodologists in your shoes.

I have nothing against DATA as a product at all, but the rush to market seems redundant considering the current bear market & a retail engagement - I think now is the perfect time to actually take the necessary time for important decisions like this.

[Kiba]

@verto0912

The business development team has no deep context on product and the role of the methodologist plus has no context on any of the previous methodologist compensation negotiations.

All past methodologist deals were dealt with by set and personally I am not satisfied with any of the results. As a coop member I would feel much more secure having BD as my advocate than Set. Also product team is shit at selecting products/methodologists, properly designing them for DeFi, and bringing to fruition (em.g. CGI, SMI, BED) so I can’t imagine BD team performing any worse than they have

@tradespot and everyone else I can understand wanting to take time but based on past evidence, more time does not make the coop make better decisions. Mostly that is because the people actually making decisions in this specific process previously (PWG, Set) have not performed well. I believe by having expert negotiators and product people from community (the best product people on coop or not in PWG) the entire deal will be better constructed for Coop and us as Methodologists. This also happens to take less time.

[verto0912]

@Kiba

All past methodologist deals were dealt with by set and personally I am not satisfied with any of the results.

Yes. The fact that previous deals are holding us back is common knowledge and has been acknowledged by everyone here. No one is saying that Set should lead this conversation. I don’t see how what I suggested can be interpreted this way.

@Kiba

Also product team is shit at selecting products/methodologists, properly designing them for DeFi, and bringing to fruition (em.g. CGI, SMI, BED)

I personally think this statement is wrong and doesn’t take any of the context into consideration. Calling our product team shit in what they do is also inappropriate and does not belong on this forum. Again, I’m not suggesting that product lead this conversation either.

As I said above, my preference is for a cross-functional group of people with context to take a lead here. This is going to affect the entirety of the Coop and our business model so it seems pretty inadequate to me that we have one single WG work on it.

[BigSky7]

@Kiba

Also product team is shit at selecting products/methodologists, properly designing them for DeFi, and bringing to fruition

This is completely unacceptable content for our forum. We simply cannot engage in name calling or slandering each other and expect to remain a respected community in DeFi and Crypto.

I understand that tensions are running high across a number of themes in our community. The only way that we can successfully navigate the most difficult challenges our community faces is by adhering to our core principles.

There are a million toxic chat rooms on the internet composed of people sniping each other and complaining. That is not why I joined Index Coop and not why you did. We have the opportunity to come together, rise above our frustrations, and solve some of these problems once and for all.

We cannot devolve into a working group vs working group, contributor vs contributor, or methodologist vs methodologist mentality. Nothing could be more detrimental to the long term success of IC.

None of us are here for the money or the prestige. I walked away from traditional employment with no guarantees because I saw a brighter future with Index Coop than anything the traditional world could ever offer me . We are all here on this forum because we love this community, deeply care about each other, and want to build something incredible . Our dialogue needs to reflect that.

[Thomas_Hepner]

@Tradespot

Iteration is great but we shouldn’t skip the correct process on the IC side to work out all the implications of the streaming fee associated discussions that could set the precedent for future aspiring methodologists in your shoes.

I agree with you here. From a incentives/negotiation/compensation perspective, I think it’s very important for all parties to be aligned pre-launch.

@Tradespot

IMO the middle of the bell curve, planning/strategizing and market research to see if anyone would give a damn about DATA as an investment is exactly what we should do before launching a major product within the IC.

For context, the origin of DATA is that @Kiba and I started building it because we wanted to solve a problem we both had. We both wanted exposure to a sector that we felt was missing from our own portfolios.

We’ve already done quite a lot of market research since then, and will do even more ahead of the product launch. For a few data points, please see this comment from Corbin Page at ConsenSys Codefi and this comment from ChainLinkGod.

Ultimately, we believe the passing DG1 vote signals that the Community is in favor of launching the DATA index from a product perspective.

Responding to both @Tradespot 's comment and Kiba’s (rude) comment. @BigSky7 @verto0912

@Tradespot

I have nothing against DATA as a product at all, but the rush to market seems redundant considering the current bear market & a retail engagement

@Kiba

Also product team is shit at selecting products/methodologists, properly designing them for DeFi, and bringing to fruition (em.g. CGI, SMI, BED) so I can’t imagine BD team performing any worse than they have

While I view Kiba’s disparaging language towards the product team as inappropriate, I think he has a valid point. It is extremely difficult for anyone to know before a product is launched whether or not it will be successful, regardless of the strength of the idea. It is very risky for Methodologists and the Index Coop to spend time and resources on research and development of a product for 3+ months without testing it in the market.

One really cannot know if anyone will buy your product until after it’s available on the market. Launching a product is testing a hypothesis. Relaunching and making product changes are also hypothesis tests.

The long time to market for new products limits our ability to test new ideas (i.e. hypotheses) in the marketplace and discourages methodologists from bringing their ideas to the Index Cooperative. This is why I was such a strong proponent of the Index Labs idea. Creating a tokenset takes 10 minutes, but launching a product at Index Coop currently takes 3+ months. While I don’t think it ever will, or ever should, take only 10 minutes to launch a product at Index Coop, we need to find a way to reduce the time to market for our proposed products.

FWIW - My views on product philosophy (i.e. speed of hypothesis testing ) comes from my experiences working at a FinTech startup where I led a team of 5 data scientists that built and sold software & data products to some of the largest banks in the world.

[verto0912]

@Thomas_Hepner

It is very risky for Methodologists and the Index Coop to spend time and resources on research and development of a product for 3+ months without testing it in the market.

I don’t believe this to be true. The entire space is nascent. We have years to develop products before they hit mainstream adoption. So I, personally, don’t think there is risk for Index Coop.

That said, we do need to considerably improve speed to market. As indicated in the Q3 priorities, unblocking product and engineering bottlenecks are at the top of the list for this quarter. As I mentioned on the org call last week, we can’t do everything at the same time. We need to keep unblocking product and engineering bottlenecks, but we also need to have autonomy conversations, discuss the new methodologist compensation for DATA, discuss the fee split for the FLI series of products, address liquidity mining incentives in the context of Uniswap V3 and, oh yeah, support the existing products. It’s perfectly reasonable to me that we need to prioritise things and, as a consequence, the timing on some of these items will slip. The question we need to ask is how critical and time sensitive different priorities are and move forward accordingly. I personally think of our priorities in this order of importance:

• support the existing products

• keep unblocking product and engineering bottlenecks

• autonomy conversation

• address liquidity mining incentives in the context of Uniswap V3

• discuss the new methodologist compensation for DATA

• discuss the fee split for the FLI series of products

I’m happy to go into detail on why I see them in this order. To be perfectly clear, the role of Index Coop, as a community, is not to service methodologists. We have a big vision for the future of the Coop and releasing a single product a month sooner or a month later, does not meaningfully impact that vision.

[Thomas_Hepner]

@verto0912

we do need to considerably improve speed to market. As indicated in the Q3 priorities, unblocking product and engineering bottlenecks are at the top of the list for this quarter.

Happy we can agree here

@verto0912

We have a big vision for the future of the Coop and releasing a single product a month sooner or a month later, does not meaningfully impact that vision.

I agree with this, but I think it’s worth highlighting how we’re both currently being incentivized as individuals by the Index Cooperative’s mechanism design.

I have been working 50+ hours per week on Index Cooperative in some capacity since mid May. I received a total of $750 worth of INDEX in compensation for June because I’m an “external methodologist” so my work on DATA is not compensated (Kiba received $0 for June).

Every month DATA is delayed @Kiba and I lose a substantial amount of INDEX rewards per the existing program and are also not being compensated for the opportunity cost of our time and efforts pre-launch. We are incentivized to be urgent and launch quickly.

On the other hand, you are a FT contributor so are receiving $5k USDC plus 0.15% INDEX vesting over 2 years, the equivalent of ~$14k per month at current INDEX price completely decoupled from MVI’s AUV growth. You are not incentivized to act as urgently because your compensation is not dependent on speed.

Emphasizing this is not a personal attack, I am very happy you have determined a compensation structure that enables you to sustainably contribute to the Index Coop FT for the long-term. Kiba and I hope to find a structure that fairly compensates the value we bring to the Index Coop as well.

[verto0912]

@Thomas_Hepner

I have been working 50+ hours per week on Index Cooperative in some capacity since mid May. I received a total of $750 worth of INDEX in compensation for June because I’m an “external methodologist” so my work on DATA is not compensated (Kiba received $0 for June).

@DarkForestCapital and myself were not compensated for our work on MVI until the launch. We found other ways to contribute to the Coop in the meantime.

@Thomas_Hepner

Every month DATA is delayed @Kiba and I lose a substantial amount of INDEX rewards per the existing program and are also not being compensated for the opportunity cost of our time and efforts pre-launch. We are incentivized to be urgent and launch quickly.

I understand. But it’s feasible that if your incentives are to be urgent and launch quickly, they might go against what’s best for the Coop. Which is why we need to go through a proper process that will help us determine a solution that is fair and benefits both parties. For what it’s worth, I believe you should be compensated for the work that went into launching DATA when the product is launched. This is what we did with MVI. So, in that context, I honestly don’t see the urgency here.

@Thomas_Hepner

On the other hand, you are a FT contributor so are receiving $5k USDC plus 0.15% INDEX vesting over 2 years, the equivalent of ~$14k per month at current INDEX price completely decoupled from MVI’s AUV growth .

I would like to point out that myself and DFC do a lot of work around the Coop outside of MVI. This was the primary reason we wanted to come on as internal/community methodologists. Further, the methodologist bounty from MVI goes to the Coop. That goes a long way towards paying for our compensation. I would also like to highlight that because my compensation is fixed and depends heavily on the long-term success of the Coop, it is in my interest to do what I believe is best for the Coop as a whole. I have no incentives whatsoever to delay DATA or any other product. But I do have the incentive to make sure that whatever the methodologist compensation package ends up being is long-term beneficial and fair to the Coop.

[jdcook]

@Thomas_Hepner

I have been working 50+ hours per week on Index Cooperative in some capacity since mid May. I received a total of $750 worth of INDEX in compensation for June because I’m an “external methodologist” so my work on DATA is not compensated (Kiba received $0 for June).

Isn’t this expected as an external methodologist? The work you are doing on DATA shouldn’t be considered work for the Coop if you are an external methodologist - you are doing that work for your DAO (Titans of Data). Or are you referencing other work that you have done that didn’t get compensated (which, if so, doesn’t seem to belong in this conversation, that should be disputed elsewhere)?

@verto0912

Good things take time. We need to get the new compensation structure right or it could be detrimental to the Coop.

Just want to signal my agreement with this sentiment from Verto. I don’t think this necessarily has to delay the launch, but we do need to be aware that we are re-laying the foundation for Coop <> External Methodologist relationships if we are to negotiation a new compensation structure here, and I think you have noted multiple times how complicated of a problem this is @Thomas_Hepner (regarding the mechanism design for methodologists).

@Thomas_Hepner

Every month DATA is delayed @Kiba and I lose a substantial amount of INDEX rewards per the existing program and are also not being compensated for the opportunity cost of our time and efforts pre-launch. We are incentivized to be urgent and launch quickly.

Recognize that you are incentivized to launch as quickly as possible. The Coop is incentivized to ensure this foundation is set right. Hence, why negotiations are necessary and this is an important topic! Let’s keep the momentum going and figure this out together!

[Thomas_Hepner]

@jdcook

Isn’t this expected as an external methodologist? The work you are doing on DATA shouldn’t be considered work for the Coop if you are an external methodologist - you are doing that work for your DAO (Titans of Data).

Yes, this is absolutely the expectation, and it’s also important for the Index Cooperative to set clear timelines/expectations with Methodologists . Knowing if you can expect to launch your product with IC in 1 month, 3 months, 6 months, etc. and what hurdles you need to jump over, is critical for getting Methodologists to choose us over other options. @Kiba and I have an (unfair) advantage over other Methodologists in this regard because we’ve been Index Coop contributors since 2020.

For instance, Llama is expecting to launch LDI in 6-8 weeks (with PAY) and from my understanding that is just not realistic.

@Llama

Llama would like to have LDI trading within 6-8 weeks. Llama is looking forward to entering commercial discussions after DG1.

But how should Llama know that’s not realistic? And how can we tell them when we would be able to launch so that they choose Index Cooperative over some other provider?

@jdcook

Let’s keep the momentum going and figure this out together!

Absolutely - @Kiba and I are very excited to see all the progress being made and want to keep the momentum going (really the intention of this post).

[verto0912]

@Thomas_Hepner

But how should Llama know that’s not realistic? And how can we tell them when we would be able to launch so that they choose Index Cooperative over some other provider?

Just FYI as it seems there’s some need for clarity here - the LDI proposal was developed primarily by @Matthew_Graham and @AcceleratedCapital with help from other members of the Llama community. They are quite aware of the timelines.