DeFi Partnerships and Integrations Q2 and beyond

Authors: @oneski22 @Mringz [Discord: @Mringz | Index, @TrotNixonLine]

Context:

Following on from posts from @Mringz DeFi Partnerships & Integrations Strategy and from @gregdocter Q1 Growth Analysis & Q2 Growth Strategy it is important that we identify how DeFi partnerships and integrations activities will assist in hitting Q2-2020 growth targets.

According to A vision for Q2-2021 all business development activities should be centered around reaching the following goals:

  1. $500M AUM
  2. 400,000+ DPI supply units
  3. $9M FLI suite 7-day moving average volume for 2 consecutive weeks
  4. 4 new products launched with $200M+ combined TVL. They are category leaders in terms of the most relevant measure (i.e. uTVL, volume, liquidity)

We believe DeFi partnerships and integrations activities will assist in reaching these goals in the following ways:

  • Increase the number of extrinsic productivity opportunities available in the ecosystem for Index Coop products
  • Communicate the value proposition of existing extrinsic productivity opportunities for Index Coop products
  • Build relationships with defi projects that will enable us to collaborate in creating new products and new extrinsic productivity opportunities

Product context:

@setoshi post on Index Coop’s Exchange Traded Product Business gives a broad analysis of the nature of our products and how they relate to our North Stars/Core KPIs.

Investor Products Trader Products
Description Market-weighted indices, smart-beta, equal weighted indices, bond ETPs Leverage/hedging tokens, volatility tokens, structured tokens
Examples DPI, MVI, CGI, SYI ETH2x-FLI, BTC2x-FLI, SDI, dVIX
Users Retail Investors, Institutions, DAOs Traders
Primary use case Sector exposure Trading
Secondary use case Liquidity mining (LM) & collateral Leveraging, hedging & arbitrage
Revenue model Streaming fees Mint/Redeem fees & streaming fees
Primary growth metrics TVL & unit supply Trading volume
Secondary growth metrics User retention & liquidity Mint & redeem volume

Metric drivers:

From the above analysis, we can identify what use cases drive each metric.

Investor Products Trader Products
TVL Sector exposure Trading
Unit supply Sector exposure, LM rewards Leveraging, hedging, LM rewards
User retention Sector exposure, collateral, LM rewards LM rewards
Liquidity LM rewards, Trading volume Trading volume, LM rewards
Trading volume Sector exposure Hedging, leveraging, arbitrage
Mint/Redeem volume Sector exposure, collateral, LM rewards Trading volume, LM rewards

Highlighting the relationship between our metrics and the use cases of our products provides guidance as to where we need to focus our DeFi partnerships & integration activities.

Activities:

DeFi partnerships & integrations activities will be focused on the following activities:

Listing collateral on borrowing & lending protocols:

  • Enables users to lend our products to earn additional yield, increasing unit retention
  • Enables users to deposit our products as collateral for a loan enabling them to enter into leveraged positions, unit retention & trading volume
  • Enables Index Coop to create new structured products, increasing unit supply & TVL
  • Enables our products to utilized for yield strategies, increases unit supply & TVL

Listing on Layer 2 (L2) scaling solutions:

  • Allows for low fee trading, increasing trading volume
  • Allows for low fee acquisition of our products, increasing unit supply & TVL

Co-incentivizing liquidity:

  • Enables users to earn additional rewards from holding our products, increasing unit retention, TVL & unit supply
  • Enables users to enter into larger positions, increasing trading volume
  • Stronger value proposition for pitches to institutional buyers and exchanges, increasing unit supply

Metrics measuring to measure our success:

Listing collateral on borrowing & lending protocols:

  • Number of protocols allowing Index Coop products to be used as collateral.
  • Amount of Index Products at work

Listing on L2 scaling solutions:

  • L2 Trading Volume per product
  • % of unit supply on L2

Co-incentivizing liquidity:

  • Change in liquidity between start and end of the program.
  • Amount of liquidity gains remaining X weeks after the end of the program.

Targets:

Listing collateral on borrowing & lending protocols:

  • 4 different collateral opportunities (current: 2)
  • 10% of DPI supply at work (current: 3.2%)

Listing on L2 scaling solutions:

  • L2 Volume for ETH2x-FLI >15% of Total Trading Volume (current 0%)
  • 5% of ETH2x-FLI supply on L2, 5% of DPI supply on L2 (current: 0%, 0%)

Co-incentivising liquidity:

  • TBD

Proposed Actions:

Listing collateral on borrowing & lending protocols:

  • Document and promote existing extrinsic opportunities for DPI
    • CREAM, Unit Protocol (USDP/DUCK)
  • Continue to advocate for DPI inclusion in Aave and MakerDAO
  • Create Index Coop FUSE pool with Rari Capital
  • Publish a proposal for Ruler protocol

Listing on L2 scaling solutions:

  • Immediately setup an ETH2x-FLI PoS Bridge to Polygon (MATIC)
  • Study Incentivizing FLI/ETH, DPI/MATIC pools on Quickswap/Sushi on Polygon
  • Promote FLI and DPI on L2

Co-incentivizing liquidity:

  • Assess liquidity of FLI after new parameters take effect to better evaluate the proposed Stakewise FLI/sETH2 Liquidity Pool
  • Create a solution for BTC2x-FLI Badger integration (after giving the market time to react to the new product)

Is there anything we might be missing going forward? Let us know in the comments.

5 Likes

I think this is awesome! As a new community member, I like to see there are plans for growth with specific targets.

3 Likes

This is a great synthesis of the various fronts for partnerships and integrations.

On the distribution front, I see you included listing on L2, I guess on L2 Dexes. But what about other distribution venues, like aggregation/portfolio management platforms?

I am thinking about this because I saw recently that Indexed Finance has named Julien Bouteloup as advisor (@bneiluj). Julien is behind Curve, Rekt news, a few flash loan scandals, but also the founder of Stake DAO. We can easily imagine that he will promote Indexed Finance products on the stake DAO platform…

It would be nice if we could find another platform to do the same kind of “featured product” partnership. Maybe there is something to do with Zerion, with whom there was already a joint campaign?

2 Likes

I really love the breakdown of Investor Products versus Trader Products. I think it’s an important framework for the Coop to get it’s head around. I was raising this point on the Growth call last week with @LemonadeAlpha that our entire view of revenue growth is broadened by the FLI line. I’m just starting to incorporate those implications into Investor Relations (turning our eye to prop funds) and I think if everyone takes a step back and looks at what we’ve done to date, we’d appreciate that it’s been Investor Product focused. That’s completely fine! And certainly appeals to my own financial sensibilities. But it means we’re likely leaving some revenue on the table for the Coop.

What’s involved here? Any engineering needs? Any way the community can help?

1 Like

@Ap0ll0517 Thanks!

The engineering requirements are mostly based on the Set team whether they can build a version of their protocol on polygon which will enable users to mint/redeem our products on polygon. But in regards to bridging assets we are in the process of bridging our assets which is being handled by @oneski22. We also are agreeing on a broader strategy to promote our assets on L2 they are concerns of fragmenting liquidity from our existing LP on Uniswap that we need to be wary of.

@trx314 Please reach out in the discord if you have any interesting ideas around L2 scaling we are all ears.

Any more Zerion-like promos?