Eth Strength Index

Governance Proposal
1

Hi Owls, I’d like to introduce Eth Strength Index

Summary
“Currency strength index expresses the index value of currency.
For economists, it is often calculated as purchasing power”
Wikipedia - Currency strength index - Wikipedia

In the case of Eth, we can calculate its purchase power of other tokens in the ecosystem in a decentralized manner.

$ESI (Eth Strength Index) = The amount of Eth needed to purchase one unit of each asset that has a LP on uniswap (*weight by pool size)

Methodology

  1. Get all Eth pairs liquidity pools list on Uniswap V3
  2. Get conversion rate
  3. Get weight by pool size
  4. Calculate $ESI
  • Uniswap V3 SDK enables 1-3
  • Assumption - Set protocol can be used as infrastructure

Motivation
$ESI can be used for investing - Eth as the medium of exchange in the ecosystem and its value in comparison to alts
It can also evolve to derivatives and hedging.
And if it will aspire to an equilibrium there’s a potential of a derivative to act as a decentralized stablecoin

Author background and commitment
I discovered Ethereum in 2017. Constantly following Ethereum evolvements as an infrastructure for sustainable business models.
Back in 2018 I Designed created and published Ethereum DAPP (verified smart contract, solidity + web3 UI)
I’m a mentor for a DeFi project (2 years).

I have 25 years of diverse expertise across various roles, including Entrepreneur, CTO, Developer, Product Manager, Project Manager, UX Designer, Solution Architect…
Built some projects single-handedly from inception to completion, managing the entire project lifecycle.

I’m interested in making this idea happen. Please reply with your thoughts…

2 Likes
2

Hi Zack

Thanks for contributing this interesting idea. Do you have any backtest data to validate the performance of this methodology?

Thanks

1 Like
3

Mr Madila, I wish I had.
I’ll google it and look for some history data.

2 Likes
4

Thanks Mr Madila, seems like there’s a way to explore this: Overview | Uniswap

5

Hi @zack is it still relevant?

6

Yes, it’s WIP

Meanwhile I created this to try some history data: https://dune.com/zakizak/esi

What are your thoughts about this?

1 Like
7

Does anyone have an idea who could be the audience for this?
or of a reason it will have demand? what use case is it good for?