IIP-166: Deprecate MNYe, GMI, FLI-P & DATA products

Product
, , ,
1

IIP: 166
Title: Deprecate MNYe, GMI, FLI-P & DATA products
Status: Proposed
Author(s): @mrmadila
Reviewed by: @afromac , @anthonyb.eth, @0x_Dev
Created: 19th Oct 2022

Please note: this post was edited on Friday Oct 21st to include DATA to the products proposed for deprecation.

Summary

This proposal intends to deprecate the following products:

Each of these products will have flash minting removed from the app.indexcoop.com, an official announcement of deprecation (including procedures for existing holders), and a 30 day waiting period before any changes to the product are made. At this point, each product will be rebalanced into a single asset to make for easy, efficient, inexpensive redemptions.

Motivation

Over the last several months Index Coop has been scaling back in size and expenditure, and refocusing the product roadmap to meet our core objectives. As part of these ongoing efforts, the Index Coop Product Pod has identified several products that have not shown strong demand or demonstrated product-market fit (PMF). These products have lagged in the metrics and KPIs that Index Coop monitors, metrics such as Total Value Locked (TVL), Net Dollar Flows (N$F), and Unique Holders w/ $100+ in Exposure (UH>$100).

Typically, Index Coop products have a relatively low margin and require a sustained, high TVL over time to cover the direct and indirect costs of launching and maintaining products. In addition, Index Coop has also inherited many costs previously paid by Set Protocol such as rebalancing resources and associated gas costs.

As an illustration of the lack of demand for these products below are some figures based of off simple TVLs:

Product Current TVL Peak TVL
MNYe $23k $220k
ETH2x-FLI-P $450k $3.8m
BTC2x-FLI-P $155k $227k
MATIC2x-FLI-P $105k $410k
iETH-FLI-P $44k $260k
iBTC-FLI-P $36k $128k
iMATIC-FLI-P $131k $150k
Total FLI-P suite $921k $4.98m
GMI $480k $4m
DATA $476k $2.5m

With such low TVLs these products are not generating sustainable revenue. Whilst this is expected at the early stage of a product life cycle, it is now fair to say these products have received an adequate share of resources and time for the market to indicate if any sustainable demand exists for them.

More objectively these products fail to meet some of the requirements set out under the previous Product profitability and retirement framework.

Costs were previously mainly attributed to gas costs related to rebalancing. Whilst these costs are negligible on Polygon and OP, there are many indirect costs that are not. As the post notes, indirect costs must also be taken into account. Factoring these costs with the low/negligible revenue from these products has driven this decision at this point. Indirect costs include marketing efforts, launch support, risk management, rebalancing execution, and maintenance of a keeper network (for FLI), alongside general time and internal resources. Many aspects of indirect costs are less tangible than direct costs, in the case of these products these costs are estimated to be materially higher than the revenue they generate.

Revenues

Product Cumulative Revenue (Gross, 3 months)
MNYe ~$100
ETH2x-FLI-P ~$6k
BTC2x-FLI-P ~$1.6k
MATIC2x-FLI-P ~$10k
iETH-FLI-P ~$1.8k
iBTC-FLI-P ~$700
iMATIC-FLI-P ~$1.3k
Total FLI-P suite ~$21.4k
GMI ~$2k
DATA ~$1k
Total $24.5k (<$100k annualised)

Specification

The schedule for deprecation of these products is as follows:

Timeline

Date Action
19th Oct 2022 IIP posted to forum
24th Oct 2022 IIP to progress to snapshot
Upon IIP passing
27th Oct 2022 Flashmint ability removed from app.indexcoop.com
27th Oct 2022 Product pages on indexcoop.com to show deprecation announcement
27th Oct 2022 Publicly release communications on deprecation of products via marketing channels
27th Oct 2022 30 Day Buffer Period to begin (no product changes during this period)
28th Nov 2022 Rebalance each product into a single asset (details below)
28th Nov 2022 Index Coop to continue supporting users selling or redeeming positions
27th Dec 2022 Active support ends. Users will be able to redeem manually via direct smart contract interaction only.

Rebalancing

Product Rebalance Action
MNYe Rebalance into 100% USDC
ETH2x-FLI-P Rebalance into 100% wETH
BTC2x-FLI-P Rebalance into 100% wBTC
MATIC2x-FLI-P Rebalance into 100% wMATIC
iETH-FLI-P Rebalance into 100% USDC
iBTC-FLI-P Rebalance into 100% USDC
iMATIC-FLI-P Rebalance into 100% USDC
GMI Rebalance into 100% USDC
DATA Rebalance into 100% USDC

Closing

The Index Coop Contributor Community views deprecating products as part of the process of bold experimentation and appropriate risk taking within the new and exciting bounds of decentralized finance.

We thank Bankless, Scalara, D4 and all other associated methodologists, partners and collaborators for their help and input into launching these products, as well of course as the important community of users who invested in them. As always, Index Coop looks forward to bringing more exciting products to market in the near future!

Voting

FOR:

DO discontinue Index Coop support for MNYe, GMI, FLI-Ps & DATA and follow the deprecation plan as outlined above

AGAINST:

DO NOT discontinue Index Coop support for MNYe, GMI, FLI-P & DATA

16 Likes
2

I strongly support this proposal. Each of these products was given a good run, but it is clear there is not enough market demand to continue supporting them. I welcome the narrower focus on our more successful products that this IIP will help with.

8 Likes
3

I support this proposal. Don’t put lots egg in basket! We can focus on DPI and others for now. DPI has $32m AUM.

4 Likes
4

Sunsetting previous products isn’t easy. But for the sustainability of the Coop, gotta optimised the product to profit and cashflow.

It’s sad to see some products go as it has/has potential. But this show progress.

I’m all FOR on this. GJ on taking a bold steps on this.

:fire::fire::fire::saluting_face::+1:t2:

8 Likes
5

In full support. Deprecating these products will mean less engineering maintenance.

6 Likes
6

I also support this proposal to reduce product and engineering admin and focus on winners.

5 Likes
7

This is very unfortunate that so many products are deprecated at once.

I think this warrants root cause analysis and a proper template for the future so that such mishappening with users’ trust and funds don’t happen from Indexcoop.

I believe this shall remain a scar on the face of Indexcoop for a long time.

Since Indexcoop is all about capital efficiency.

1 Like
8

Hi @Vitruvius, apologies, it is not clear what your concerns are.

No “user’s funds” are at risk. Users will be able to redeem all units for the underlying components.

Feel free to reach out to us in the community discord server and we will do our best to answer any questions you have. Thanks

1 Like
9

Thanks for leading this initiative @mrmadila.

After consultation with D4, we have decided to also proceed with the deprecation of DATA. Let’s combine the deprecation of DATA in the same IIP, and execute the same timeline and communications strategy you have described above.

I request that we amend your original post to also include the following information:

DATA Economy Index

Smart Contract Address: 0x33d63ba1e57e54779f7ddaeaa7109349344cf5f1

Current TVL: 476K USD
Peak TVL: 2.5M USD
Cumulative Revenue: 12,268 USD

Rebalance Asset: 100% USDC

Please also amend the vote to be:

FOR:

DO discontinue Index Coop support for DATA, MNYe, GMI, & FLI-Ps and follow the deprecation plan as outlined above

AGAINST:

DO NOT discontinue Index Coop support for DATA, MNYe, GMI, & FLI-Ps

We thank @Thomas_Hepner and @Kiba for their commitment to the DATA Economy Index, and their collaboration with Index Coop on this and other projects.

4 Likes
10

should we remove $JPG either? . It has $116.4K market cap.

11

Hey @LONGnostradamus we are in discussions on the future of JPG and will be able to share more very soon.

2 Likes
12

Great to see the product team continuing to improve the sustainability of the Index Coop by shifting resources to more productive products.

I would like to know why MNYe is getting deprecated so soon considering it’s the most recent product?

13

Hey @sixtykeys

Thanks for your kind words. MNYe, while an interesting product, has not managed to attracted the level of investment that we need to see to determine there is some kind of early product market fit that we can build on.

Additionally, we have agreed to focus on delivering products that are designed specifically for long term holders. Due to the volatile nature of the returns on the underlying strategy for MNYe this is not the case.

For these reasons it makes sense to deprecate the product at this time.

1 Like
14

Original post has been updated to included DATA.

1 Like
15

image
image828Ă—1490 149 KB

We can prove that he is wrong. Let’s removing product. focus on DPI and others thing. I like to see DPI, MVI and other supply growing. Maybe try new MEV profitable or loan aave style. Thanks.

1 Like
16

This IIP is now schedule for vote:
https://snapshot.org/#/index-coop.eth/proposal/0xb62ebf4b0be8b6258b534ae4b1c2b87fa64eb294ceef48c36c67b8dbe112aacf

2 Likes
17

Hi Team,

I AM AGAINST this proposal.

DO NOT discontinue Index Coop support for MNYe, GMI, FLI-P & DATA.

Cheers,
Vlad

18

I echo @vitruvius’ comments - in that this does affect users’ trust in IC.

Most of these products are less than 1 year old (only DATA is older), and caught in a bear market.

I’d expect index products to be given more time, since that’s one of the underlying thesis of investing in indices. IMHO, one should be trying to develop the products, instead of quickly canning them.

1 Like
19

Appreciate the feedback.

@vvronsky This IIP has been posted to snapshot where you are free to express a vote against.

@omnifient As per the proposal, every effort has been made to develop the products, we are responding to the signal for the market that there is a clear lack of demand from them. Current users of DATA will not be disadvantaged as they can redeem the products for the underlying components if they wish to continue following that segment.

Thanks

6 Likes
20

That would be an honorable option for the DATA holder’s redeemability; who would not get USDC and rather go for the underlying tokens as such they would experience the essence of Indexcoop products.

I have this firm feeling that DATA should be given another chance to make it.

It’s too early to decide upon the fate of DATA. Since Web 3.0 is still in its infancy.

We should look for opportunities to market it well IMO.

1 Like