This proposal aims to create an Internal Methodologist Committee (IMC) within Index Coop. IMC will be responsible for monitoring the indices of products that do not have third-party methodologists. Additionally, the committee will ensure that third-party methodologists adhere to Index Coop regulations about changes and rebalances of index methodology. The IMC will initially comprise three members with experience in managing and maintaining on-chain indices, and more members can be added or removed through the Index Improvement Proposal (IIP) process.
Index Coop currently supports several products that do not rely on a third-party methodologist to determine the methodology. We expect to launch more products like this in the future. It is necessary to adapt and improve product methodologies over time to execute the best possible version of the strategy, manage risk, and improve liquidity conditions for the underlying assets. Oversight is required to ensure that existing methodologies are consistently executed and that any changes or updates are communicated to the broader community.
To ensure best practices in maintaining and improving methodologies, it is necessary to delegate this responsibility to specific Index Coop contributors with expertise in managing on-chain indices. This proposal seeks to create an IMC to assume responsibility for this role.
The IMC will be responsible for updating and maintaining the methodologies for the following products:
Any future Index Coop products that launch without a third-party methodologist will also come under the purview of the IMC. In the event that Index Coop agrees to join in partnership with a third-party who will assume the Methodologist role for any or all of these products, these responsibilities can be revoked by IIP.
The IMC will consist of three members with expertise in on-chain indices, namely:
IMC members will serve until they are removed by an IIP or voluntarily step down. Additional members can be added or removed by IIP. IMC members will not be additionally compensated as they will be core contributors to the Index Coop DAO.
The IMC will be responsible for ensuring that product methodologies are fair and objective and that they represent the best possible version of the strategy that Index Coop can execute with the current resources and information available. This will be achieved by defining clear and quantifiable rules and criteria and removing any ambiguous language that might exist in the methodologies today.
Over time, product methodologies should be updated when new technology and information becomes available. Any changes to a product methodology should be clearly communicated to the wider community, along with the rationale for the changes. A product methodology should only be updated infrequently to ensure consistency for token holders.
The IMC will regularly review existing methodologies to determine if any changes or updates are necessary. This formal review will occur bi-annually, and informal discussions will continue throughout the year to keep the methodologies up to date. If a change is proposed, one of the IMC members must publish the proposed change on the forums. The committee, consisting of three members, will use optimistic governance, which means that any communication from a committee member will be considered to have been unanimously agreed upon unless objected to on the forum by the two other members. In the event of a dispute, changes can be resolved via an IIP
The IMC will also ensure the highest standards in data collection, methodology execution, and communication around product rebalancing and reweighting. Data should be collected from multiple trusted data providers to ensure accuracy. The raw data should also be made available in the Pre-Rebalance Report to protect against data manipulation, errors, and corruption.
All intended rebalance trades should be communicated in advance to token holders, and all trades to execute the rebalance should prioritize capital preservation as the primary goal.
Specific milestones and documentation to be published during the rebalance period includes:
- Data Collection: To occur 10 days before a rebalance
- Pre-Rebalance Report: To be posted 1 week before a rebalance
- Rebalance Date: To begin on the first working day of the month in line with the specific schedule of the product methodology
- Post-Rebalance Report Date: To be posted within 3 working days of the completion of the rebalance
Criteria for Membership
All candidates for inclusion in the IMC now or in the future should have previous experience in designing and operating on-chain financial products. It is highly recommended that they are recruited from the product team directly, as is the case for this initially proposed cohort.
Specific competencies include:
- Risk management
- On-chain liquidity evaluation
- Financial data analysis
Non-compliant members can be asked to stand down by the Operations Pod, and be replaced by IIP.
This IIP proposes the formation of an Index Coop Methodology Committee (IMC) to assume responsibility for overseeing and maintaining the methodologies that support the current and any future Index Coop products. The IMC will be responsible for defining clear and quantifiable rules and criteria, updating and improving product methodologies over time, collecting data from multiple trusted data sources, and communicating any changes to token holders. The IMC will consist of three members with expertise in on-chain indices and will serve until removed by an IIP or voluntarily step down. The Committee will utilize optimistic governance and any changes can be resolved via an IIP in the event of a dispute.
For: Do create the Internal Methodologist Committee
Against: Do not create the Internal Methodologist Committee