IIP-22 Bankless BED Index

I’m not sure I understand where the idea they are not a/the methodologist comes into play. I first heard of this construction on Bankless and they produced the proposal after I mentioned to them the idea of formalizing the product with the Coop.

I would like to clarify that I am not the methodologist and not seeking to be. I have simply managed the relationship between Bankless and the Coop and I made up the acronym and meme behind it.

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Don’t think you can automate the inclusion of asset classes with >$25B in market value.

Generally appreciate this line of thinking as its customer first. Though from my perspective, distribution and education are major value adds for the end user. Potentially much more so than better rebalancing. At the end of the day, it’s how our products can deliver the most value to our end users and technology is really only a small piece of it.

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You definitely can automate inclusion of new assets >$25B using Balancer Smart Pools and Chainlink oracles that return mcap of a given asset. Liquidity Pool → Smart Pool controller → Asset Class Registry → ChainLink Oracles. Then you just have a function on smart pool that keepers can call if an asset should be added/removed, smart pool reads from the registry if oracles have confirmed it should be included, then smart pool takes care of the rest.

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That’s an overly complicated answer lol. As I said before we can change tokens and weights anytime we want since we own the pool. Balancer pool automatically does rebalances via the market so you don’t need anyone to manage that process once you do the very difficult math of figuring out what 1/4 is vs 1/3 and sending a tx to update weights

I’ll circle this back to the high level as I did in the last thread on this topic:

  1. This debate evidences the Coop needs to consider a general framework for partnerships. (@BigSky7)

  2. In this case, the Coop needs to outline what role each party plays, what reward each party receives, how long the partnership will last, and what happens to roles/rewards/product in the event the partnership is terminated (and what would cause a termination).

  3. So, do we partner with media companies (eg, Bankless) in the the form of marketing partners (ie, pay marketing fees for specific marketing assets—an Insertion Order), in the form of co-branded ventures (ie, BED is a Bankless + Index Coop production with some form of split streaming fees, and each party specifies exactly what they will do and for how many months or years), or some other framework?

I think it would be helpful if anyone has notes from the Discord so we can cut down the redundant questions and assumptions.

Understandably, without a high level general framework for “How to Partner with a Media Partner,” there will be heavy tension around roles and rewards every time one of these proposals arises. Frameworks provide a starting point for “How we do business” and then each case can negotiate from that starting point (and we can choose to make an exception because it’s warranted, or we can stick to the framework policy when an exception is unwarranted).

This might seem ahead of where we are as a “startup,” but trust me it is not. The earlier we can build partnership frameworks the sooner we can save time/energy/resources for other things…and there are a lot of things :wink:

I also offer my sincere gratitude to @ryanseanadams @TrustlessState and @LemonadeAlpha for having the patience to let us work out the kinks in this alpha test. Bankless is a premium media company in crypto and we would love to find a way to have a win-win partnership that adequately rewards both parties. I believe we can figure this out.

Thanks everyone!

Tim

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It looks like PieDAO charges fees on their balancer smart pool by creating their own token and inflating the token supply by minting new tokens to themselves instead of using base balancer pool token. I’m still vehemently opposed to charging fees but if we must. I might be reading that wrong, they have no docs on how their fees work on the product site, docs site, or in the smart contract repo

I am starting to agree with @Kiba that for something this simple, we should not charge streaming fees for this.
My thinking is from a competition standpoint, anyone could spin up a balancer pool (paying modest gas fees) and perfectly replicate this.
The coop still benefits because this no-fees index introduces new users to Index Coop and the DPI. I think this is valuable. Imagining myself as a new user I would lose a bit of trust in Index Coop, if upon finding about BED, someone tells me there’s a different token that I can buy, which is EXACTLY the same as BED and does not charge fees.

EDIT:
And as many have said already, I also have a lot of respect for Bankless, and enjoy their shows. This is in no way trying to deny their contribution, but perhaps some other arrangement rather than streaming fees are more appropriate.

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Agree, great product. The fee structure need to be seen as fair, or a copy cat product with a more long term fair structure will be created and people will move there. There will be tons of products like this and better to do it right from the start. How low can a sutainable fee be? <—that would be the place to set the % Buy hey, it’s a competitive, transparent, crypto market economy so fees will be lower over time.

OK, I’ve done a backtest of hold vs balancer vs rebalance every 4 weeks.

Balancer has IL that varies over time (~1 to 2 %), but Balancer fees are about 3% PA.

Rebalance strategy gets ~5% APP over longer time periods, but needs gas and management attention.

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I understand that you are comparing this fee structure to 12b-1 fees but keep in mind that 12b-1 is/was a terrible idea. By paying marketing fees to the company that issues the product it leads to poor products being pushed on customers simply to capture fees, there are many studies that have shown over time, 12b-1 products have under performed similar products simply because of misaligned incentives.

I personally think its egregious to charge 35 basis points for an index of three products that have a fixed ratio. This is tradfi “innovation” at its worst. That being said, I like the index idea but some of the construction mechanics seem off. Like why isn’t the the composition weighted by something so that under performing assets aren’t always being over-weighted every time a rebalance happens. If we really think the ETH/Defi is the future, an index rebalancing 1/3 to bitcoin forever its going to suck long term.

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The fee to Bankless is way too high. Should be paid in INDEX, and should be 10-20% of overall fees max.

Balancer v2 officially dropped
https://medium.com/balancer-protocol/the-most-flexible-and-efficient-amm-is-live-meet-balancer-v2-2451a22779b3

Some highlights:

  • about 50% lower gas costs than uniswap v3 for simple swaps
  • Customizable AMM logic (e.g.can build Curve or Uni v3 style DEXs on top of Balancer vault)
  • Built in functionality for arbitrageurs
  • Built in asset management for better capital efficiency
  • Dynamic swap fees backed by Gauntlet
  • MEV protection with Gnosis
  • Flashloans for additional yield to LPs

Edit: They also launched with a BED pool :joy::joy::joy:
https://app.balancer.fi/#/pool/0x61d5dc44849c9c87b0856a2a311536205c96c7fd000100000000000000000001

That’s how easy and copyable this methodology is

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Hey all!

With the BED Index just hitting DGII, I thought I’d add a refresher and touch on some of the concerns that people may have that are on the fence for which way to vote. A lot has changed since this was first proposed after all! From our perspective, there’s three main points of pushback that we think we’ve addressed:

  1. Fees are too high: We’ve agreed to drop the fee down to 0.25% split between the Bankless DAO and Index Coop. When factoring in the DPI streaming fee, BED index holders are paying just above 0.5% per year in streaming fees, which feels much more sustainable for passive holders.

  2. There’s no moat (easily replicable): It is true that BED could easily be replicated by other protocols, but it’s missing two key players that create the product’s moat: the Bankless DAO and LLC. On the LLC side, we have one of the biggest audiences in crypto and have serious plans to market and push this product across our media outlet (newsletter, podcast, etc.). The index is highly aligned with our mission as we want to provide anyone a simple way to invest into crypto–the BED index covers this need perfectly. We also recently launched the DAO (where all streaming fees will be directed to the community) which features an ERC20 token and a community of over 4,000+ people. More on this below.

  3. Uncertainty around the market: We want everyone to have a simple (and comfy!) way to invest into crypto. That’s what the BED Index does. Anyone can easily point to there new friends and family to this index and know that they’ll be okay–they’re not getting into random dog coins or alleged smart contract killers, they’re investing in the three big crypto themes, all of which have a significant product market fit to date. This is literally the comfiest way for any crypto investor to get into the market. There’s really only one way to find out on whether or not there’s a market for this product, but I firmly believe that the BED index will be a significant product for the Coop given the simplicity it provides for newcomers and our ability to market this product to that exact same audience.

Index Coop :handshake: Bankless Partnership

There’s also a few key benefits that I think the Bankless ecosystem can provide for the Index Coop that would greatly benefit the project assuming this proposal passes.

  1. We can market Index Coop: Bankless LLC and the DAO’s media nodes have the ability to market any of the Index Coop products (BED, DPI, ETH2x, etc.), can host Index Coop community members on the podcast, and do more articles featuring the Coop and their mission (see here and here). We also have one of the best memelord’s in crypto. I’m serious when I say we can literally meme this product into existence and success, especially with the combined power of our two communities.

  2. We launched a DAO: There’s a community of over 4,000 people aligned with an ERC20 token. If the BED proposal passes, given the streaming fees are now directed to the treasury, the entire Bankless DAO community has a vested interest to support and use this product. We’ve also had a few high level discussions with Coop community members about using the BANK token (the governance token for the DAO) in a joint liquidity mining program with Index Coop and even Sushiswap Onsen (threesome in BED anyone?). There’s also interest from the community to create more index products in the future–we’d love to be apart of this as we align ourselves into a long term partnership.

  3. We have friends in high places: The LLC and the DAO are deeply connected in the crypto space. From investors, to other DeFi protocols, to exchanges, we can do our part to help facilitate anything that the Coop needs from integrations to listings (cough Gemini is a long time sponsor). That said, we obviously cannot directly promise anything would come to fruition, but know that the Bankless team will make it happen to get the Coop’s foot into the door whenever we can.

The through line here is that if the BED index passes, the Index Coop is aligning itself with the Bankless ecosystem for the long run! And there’s a lot of mutual benefits for both communities that can be had if so :slight_smile:

That’s all I got - apologies for the novel, but thought this would be worth writing up to clarify and address any points that people had as we begin voting on DGII.

Very excited for this vote and hopefully the BED index passing

Happy voting!

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Great job addressing all of the comments and concerns from DG-1, Lucas. I was already on board, but I’ve seen firsthand what the Bankless Team and the Bankless DAO are up to. This could be a great partnership. I get asked all the time about whether this or that DOG or Moon coin is a good investment, not to mention Stellar Lumens, XRP, etc. It will be nice to have something substantive to point those people to, and to point them back to after they don’t listen and get rekt by the latest Dog or Moon scam. Thanks for pulling this together.

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just pulling this out because the question came up in Discord

Market cap weighted would be a nice option too. That way, the emphasis increases on the asset that is “wins” over time.

Interesting to revisit this post in light of the robust discussion on mechanism to use, and the role of distribution:

(no comment here on overall success)

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isn’t BED streaming fee 25bps?

Looks like you’re right based on the Bankless page, but that means the fee on our product page is incorrect CC @dylan maybe to confirm?

@Cavalier_Eth
Below is correct, the error is on our site. Will raise to get it fixed asap.

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