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.
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.
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.
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:
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.
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.
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 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.
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.
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.
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
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
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.
Bankless Partnership