IIP-55: Data Economy Index (DATA)

Before I comment on any details, I will just emphasize that if the Index Cooperative does not believe the proposed incentive structure is fair and reasonable to both Index Cooperative and Titans of Data, we are absolutely open to negotiating a different structure. We certainly do not want the compensation structure to get in the way of a DG1 vote and further development of the index!

Now, onto the specifics!

This is close, but not quite correct. If the product reached $100m in TVL, it would unlock a total of 2% of INDEX as the product grew to $100m in TVL at $5m AUM (0.1%), $10m AUM (0.2%), $20m AUM (0.2%), $50m (0.5%), and $100m (1.0%).

Titans of Data believes this structure incentivizes us to maintain and develop the index over the long-term. INDEX rewards are only unlocked by reaching higher levels of AUM while still allowing the Index Cooperative to keep the majority of the long-term value creation.

Yes, Titans of Data will only receive 0.1% of INDEX supply (10,000 INDEX) for reaching $5m in AUM. For context, MVI has been 1.6% of the Index Coop’s revenue over the past 3 months (currently ~$5.5m AUM), so if it were part of the Methodologist Program it would be earning about ~670 INDEX per month, meaning that if it had gone live on the first day of the Methodologist Program, and retained its revenue share relative to other products, it would earn ~12,000 INDEX total.

Titans of Data is not participating in the Community Methodologist Program so @Kiba and I will not earn the $5k + 0.15%/INDEX over 2 years.

If we went the Community Methodologist route, and DATA failed to surpass $5m in AUM, Kiba and I would collectively make $240k and 30,000 INDEX ($690k at $23/INDEX) without providing any long-term value to the Coop. Under our proposed structure, if DATA fails to surpass $5m in AUM, we get 0 INDEX. If DATA surpasses $5m AUM, but fails to reach $10m AUM, Titans of Data only receives 10,000 INDEX.

We believe our proposed structure is significantly less financially risky for the Index Cooperative than the Community Methodologist Program.

As External Methodologists, we are assuming a far greater degree of risk than Community Methodologists, and therefore we believe we should share in greater upside than the Community Methodologist Program provides.

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@Thomas_Hepner mentioned that “34 separate projects were considered for inclusion in the Data Economy Index by sourcing from CoinMarketCap’s AI & Big Data, Oracles, Storage, IoT, Prediction Markets, and Distributed Computing categories.”

I believe the following projects are solid but there are valid reasons why they’re not yet included, e.g. too low marketcap, liquidity, usage (& partially token models are really not at a point where owning them makes a lot of sense - except you want to use the apps…)

Oracles: Band, API3, DIA
Data & Analytics: Covalent, Parsiq

PS: Ocean Protocol is quite advanced and exposure is relatively low in the $Data Index :slight_smile:

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I do not think this is the correct way of thinking about investing in product development and expansion. If it were, we never have launched DPI as it is currently costing the Coop $9m/year just in liquidity mining rewards - I definitely do not agree with this conclusion!

Index Cooperative is a startup in rapid growth mode. If we launch a product that reaches $100m in AUM that is a strong sign of product market fit, and that AUM will grow much higher over time, and generate far higher revenues for the Coop.

Streaming fees are a form of subscription revenue. Software-as-a-service companies (SaaS) based on subscription models at our stage of development conservatively are valued by markets at 25x+ multiple of revenue. Extrapolating Index Coop’s June 2021 revenue, we are annualizing ~$2.3m in revenue, so INDEX is trading at ~23x revenue (using circulating supply) and ~117x revenue (using FDV).

At $100m in AUM and 70% of the streaming fee, the Index Cooperative would have a product generating $665k of annual revenue. Using INDEX current revenue multipliers, that would be adding ~$15m in circulating market cap or $79m to FDV.

As an INDEX holder, if the Index Coop had a different opportunity to pay 200,000 INDEX (~$4.6m at $23/INDEX) to grow FDV market cap by ~$79m (~30% of current FDV), I’d vote for it without hesitation.

LM program is not comparable, and its cost could be engaged for DATA anyway (or not, but I think this is another discussion). What should be compared instead are the other products launches and the associated Methodologist compensations.

We believe our proposed structure is significantly less financially risky for the Index Cooperative than the Community Methodologist Program.

Actually I think it makes sense for the Coop to assume these risks: as a “large” organization compared to the methodologists, it should be more exposed to the the risks of failure, but get a larger part of the rewards in case of success.

As an INDEX holder, if the Index Coop had a different opportunity to pay 200,000 INDEX (~$4.6m at $23/INDEX) to grow FDV market cap by ~$79m (~30% of current FDV), I’d vote for it without hesitation.

I would first check if there was not another way to reach the same results at a lower cost!

LM is comparable since it drives DPI AUM which drives DFP methodologist rewards. The Coop is spending INDEX to pay even more INDEX to DFP. Without DPI LM, DPI revenue would significantly reduce, leading to lower INDEX to DFP. LM is effectively a indirect methodologist reward to DFP and must be incorporated.

When has the coop ever been pro-risk? I’ll wait.

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I like the idea of a DATA index and I think there is certainly a space for something of this type in the coops portfolio. The tokenomics of Filecoin (combined with the 25%) cap mean there may be continued buying of renFIL by the DATA product as circulating supply increases and price drops. However, I’m a strong believer in keeping things simple and using a Market Cap based approach. As such I think DATA is a strong proposal.

From a product point of view I see two challenges:

  • Having sufficient liquidity for renFIL at all times so we can issue / redeem and rebalance. The absence of promised liquidity is a major contributor to the depreciation of CGI.
  • Having an understanding of the market size for such a product. How much AUM can we get?

Finally, I see no benefit in the proposed Methodologist Compensation scheme based on AUM thresholds. I fully expect many of our products to exceed $1,000,000,000 AUM in the future, and allocating 8% of INDEX supply to each methodologist will rapidly exhaust our reserves / limit our ability to offer similar packages to others.

The partnership with a fledgeling DAO further complicates the Methodologist : coop discussion (as we already have structures for large Methodologists and for community contributors).

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Happy to hear you think DATA is a strong proposal! :smiley:

@Kiba and I are excited to tackle these challenges and get to product-market fit (i.e. high AUM) for DATA as quickly as possible. We believe that launching and iterating quickly is essential to discovering product-market fit.

You, @verto0912, @Matthew_Graham, @BigSky7, and @trx314 have all expressed your reservations and/or disagreement with the draft INDEX rewards schedule we proposed in public or private (Discord/Zoom conversations).

I want to emphasize the draft nature of this proposal. Neither Kiba nor I believe this will be the final agreed upon INDEX rewards schedule . It should be considered a starting reference, along with the External Methodologist Program and Community Methodologist Program, to build the foundation for a long-term win-win relationship between Titans of Data and the Index Cooperative.

Will you support DG1 for DATA index while INDEX rewards is discussed further?

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Strongly support the Index and want to see it happen. It seems to me the best way forward is to table the fee discussion until after DG1 and then have that be the focal point for the pre-DG2 discussion.

Let’s make DATA happen! :robot:

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Strongly support moving this to a DG-1 vote and having fee split discussions held pre-DG 2.

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:robot: Beep boop. DG1 LG!

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@overanalyser @verto0912 @Matthew_Graham @trx314 @BigSky7 @Kiba

Details under the Fees sections were removed to provide clarity that a DG1 vote is intended to signal if DATA is a product the Index Cooperative wants to launch.

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@gregdocter @Pepperoni_Joe

Can you review the IIP and move to DG1 Snapshot vote for next Tuesday, 7/13/2021? Thank you!

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Indeed :+1: will get on it this afternoon CT

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Details under the Fees sections were removed to provide clarity that a DG1 vote is intended to signal if DATA is a product the Index Cooperative wants to launch.

sounds good!

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An IIP number has now been assigned and this will be queued up for DG1 vote on Tuesday 7/13/21, which is 7 days after this was posted as IIP-XX**

DG1 is a sentiment check and is not subject to quorum requirements.

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I like this market a lot - think @Thomas_Hepner and Kiba are the people to go after it

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Signaling my support for this proposal as I believe the decentralized data economy has significant room to expand into the future given data itself is the world’s most valuable and versatile commodity. Unfortunately to date, monetization of data has been largely captured by centralized intermediaries, and people will only become more aware of this and prefer decentralized solutions, leading to opportunities for investors/speculation. I think the DATA index would make a perfect addition to the DeFi index (DPI) and Metaverse index (MVI) as they are very different domains.

One aspect that stood out from this proposal is the selection of industry leaders within each industry vertical as data has many applications: oracles (LINK), data storage (FILE), indexing (GRT), advertising (BAT), livestreaming (LPT), tokenization (OCEAN), machine learning (NMR), VPN (OXT), prediction (REP). I think this is the right approach to take as holders of such industry leading projects who want exposure to the broader decentralized data economy (initial targeted users of this product) would be unlikely to want exposure to less adopted competitors within their vertical. I can state for at least the Chainlink community, I know that this would be the case. A broad data application index is best approach and glad to see that here, excited to see this launch in the future.

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I would love to see this initiative come to fruition. I won’t repeat everything mentioned by previous replies, but it’s definitely a solid proposal with great potential.

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welcome to the community @ChainLinkGod :partying_face: only right for this topic to be the one in which u make ur index coop debut post :slight_smile:

that said, it’s great to see ur words of encouragement on the DATA index and that u too see how much potential it has within the space! very high co-sign for this product that @Thomas_Hepner & @Kiba have been working hard in order launch

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:triangular_flag_on_post: FYI – The full forum post surpasses Snapshot’s character limit.

I will be removing removing sections and adding to the top of the proposal

The full text DATA proposal exceeds Snapshot’s character count limit. Below is an abbreviated proposal. Check out this forum post to read the full proposal.

[EDIT] for example: DG2: SMI

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