IIP-83: Wintermute Market Making Proposal

@fallow8 and @Metfanmike can add more but IIRC others were spoken to.

Here is a view from a competitor market maker on this structure for $Index “in our opinion that amount of liquidity is not needed for market making and is most likely a play on speculating on the price movement. We’ve seen these models in the past and believe that they can be dangerous as they could be the base for a price manipulation setup, due to the amount of token liquidity compared to the market cap that is being used on each market.”


I am also strongly FOR this and will be voting with my tokens accordingly.

There’s been a solid feedback process, we need to move fast and test things, and this seems like an experiment with an aligned partner who has skin in the game with the Coop.

I’m really excited to see what value this gets us in time and hope to see a T1 CEX listing in 2020.

Thanks for the proposal and grind pushing this forwards @fallow8 @wishful_cynic.


What terms would this competing market maker offer? What different alignment of incentives would they propose?

Sounds like they’re kinda saying they’d simply do it for cheaper, but there’s little clarity about who they are.

The comment was purely based on the data related to $index : DEX volume, DEX liquidity, Circulating supply, Tokens locked with VCs and Strategics, what liquidity can be generated from a token loan e.t.c.

Clearly a $5m option is totally disproportionate to what is currently needed to provide liquidity for the Token. You could support >$50 of daily volume with that size of loan. There is no need to sell an option of that size to 1 counter party at the expense of other token holders who bought into the project from the DEX or farmed. Relative to the free float of Index 100k is a huge block of tokens.

My suggestion was focus on building liquidity staked in $Index via the DEX. If the project hits the metrics required for a Tier1 listing then employ a market maker based on the liquidity required. You have circa 10 to choose from.

The following details what Binance requires. Note there is no mention of market makers.


  1. Binance expects to see good coins. What determines good is based upon: a proven team; a useful product that solves a fundamental need; and a large user base.
  2. There are no hard requirements.
  3. User adoption is heavily considered in the listing process.
  4. User value is heavily considered in the listing process.
  5. Technical expertise is heavily considered in the listing process.
  6. The communication process is part of the evaluation. If a project team is lazy, unprofessional, pushy, or does not seem technically competent, this can lead to a rejection of an application.
  7. Do not pressure Binance into listing your coins by ‘spreading FUD’ or encouraging your community to tag Binance.
  8. Do not encourage your community to shill your coin. It can lead to a rejected application.

@jackiepoo helpfully produced a breakdown of $index Tokenomics.

Of the 2MM circulating INDEX:

  • ~400k (~20%) are held in VC/OTC wallets & vesting contracts
  • ~50k (~2.5%) are held in liquidity pools, which can still be used for voting
  • ~40k (~2%) are held by contributor accounts. A total of 74k INDEX has been handed out to contributors as compensation, so if we assume that contributors didn’t sell any INDEX and are holding all that 74k INDEX in privacy accounts, that would mean contributors have 3.7% of circulating INDEX.
  • ~1.5MM (~75%) are held by other wallets we don’t recognize, including but not limited to:
    • Whales farming INDEX using DPI
    • OTC trades of INDEX by DefiPulse and Set
    • True believers in the mission who just bought INDEX at market
    • Privacy wallets
    • Literally everyone else
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Voicing my support for @Metfanmike @fallow8 and Wintermute.

I won’t pretend I have the expertise to comprehensively evaluate this proposal - but I trust that our IB team is making a decision that will only help Index Coop.


I dropped a few comments in the IIP-83 thread on Discord, so this is repetitive of that. From what I understand, if there is no CeFi listing after 1 year, Wintermute gets the option to return USD$7.5 million equivalent in USDC/DAI/Eth or 100,000 Index. Obviously, it would act in its best interest and return whichever is of lesser value.

Example: Wintermute gets 100,000 Index. 1 year passes and no CeFi listing. Despite this, the Index token trades at the USD equivalent of $250 per token at the 1 year mark. Wintermute then elects to return the USD equivalent of $7.5 million in USDC/DAI/ETH, electing to keep the USD$25 million of Index.

Just my two cents, but this proposal doesn’t align incentives well for Index holders. If I’m misunderstanding how this would work in that scenario, please let me know.

Then we’re aligned. The proposal makes clear that while the loan is in INDEX, Wintermute will be making markets in all our various products…

…and helping with a Tier I listing for any/all of them:

Our current push (whether it’s custodial token listings or centralized listings) has been and will continue to be DPI as our flagship product.

If the price of INDEX is very high in the future, it’s true that the 1% of the token supply will make the payoff to Wintermute quite lucrative, but:

  • What is the likelihood that their making markets in our products and helping with listings doesn’t contribute to the price going higher? If DPI gets listed and if we have a more liquid INDEX token than the relatively thinly-traded market we find ourselves in today, wouldn’t we expect the price to be up quite a bit?
  • In the scenario you posed, where INDEX has a market cap of $2.5bn, I’d imagine the rest of the token holders (ie, the community) would be ecstatic. We’re aligned because if they win, the community members win, too.

Sure they would be ecstatic, but that would have nothing to do with Wintermute. In the scenario I posed, Wintermute does nothing but gets an $17.5 million benefit which comes at the expense of other Index holders through dilution. I am not saying that Wintermute will sit on its hands. I am saying that Wintermute should not get a ‘heads I win, tails Index loses’ option.

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@fallow8 @Metfanmike I was aware that Wintermute said they were working “across the index space” (not a verbatim quote, just my interpretation) but I guess I didn’t realize they were actively pursuing a similar deal with Indexed and PieDAO - curious how y’all think about that?

I mean, it does kind of reinforce how great of a deal this is for Wintermute. They win no matter who loses and if they help someone else win it hurts us… just a quick interpretation by me, which I may not be thinking about it right…

I would also add that I would feel much more comfortable if it were possible to trim the tier 1 list to like Coinbase, Binance, FTX and/or 2+ of the others.

I’m not sure I’d be stoked about some of the option outcomes for some of the others.

It may not even be Wintermute’s neglect that gets it a win. Let’s say the SEC files its lawsuit against Coinbase over Lend and continues loudly investigating Uniswap. Lend is a different product than Index, for sure. But, let’s say all these CeFi platforms suddenly get cold feet over listing anything that could be deemed a security and pause while that’s resolved. No CeFi listing, through no fault of Wintermute. But, if DeFi continues to press on (tough to get an injunction against a smart contract), then I could still see Index rising in value.

I would simply suggest that incentives would be better aligned if Wintermute did not get a potential reward for failure.

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Due to the extensive amount i want to weigh in. I like indexcoop and are just a DYOR guy presenting info.
Wintermute is no doubt a leggit MM that accelerates listing on tier1. More people, more holders, more fees, more buzz, sound good but not too fast and have a look onchain.
wintermute1 wallet: Ethereum Transaction Hash (Txhash) Details | Etherscan
SomniumSpace team transfered 5e6 USD to the MM on the 28.04.2021 and quickly after the price doubled from 2.5 to 5usd. On the 1. may the listing on gemini followed and the token gradually hovered down to 4usd the following month. To “market-make”, wintermute sent only 500k of a total 2e6 CUBE tokens (25%) to gemini (no interaction since), implying that the actual amount of tokens is significantly less. If the remaining 75% tokens are necessary to mm a pair on uniswap is questionable and therefore be considered a compensation for the listing/service amounting to 1.5e6 CUBE worth 3.75Musd at 2.5$ (a full retrace).

  • the amount was overstated for pure MM and the major cut can be considered a “listing fee”
  • price spike after listing fully retraced (good, no shady mm pumping)
    fig1.: price spike from 2.5 to 5 back to around 2.75$

The project spent 5e6usd for a MM on uniswap + gemini listing/mm which they probably would have gotten via organic growth by users regardless. In contrast the FLI product of indexcoop got market fit already, so i see INDEX in the three digits price range, but lets conservative take current price 43$

If index drops below 7.5e6 /1e5 = 75$ they would return 100k index, bearing 0 risk.
The MM will likely be able to list tier1 putting in a bottom at 50$ and using projected mcap growth to derisk holdings in three digits range, paying back the 5Musd loan. I anticipate a mcap growth of40e3 / 2e3 = 20x, putting index at 20*43 = 860 - unlocks ~ 500$ per coin. The 100k loan would amount to 50e6 of which they pay back 5e6 alias 10% gradually derisking the excess amount (not needed for MM).

Indexcoop should invite Wintermute but revise:

  • restrict tier1 definition to binance/coinbase/(ftx)
  • consider that primary audience is defi users whose weight is growing with maturing defi infra and thus either reduce the index amount or increase the loan payed by wintermute.
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Confirming that this IIP has passed with 127.63k INDEX (86.88%) voting FOR. :white_check_mark:
Snapshot here.

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While the IIP passed, I wanted to address some of the subsequent questions over the past few days:

Wintermute isn’t just pursuing a deal. They actually have one in place with PieDAO, for example. However, we feel far better positioned to be the beneficiary of the services given our place in the market, for what it’s worth.

Wintermute winning also isn’t the guaranteed scenario you are making it out to be. If the INDEX price is below $50, Wintermute works for free for us for a year. Now, I don’t think that’s likely. What I do think is likely is that Wintermute market-making helps the Cooperative get to higher INDEX prices by ensuring more liquid, deep markets for our products.

Ultimately, I fail to see how a price of $250 could possibly be considered a losing scenario for the Cooperative (or how you can conclude that that price would have nothing to do with Wintermute). I hope Wintermute gets at least that level. If they do, that means the entire community of token holders would share in the upside.

It’s in our control where we pursue a listing, so while we will honor this list, pursuing a given exchange will be because we decided to pursue that particular exchange. We can internally decide how to prioritize exchanges if we feel Coinbase (or even FTX) matters more.

If this scenario plays out for the broader IC product suite, the INDEX token itself would still be fair game for a listing, which would be huge for the token and this community.

As always, thank you for the feedback and the opportunity to clarity some of these nuances.


Hey @Metfanmike @fallow8 , now that the IIP has passed, when exactly will the 100,000 INDEX be loaned out? Curious as to when Wintermute will actually begin market making for Index Coop.

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Next step is signing actual legal contract. Working on it!


I am late to the party on this proposal but think its worth sharing a couple thoughts for your consideration.

  1. Can I suggest that if Wintermute elects to repay cash rather than Index tokens that it also agrees to a further lock up?

  2. In future, can we please run a competitive tender process for these types of deals? In my life I have never seen commitments of this size made without a competitive process being run. It is a SOP for any serious organisation. This would also alleviate many concerns from community members on pricing.

Thank you for your efforts on this.

This proposal has been executed. 100,000 INDEX has been transferred to Wintermute here:


Just seeing this comment, so apologies for the delay. To avoid any confusion, we had three well-known market makers in the mix (including Wintermute) to be our official market maker. Wintermute’s proposal was (easily) the best.

Subsequent interactions with other market makers at recent conferences have only validated the decision to go with Wintermute. The market makers we met would have asked for more of the token supply and at a discount to spot, rather than at a premium.

We also communicated the competitive nature of this process in weekly standups and IBWG meetings in the weeks prior.

Does that help?

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