I am pleased to present Index Coop’s August 2021 one-page Financial Report and the longer form deep dive article which has been posted on medium - link here.
At the end of August, the Index Coop treasury has a market value of $85.3M, of which 90% are INDEX tokens.
Key Takeaways
*Index Coop at a gross profit level experienced its first profitable month a direct result of reduced LM incentives on DPI. ETH 2x-FLI stole the show generating fees of $348k alone.
Revenue increased 77.2%, Liquidity Mining costs decreased by 58.7% and Contributor Rewards increased by 270%.
Contributor rewards are up significantly this month, a direct result of FTE vesting contract cliffs being reached.
Unit Supply across all product offering was up 8.1% which is an increase of nearly 124,000 units. The largest gain in unit supply BED growing 48% with MVI also adding 33% growth in supply
Overall profitability worsened from a $0.50m loss in July to a $0.77m loss in August. When excluding the FTE rewards the DAO would have generated a loss of $0.35m
AUM increased by 53% MoM from $227.4m to $348.4m.
The reduction in liquidity mining incentives is expected to significantly improve the profitability of DPI as a product and drive further improvements in capital efficiency.
Please do drop a comment below and let us know what you think.
Curious what the contributor rewards for August are w/out the FTE vesting?
Would it be ~$888k - ~$420k (taken from the $.77m to $.35m loss calc) = $448k?
I am thinking through this now, but I am not sure it makes sense to include those in the same line item… or even in the P/L at all… your thoughts? How do traditional startups account for equity vests in the P&L (how I see the FTE vesting contracts rather than salary or rewards)?
During August, three wallets withdrew INDEX from their Full Time vesting contracts. The USD value of each transaction was $139,839 for a total $419,525. Some may have heard me talking about the lumpy contributor reward transactions a couple weeks ago.
Index Coop utilises cash accounting which means we record the value at the time of the transaction and we do not accrue revenue or cost.
Contributors who work for Index Coop during the month of July receive payment in August. In August, we distributed $468,284 to metal owl contributors and $419,525 to Full Time owls for a total of $887,809.
We did think about separating out Full Time contributors from the metal owls and we are open to doing this. We are also looking at separating out stipend payments nominated in INDEX for leads as this too has inflated the USD paid to contributors as the INDEX price has risen from low $20s to low $40s.
Full Timer vesting contract withdrawal figures must be included in the statements. We are paying metal owls and Full Timers with equity for exertion. Metal owls, stipend owls and a Full Times are all rewarded for exertion.
The below shows just the contributor rewards across working groups and funding council.
Thanks for replying to this @Matthew_Graham that is exactly how we have dealt with the transaction. We are still working out the best and most transparent way to show the Full time vesting contracts and their associated costs. Currently, as Matt says we are working from a cash accounting basis due to the way the information is pulled from Etherscan and the lack of a financial accounting system. This however is in the works and I envisage working to integrate our underlying transactional detail into a system such as Sage or SAP. Something which myself and the team will be working on in the coming months. This will enable us to shift from the cash accounting framework to the accruals concept.
To specifically answer your question @jdcook around how we should account for the FTE vesting contracts I agree that we in the future will change the way we account for these costs. I see the agreements as an ‘Equity settled share-based payment scheme’ which when applying IFRS would come under IFRS 2 the guidance, therefore, states that the FTE vesting contract is to be recognized in the balance sheet at its fair value at the date of the grant and charged to the profit and loss over the vesting period, linearly, with the annual transaction to be;
Dr Contributor Rewards or a specific line item in the P/L (Expense P/L)
Cr Equity (Balance Sheet)
We have not adopted the above model as we do not have a balance sheet to track these transactions as of yet and wanted to for transparency include these costs in the P/L. This will however change and retrospective adjustments will be made and additional notes to the financial statements included to show the ‘actual cost’ based upon the token price at the date of vesting for complete transparency purposes. Which I hope you will agree is valuable for the DAO - similar to how directors of large companies detail their annual salary.
Hopefully, this clears up some of your points, and happy to clarify any of the above.
