Index Coop Q2 2023 Update

Index Coop Q2 Update

The Index Coop’s mission is to make DeFi simple, secure, and accessible. We do this by creating a diverse range of crypto indexes and structured product tokens that offer exposure to various sectors of the crypto market.

The purpose of this Q2 2023 report is to foster transparency and accountability within the Index Coop and to ensure that token holders are well-informed and engaged stakeholders in the Coop’s success.

This report will provide INDEX holders with a comprehensive update on the Coop’s performance, including financial metrics, product development updates, protocol upgrades, community engagement activities, and partnership updates. It addresses some things we’ve been quietly working on, upcoming plans and initiatives, and obstacles we faced during the quarter.

This update also allows token holders to ask questions, offer feedback, and participate in the Coop’s decision-making process.

Q2 2023 — High-level Overview

Financial Performance

Treasury Insights

At the end of Q2, Index Coop’s treasury held $6.15 million, composed mainly of stablecoins. The treasury does not account for INDEX as an asset.

Revenue & Costs

Throughout Q2, Index Coop generated $43,700 in average monthly net revenue from streaming and issuance and redemption fees. During the same period, the monthly payroll cost was $215,313 representing a revenue to labor cost of 20.3%. We budget for approximately $20,000 in monthly non-labor expenses which is primarily attributable to legal fees, smart contract audits, and software subscriptions. At the end of Q2, our base case for runway was 31.8 months.


At the beginning of Q2, Index Coop had TVL of $66.8m and ended the quarter with TVL of $59.1m.

During the quarter, Index Coop experienced $5.4m in net outflows. However, both the decline in both TVL and Net Flows is predominantly due to redemptions of DPI during April.


Over the quarter, the INDEX price declined from $1.77 to $1.38, representing a 22% decrease in USD and a 36% decline in ETH.

Product Updates

Q2 was a protocol-centric quarter for the Index Coop, with several major modules developed, audited, and integrated into Index Protocol. These additions will enable the next generation of Index Coop products that will be introduced throughout the next two to three quarters. While all the protocol work was underway, the following products were in focus for the team in Q2:

Large Cap Crypto Index (LCAP): scheduled for launch in Q3, $LCAP provides diversified exposure to the top ten crypto assets measured by market capitalization; this includes non-EVM-native assets despite the fact that it will be deployed on Ethereum main net. We have been developing this product with a partner organization for the majority of the year, and the product will be the first to use several innovative Index Protocol features such as Auction rebalancing and 0x RFQ liquidity. There is also a significant amount of app or interface work underway to support this product, including an Auction interface for third parties to bid on assets up for rebalance.

Real World Assets Index (icREAL): scheduled for launch in Q4, $icREAL is a stablecoin yield product that provides diversified exposure to public and private credit positions across the leading RWA protocols. $icREAL is being developed with a partner organization and will have a variety of new features like flexible weights, onchain KYC, and unique issuance and redemption processes; similar to $LCAP, $icREAL has been the subject of intense research and development in order to enable these new features and solve the associated technical problems.

Leveraged rETH Staking Yield (icRETH): scheduled for launch in Q3, $icRETH automates the leverage staking trade using Rocket Pool rETH on Aave v3 (similar to $icETH which tokenizes the same strategy for Lido stETH on Aave v2). This product will be the first to use the new Aave v3 Leverage Module, which was developed and audited in Q2. Though the intent was to launch $icRETH in Q2, the interest rate environment in Aave v3 was unfavorable until more recently; there were also several supporting smart contracts that required updates as a result of the initial Index Protocol audit.

Money Market Index (icSMMT): deployed in Q2, the money market index is a stablecoin yield product that offers low-risk, diversified exposure to top DeFi money market yields. The product has been deployed for several months and has functioned as expected; however, low stablecoin rates across the leading money market protocols and high issuance costs have rendered the product most suitable for large, long-term buyers. Outreach to this customer segment has begun on a direct basis, but general growth efforts have not been dedicated to this product. As yields improve and issuance upgrades are enabled, we intend to market the money market index more actively.

Diversified Staked ETH Index (dsETH): launched in Q1, $dsETH provides diversified exposure to the leading liquid staking tokens and is weighted according to protocol decentralization. The most notable update for the index is the addition of Frax’s sfrxETH liquid staking token in the most recent rebalance; this adds a fourth token to the composition and demonstrates the progressive diversification expected within the product as the liquid staking industry grows. sfrxETH will also be included in $gtcETH, a “clone” of $dsETH that directs a higher streaming fee to Gitcoin Grants funding.

Protocol Updates

As noted in the Product Updates section, Q2 was was a protocol-centric quarter for the Index Coop. Several major modules and supporting contracts were developed and audited, including the Aave v3 Leverage Module and the Auction Module; Index Protocol as a whole was also audited to ensure its security and user assurances were current and comprehensive.

We have selected Sherlock as our primary audit partner and have been very pleased with the results of both audits; across both contests, Sherlock has outperformed secondary auditors and even the original auditors of Set Protocol V2 in terms of issue identification and resolution.

Aave V3 Leverage Module: this module enables automated leverage management on Aave V3 and includes support for E-mode functionality; using this new infrastructure, it is possible to achieve higher safe leverage ratios for leveraged tokens and also reduce issuance and redemption costs associated with the collateralized debt positions in Aave V3. Imminently, $icRETH will be the first product to use this new module; subsequently, other leverage yield strategies will likely use this new infrastructure.

Auction Rebalance Module: this module allows external managers to run competitive auctions for rebalancing index tokens. In auction rebalances, traders compete with each other to execute swaps at the best prices, making rebalances more cost-efficient; traders can also bring liquidity from CEXs or other chains, which means the protocol can now support components that may not have deep liquidity on Ethereum Mainnet (or whichever layer the protocol is deployed on). This represents a major upgrade to the protocol, freeing products from liquidity constraints, enabling extensive management efficiency, and unlocking critical composability. In time this process can also lead to a more automated and scalable reweighting process for a range of product types.

Marketing Updates

During Q2 the Marketing team focused heavily on improving our infrastructure. As our product and engineering teams worked on long-term protocol and product bets, we worked to improve our infrastructure, channels and competencies to achieve superior marketing campaigns for future products. We also worked to improve our articulation of the Index Coop brand on our website and via our white paper.

Iterating on Our New Website
In the first week of Q2 we published our new Index Coop website. We quickly iterated on the homepage based on feedback from our Index Insiders community, and published a new intermediaries page to showcase our partners and partnership opportunities. We are currently working on a new product roadmap page to create more visibility into where our products are in the pipeline.

Our First Annual White Paper on the State of the Onchain Structured Products Market
Our new annual white paper covered the largest protocols and product types attracting the most TVL; the history of this market and its current makeup; and the headwinds, tailwinds and important trends impacting builders. The white paper was a collaboration among many Index Coop contributors. It’s been downloaded nearly 300 times, and we are still running ad campaigns to drive additional downloads.

A New App Team and Reskinned App
At the end of Q2 we formed a new team to tackle our app development. We stripped down our existing app to make it easier to use, and our new app team began the work of defining our long-term app strategy. By the end of Q3 we expect to have a clear app roadmap.

Web3 and Crypto Media Coverage
The Defiant covered our gtcETH index token. Coindesk covered the launch of our white paper. Other projects and protocols in our ecosystem also Tweeted about our white paper when we first published it.

Newsletters and Index Insider Community
Our weekly “Index Insights” newsletter and monthly “Insiders” update continued to thrive in Q2. Our newsletters typically enjoy around a 37% open rate, and we’ve seen steady organic growth in subscriber numbers. We’re working on accelerating newsletter growth in Q3.

Upcoming Marketing Initiatives — Q3
In Q3 we are focusing on the LCAP marketing campaign (keep an eye out), moving our marketing campaigns into hubspot, growing our Index Insiders community, and developing our app. We’ll also be improving our website to drive more email capture, as well as optimizing our site/app set-up to drive TVL.

Partnerships Updates

Overview of Partnerships in Q2

In Q2, we strengthened the groundwork for Index Coop products to establish a strong presence and TVL in both traditional and crypto sectors. Our core objectives remained the same: enhance brand recognition and amplify TVL through strategic education, product collaborations, and listings on key DeFi and CeFi platforms.

Our First CeFi Integration

In collaboration with Matrxiport, our icETH partnership officially launched, demonstrating the potential of DeFi products serving as the core backbone for CeFi platforms. While the immediate TVL increase was modest, this collaboration solidified our connection with Matrixport, a prominent CeFi entity in the APAC region. It also encouraged other CeFi platforms to consider using onchain structured products as a way to reduce operational complexity and increase transparency. Bolstered by this, and our new distribution incentive system, we’ve continued to explore numerous integration opportunities with CeFi platforms, especially in the LATAM and APAC regions. However, the stagnant regulatory landscape does affect our progress. We’re laying the groundwork for a clearer regulatory future.

Boosting DeFi Progress Through Distribution Incentives

Our distribution incentive structure has also been instrumental in building our DeFi partnerships, in particular with leading DeFi wallet providers. With help from our engineering team, the Index Coop app is now integrated with Safe, and we’re actively engaged with many additional wallet providers to broaden our product support and visibility. In addition, OKX has lagged but still looks positive for listing ETH yield products in their next app upgrade. A new intro to wallet has been made and has the potential for a new type of BTC-focused user.

Upcoming Product Partnerships

Our partnership team has been diligently building high-value product and brand collaborations to be unveiled in the coming months. This quarter we’ve partnered on some major wins for Index Coop, including bringing in infrastructure partners for our upcoming icREAL launch and signing into a contract on an innovative new product with a renowned crypto brand. Additionally, we’re on the cusp of finalizing a third partnership centered around our Large Cap index token. These partnerships are pivotal for enhancing our product infrastructure, distribution, and brand visibility. After two meetings with the Truflation team, there is significant interest in building an inflation-hedged product that would play directly to their user type and be generally low lift given the distribution on their site. Finally, an eToro product partnership has been a long time coming and will launch in September. With the front end built out on their site and fee agreement signed the last remaining pieces will be PR/Marketing. Stay tuned for more.

Boots On The Ground

Our team participated in events like ETH Denver, Digital Asset Week SF, and ETH Paris, where we delved into discussions about our products and protocol with current and prospective partners. Concurrent with the launch of icSMMT, we also actively engaged with leading DAO treasury and crypto hedge fund managers. These relationships have not only deepened our understanding of crypto asset allocators’ preferences but also have helped to hone our product strategy and introduced us to many new potential buyers. Over the past three months, we have expanded this network considerably and improved the tools we use to ensure they remain closely connected to our products and protocol.

Continuing To Bridge the Tradfi Gap

Mirroring Q1’s momentum, we saw increasing interest from traditional finance institutions this quarter. We’ve invested time and effort into educating these firms about our protocol, offerings, and potential on-chain product concepts. Regulatory challenges persist; however, in response, we’ve allied with a renowned web3 project specializing in KYC, which adds a much needed tool for our partnerships toolkit. This product feature responds to a long-standing request from our traditional finance partners, promising to be instrumental in future partnerships.


During Q2 the Index Coop invested in fundamental protocol and marketing infrastructure while establishing partnerships that will bear fruit in Q3. Despite net outflows in Q2, the Index Coop’s runway is healthy, and the DAO is committed to its mission to create and maintain onchain structured products. During Q3, which is well under way, the Index Coop will launch our new LCAP product, and prepare for the launch of icREAL. We will also continue to build on our existing partnership initiatives and connect with key players in the crypto and traditional finance sectors.