Authors: Ryan Sean Adams, David Hoffman
Proposed: 26 February, 2021
One-Click Exposure. Self-Driving Crypto.
The BED index is meant to track crypto’s top 3 investable assets.
The proposed index is a full portfolio solution intended for beginners, or as part of a core-satellite construction for more advanced investors.
It seeks to give safe, passive access to a vehicle which captures equal-weighted upside from the most promising use cases and candidates around the theme of blockchain as a generationally disruptive technology: store of value, programmable money, and decentralized finance.
Bankless brings a strong reputation and expertise to the table and has an audience which represents the core personas this index seeks to serve. We have referred to this construction as the Bankless portfolio in the past.
The BED meme, a theoretical index now potentially brought to life by Index Coop, has captured the hearts of the Ethereum community. BED and Bankless have great brand recognition amongst our target personas and we expect Bankless can use it’s media platform spanning video, podcasts, and articles to educate newcomers on the assets in the BED index.
The composition would be:
Rebalanced on a monthly basis
Core value proposition - Customer
Set and forget, self-driving crypto exposure
Betting on bankless assets
Low cost to hold
Core value proposition - Index Coop
Extension of DPI
Supports DPI AUM
Built on v2 Set Protocol contracts as a long term passive product
$ETH is economic bandwidth and the reserve asset of DeFi, so a heavy focus on ETH makes sense for any initial investment in decentralized finance. This is an investment in ETH is a store-of-value, commodity, and capital asset.
$BTC is the largest cap crypto money and currently a reserve asset of crypto banks. . Some exposure is essential, but too much means an underweight position in DeFi. . Having a portion in BTC with monthly rebalances captures some of the benefit of the volatility vs ETH.
$DPI DeFi is growing and a carefully curated set of DeFi money protocols with massive potential, and use of monthly reblances captures the volatility.
- 0.35 % Streaming fee (.175 to Bankless, .175 to Index Coop)
Flexible. Eventually, Farm ETH/DPI and ETH/BTC Uniswap pools, stETH, etc
Notes on construction
A third BTC. A third ETH. A third DeFi. Simple narrative.
Decided against stETH for now for flexibility.
Size of opportunity: Ultimately, this index could be the preeminent bundled crypto product. We expect that this portfolio is suitable for the vast majority of crypto participants. Several $billion AUM over the next 5 years is not unreasonable.
Differentiation: Different from any product in the crypto ecosystem. Piedao’s BCP has a similar construction, but has not captured the attention of the market.
Similar construction to CGI with key difference being gold in place of defi. There is potentially slight cannibalization between CGI and BED.
Potentially some competitive crossover with DPI, but ultimately different products (and, of course, BED includes DPI).
On-chain liquidity analysis: All assets are available in DEX’s with deep liquidity.
Methodology: The methodology is fairly rigid. There is scope for substitution or changing the weights but this is expected to be infrequent.
Author background and commitment:
[Ryan Sean Adams] is a crypto investor & co-founder of Bankless. He’s an open finance maximalist who propagates the message of financial sovereignty. His mission is to onboard the first billion people to crypto through memes, media, and education.
[David Hoffman] is the co-founder of Bankless, a content studio with a newsletter, podcast and YouTube channel focused on education on how to live a life without banks.
Our financial world today is run by analog banks. Crypto money provides an alternative. The option of self-sovereign money & banking. In a world where private keys act as money and code makes that money programmable, the entire money system changes.
So Bankless is about banking less. And less banking. And less dependance on banks.
We are the Bankless Nation.