Metaverse Index - October Rebalance

Objective of the Metaverse Index (MVI):

The Metaverse Index (MVI) is designed to capture the trend of entertainment, sports and business shifting to take place in virtual environments. The MVI uses a combination of the square root of market cap and liquidity weighting to arrive at the final index weights.

MVI Rebalance Weights:

Weights were calculated as of October 31st 2021:

Here’s the change in allocations with “current” allocation taken at the time of writing.

Rebalance summary:

The above weights were calculated with some differences to the normal procedure, as this month’s rebalance was hit by a confluence of factors that required some emergency measures. First up, our usual liquidity data scrape failed to run, meaning we had to switch to taking spot liquidity values as a proxy. These values were used instead of the usual 7-day average from Dune Analytics.

More pressing however, were the huge amounts of price volatility and AUM growth seen during the determination phase. This has come at a time where Set and the Product team at Index Coop are pushing to reduce the overall cost to rebalance. As a result we agreed to increase the maximum price impact on each trade to 100bps from 50bps, and to extend the rebalance window from one week to two. The combination of which should reduce the number of trades this month by around 40%, saving gas and give Set a wider window to trade which, hopefully, presents some opportunities to pick out low gas periods. The increased tolerance for price impact does have a knock on effect, in that trades of certain tokens will cost more (fewer tokens received) than if a stricter value was used. We have calculated the impact of this to be a further -0.11% on the net asset value of MVI than if 50bps was used. This obviously depends on the total AUM and the current weights at the time of the rebalance.

We are discussing potential long term solutions with the Product team. We hope to get clear direction and some hard figures to target for future rebalances, plus a defined strategy for simple indexes generally. Clearly, there is a trade-off between changes to the methodology and making sure we are not disproportionately punishing index holders and Set or whoever bears the cost of rebalances.

As for composition, there is one new addition this month, in the form of Yield Guild Games and their YGG token. We have a joint announcement coming in the next few days followed by a detailed investment thesis later in the week, so will hold off on diving deep here. Suffice to say we are pleased to welcome the token into MVI. We see the gaming guild model as a key factor in enabling virtual economies to arise within the Metaverse.

No tokens were removed in this month’s rebalance.


Thank you, @DarkForestCapital

Looking forward to the deep dive. All eyes on MVI at the moment! :eyes:


Looking forward to the deep dive and investment thesis on YGG. As well as how the next rebalance looks after the Meta craziness in the past few days. Thanks! @DarkForestCapital

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Very interesting. As somebody who work in TradFi (asset management), I can testify I’ve seen much less comprehensive feedback. Thanks a lot. Very professional attitude. You built trust and confidence.