The Methodologist Fee Menu presents a simple, choice-based framework for determining how the streaming fee is to be distributed between the Index Coop and the Methodologist. The subjectivity of deciding how much of the streaming fee each partner receives is solved with a simple assessment of value-add contributions.
Firstly, let’s define the role of the methodologist. The community handbook describes methodologists as “data providers which publish research and data on compelling Index strategies”, and goes on to further define the methodologists contributions as shown below.
- Propose a product that is well differentiated from existing Index Coop products;
- Target a sufficiently large market to be meaningful to the Index Coop;
- Do an on-chain liquidity analysis for underlying collateral assets;
- Have a complete methodology;
- Keep all documentation related to the index up to date, tracking performance and sending out updates monthly/quarterly/yearly as appropriate;
- Stay visible to index holders and Coop members to answer questions and act as a single source of the truth in relation to the specific index;
- Respond to questions on the forum and discord relating to your index.
These contributions are considered the “Base Level” requirements that each methodologist shall meet. In addition to the Base Level requirements, there are several value-accretive categories where the methodologist can add value to the product. These value accretive activities are shown below:
Provide capital to bootstrap liquidity (Note: Optimal initial liquidity will vary by product and will be discussed before a product goes up for Decision Gate 2 voting.)
Partner with Index Coop to offer liquidity mining incentives bootstrapping the product (Note: The scale of Liquidity Mining incentives will vary by product and will be a function of the size of the liquidity pool necessary to accommodate the target customer.)
Unite together to combine sales & BD efforts, including marketing, distribution, promotion and product development. This would include things like ecosystem integrations, DeFi partnerships, CEX listings, etc.
The methodologist is free to choose their level of commitment to any or all of the activities mentioned above, depending on their preferences and areas of expertise.
A preliminary assessment of the market size and what is required to successfully launch the product should occur before Decision Gate 1. At the very least sufficient background work shall be undertaken to facilitate a discussion around the topics mentioned above, and come to a high-level agreement of what Index Coop and the Methodologist can do to enhance the success of the product. We are working on a liquidity mining framework that will aid the Methodologist in estimating the quantum of financial contributions for items 1 and 2 above.
Introducing the Scoring System
Based on the above value accretive activities and the methodologists level of involvement, we can derive a progressive scoring system. Initially, we consider a Base Score and then consider the various add-ons that each methodologist can elect to contribute.
If a methodologist commits to Base Level requirements only, they are assigned either of the following scores:
- No Methodology (BED) - Receive a base score of 0.00
- Simple Methodology (DEFI5 & CC10) - Receive a base score of 0.50
- Comprehensive Methodology (CGI & DPI) - Receive a base score of 1.00
In addition to the base score, the methodologist can earn additional points for each value accretive add-on described in the Overview section.
Capital to seed initial liquidity is provided by:
Liquidity mining incentives bootstrapping the product are provided by:
BD & sales efforts, as described above, are done by:
The Methodologist Fee Menu
The minimum score available to a methodologist is 0.5 and a maximum scope is 4. Each 0.25 increase in the score corresponds to a 2.5% change in the fee arrangement.
- Score 0.50 - fee split 75% Index Coop & 25% methodologist
- Score 1.00 - fee split 70% Index Coop & 30% methodologist
- Score 2.00 - fee split 60% Index Coop & 40% methodologist
- Score 3.00 - fee split 50% Index Coop & 50% methodologist
- Score 4.00 - fee split 40% Index Coop & 60% methodologist
Introducing Methodologist Levels
Methodologist levels allow us to easily segment methodologists based on the quantum of their contributions. This roughly aligns with how we classify contributors, with Gold, Silver and Bronze Owls.
Platinum Methodologist - Score above 3
Gold Methodologist - Score above 2
Silver Methodologist - Score above 1
Bronze Methodologist - Score of 1 and below
A methodologist that has a comprehensive methodology (Base Score 1.00), that seeds 100% of the initial liquidity (1.00), provides all liquidity mining incentives (1.00) and is actively involved in Sales & BD initiatives (1.00) receives 3.0 additional points to the base score for a total overall score of 4. This methodologist can be referred to as a Platinum Methodologist and receive 60% of the streaming fee.
A methodologist that has a simple methodology (Base Scope 0.5), that seeds 50% of the liquidity pool (0.50), Index Coop provides 100% liquidity mining incentives (0.00) and Sales & BD efforts are shared 50/50 (0.50) received 1 additional point to the base score for a total of 1.5. This methodologist can be referred to as a Silver Methodologist and receive 35% of the streaming fee.
A methodologist that has no meaningful methodology beyond the initial idea (Base Score 0.0), that seeds 0% of the liquidity pool (0.00), Index Coop provides 100% liquidity mining incentives (0.00) and Sales & BD efforts are shared (0.50) received 0.5 additional points to the base score for a total of 0.5. This methodologist can be referred to as a Bronze Methodologist and receive 25% of the streaming fee.
What About the Community Methodologists?
Community methodologists follow the same criteria, but Index Coop receives an additional 10% across all levels. A 70% Index Coop and 30% methodologist split becomes 80% and 20% split with a community methodologist. For example, Metaverse with a score of 1 has a fee split 80% Index Coop & 20% methodologist as the methodologists are community members.