Methodologist Fee Menu

I just think this needs to be seen as more of a rubric which stands as the starting point in an internal discussion than something that is supposed to automate fee splits for us. Also, the content that a methodologist sees should not feature some kind of scoring system, it should just spell out what we are looking for (and perhaps include the distribution that is come up with).

While the methodology is certainly a large part of it, its not the entirety of the product’s job. I think brand is pretty powerful, especially for these types of curation products (see Ark in recent years). My hypothesis is people love DPI because DFP is an institution in DeFI and not so much because it screens for xyz vs the less rigorous Defi+L or DEFI5.

Imo the argument you make for a methodologist’s distribution power being captured in AUM is better served for the reverse. If a methodologist is being given value in the split for their marketing ability, the Coop has no incentive to market that product. If it dies, the Coop has many other products to continue actively growing.

I’m not sure I’d agree that most of the BD/sales work occurs in the most 12 months. The ETFs that are experiencing the most impressive growth are due in no small part to their marketing and it doesn’t discontinue.

Thank you guys for this well thought out and well researched proposal. This is the kind of research and in-depth discussion that truly highlights the power of the DAO model.

@LemonadeAlpha brings up many valid points and I share your concerns.

The great thing about having a number of very smart individuals discussing highly sophisticated issues such as this is that everyone has a very informed and very good perspective. However, from reading through this discussion one thing really stands out, we are getting mired in complexity and need to boil things down a bit.

To steal a line from @gregdocter “what is the problem that we are trying to solve?”

At the highest level, we don’t have a way to structure business negotiations between outside partners and the DAO. Community members want assurance that they are not working hard to support products that either don’t interest them or are not supported by the methodologist.

The negotiations between our DAO and methodologists are complex and require a high degree of context and nuance. While a broadly agreed upon framework is important, that framework should serve as the jumping off point rather than the end point.

We should strive to only partner with methodologists capable of creating and supporting true-value add products. DeFi Pulse is a great example of this, almost everyone in the community is here in some way because of DeFi Pulse and $DPI. We work hard to support $DPI because we are passionate about the product.

If our partners want to launch products that do not interest or excite our community, we can expect that product to fail. No matter how generous the fee-split, people will only work hard to support products they care about. If we release indices that don’t inspire our community, they will not inspire anyone else.

Index Coop is more than simply a platform for launching Index Funds. Our DAO provides a massive arsenal of talent that is impossible for any methodologist to replicate. This is what our methodologists are getting:

And a MASSIVE number of other capabilities which we have only now started to fully appreciate.

This is truly world-class talent, no start-up in the world has this many passionate people all working so hard on something. Each Index we launch requires significant time and effort from our community. We need confidence that our methodologist partners are willing to invest the same level of effort for their indices as the community. On the other hand, our partners need a better understanding of exactly what partnering with Index Coop gets them.

We should demand the same level of investment from our partners. As a community we need to be crystal clear, we expect to partner with world-class methodologists. Launching low effort, non-original products into pools with ZERO liquidity is a waste of time for everyone.

We can debate the fee split all day long, but fee splits don’t sell our products, we do. And if we don’t care about a product no-one else will.

$DPI is successful because DeFI Pulse is an awesome partner with an awesome product. They remain active in our community and contribute to almost all of our functions. @snasps has been an incredible value add for BD and has personally helped me navigate many complex BD issues. This is the standard we should expect from our methodologists and this is the standard that will allow us to launch successful and important products.

None of the things I listed can be boiled down into a binary list of options. We are collaborating with methodologists, not simply offering them a list of services. This conversation should start from a mutual understanding of fee splits and seed liquidity. However, we are talking about a long-term mutually beneficial partnership that requires a massive investment in time and capital from both parties. This cannot be boiled down to a list of options.

I see a few ways to move this conversation forward.

  • Set expectations for methodologists. For non-community methodologists, this means liquidity and liquidity mining. We should not be working with outside methodologists who are unable or unwilling to help provide seed liquidity. The BD/Marketing side of this conversation is tangential- seed liquidity and LM create skin in the game for both parties and is the jumping off point.

  • Continue actively recruiting other world-class platforms like DeFi Pulse to design and build Indices. We need partners who Inspire us with their products. Token Sets are one of the most powerful tool in the DeFi ecosystem and allow us to build far more complex and elegant indices than ever before possible. We want to build the DeFi funds of the future, not just a better S&P 500.

  • Use the framework outlined here, alongside Liquidity Mining Framework - #8 by TJB2K to outline our product launch strategy and clarify requirements from both parties. We don’t need a fee menu so much as we need crystal clear guidelines of what we expect from methodologists.