Title: Pre-Sale Product Proposal Template
Status: Final
Author(s): @allan.g
Reviewer(s): @0x_Dev @jordan.t @MrMadila @anthonyb.eth
Created: 8 March 2024
Summary
This Pre-Sale Product Proposal template provides a standardized structure for future products that utilize the new pre-sale process. The objective of this framework is to establish clear and concise answers to fundamental product questions regarding marketability, feasibility, and profitability while also being accessible enough for third parties to use for external product proposals.
The Pre-sale Process Steps are:
- Step 0: publish (this) Pre-sale Product Proposal to the forum for comment period; incorporate feedback
- Step 1: conduct $INDEX vote to advance (or not advance) the product to the Pre-sale
- Step 2: open Pre-sale for a specified amount of time with a defined deposit threshold*
- Step 3: if Pre-sale threshold is met, begin formal launch preparation and distribute incentives*
- Step 4: execute formal product launch*
*exact timelines to be determined on a per product basis
Please note: the Examples provided are for a forthcoming product that will use the pre-sale process; a separate, finalized version of that product proposal will be available on the forum shortly.
Pre-sale Product Proposal
Elevator Pitch
Prompt: In 1-2 sentences, describe what the product accomplishes for token holders.
Example: The High Yield ETH Index (hyETH) will provide diversified exposure to ETH yield strategies that outperform the staking rate by +3% or more. hyETH will rebalance on a monthly basis to ensure the most relevant strategies are reflected in the index.
Composition
Prompt: Outline the assets or positions to be included in the initial composition; include weights, dependent protocols, and other critical variables (ex. APY, TVL)
Example:
| Symbol | Name | Protocol | APY (30d) | Weight |
|---|---|---|---|---|
| METH | Mantle Staked ETH | Mantle | 7.07% | 20% |
| PT-weETH | Pendle EtherFi PT | Pendle | 29.65% | 20% |
| PT-RSETH | Pendle EtherFi PT | Pendle | 27.48% | 20% |
| iETH | Instadapp ETH V2 | Instadapp | 7.45% | 20% |
| YieldETH | Sommelier Real Yield ETH | Sommelier | 13.39% | 20% |
| Totals: | 16.20% | 100% |
Methodology
Prompt: define the overall objective of the methodology, the inclusion criteria, how weights are determined, and what the rebalancing cadence is.
Example: The goal of hyETH is to target yield opportunities for ETH that exceed the staking rate. To be included, strategies must have the following attributes:
- Must be listed on DeFi Llama Yield Rankings denominated in ETH, available on Ethereum mainnet, and have the attribute of no IL
- Strategies must have a 30d APY that is at least 300 bp higher than the backward-looking APR of dsETH
- Strategies must not have locking mechanisms or caps
- Strategies with fixed terms must have a minimum maturity of three months
- Strategies must have at least $25m in TVL
- Strategies must be ERC-20 or ERC-4626 and compliant with Index Protocol
- Strategies must not require additional engineering work for compounding incentives
- Protocols underpinning these strategies must be open-source
- Protocols underpinning these strategies must have publicized audits
The composition will be the top five strategies ordered by TVL that meet these criteria; included strategies will be weighted equally. hyETH will be rebalanced monthly to ensure the most current and congruent strategies are reflected in the composition.
Description
Value Proposition
Prompt: In ~200 words, identify the customer problems or needs that this product may address. Map each problem or need to a clear solution that the product will provide. Focus on benefits to the customer, not features of the product.
Example: The staking rate for ETH is often called the “risk-free rate” in DeFi, but opportunities oftenv offer higher returns with higher risk, which is appealing to many users. Most of these opportunities exist on Ethereum, requiring much research and capital to diversify and maintain these strategies. A structured product that allocates to the best-performing yield strategies with the highest TVL is valuable because it allows users on Ethereum and L2s to access a repricing token via a swap. hyETH will offer diversity, high yield, and low entry/exit costs. And, as an ERC20 token, it will be composable within DeFi and portable across the L2 ecosystem.
Target Users
Prompt: identify the target user(s) for the product. Explain what unique value the product provides for each target customer type, and cite customer or market research wherever possible.
Example:
Agile Crypto Funds: Input from DeFi fund allocators points to potential enthusiasm for an automatically rebalancing high-yield ETH product. This product can be held for an extended period and will reprice, providing some administrative simplicity.
Small On-Chain Users: This product is designed for small on-chain users who are long ETH and want to earn yield. Like icETH, which was very popular with modest-size ETH bulls, this product will make the high-yield, gas-intensive strategies accessible to the everyday DeFi user.
Large On-Chain Users (Whales and Treasuries): While some DAO Treasuries hold only USD-denominated assets, many also have ETH and are looking for productive ways to allocate that ETH. Due to the slow governance process, it is easier to allocate to a single token that provides diversity and monthly rebalancing. A token also allows whales to allocate to multiple strategies via a single token without needing to constantly research and update their positions, which in many cases is gas-intensive even for high net-worth individuals.
Competition
Prompt: Identify the closest alternatives that solve the same customer problems. Define how this product might differentiate itself from competitors.
Example:
| Alternative | TVL | APY | Differentiation |
|---|---|---|---|
| Origin Ether | $166.2m | 4.64% | Higher APY, more protocol/strategy diversity |
| Sommelier multi-strat ETH vault | $55.87m | 10.69% | Higher APY, more protocol/strategy diversity |
| Yearn yvWETH | $128.8m | 1.77% | Higher APY, more protocol/strategy diversity |
Distribution
Prompt: identify the most relevant distribution channels for the target users in scope; assign priority based on relevance. Focus on where the tokens can be accessed, not necessarily marketing or communication channels.
Example:
Operation
Prompt: define expected behavior for issuance, redemption, reweighting, and rebalancing; this section should cleanly transfer over to a Product Requirements Document (PRD).
Example: hyETH should have flash mint support at launch, enabling seamless issuance and redemption of hyETH in exchange for ETH, WETH, stETH, and USDC.
Auction rebalancing should occur on a monthly basis in tandem with decentralized reweighting via UMA’s optimistic oracle.
Economics
Prompt: focus on the costs to the customer (i.e. streaming, mint, redeem fees) and costs covered by the Index Coop (i.e. gas during rebalancing); product profitability projections are not required
| Streaming Fee (annualized): | 0.95% |
|---|---|
| Issuance Fee: | 0.10% |
| Redemption Fee: | 0.10% |
| Operational Gas Costs: | covered by Index Coop |
Please note: product holders may pay separate fees on the underlying strategies
Pre-sale Details
Prompt: provide all relevant details for the pre-sale process, including length of the pre-sale, deposit threshold for success, and any incentives that may apply.
Example:
Participants may deposit wstETH into the hyETH token once the pre-sale period begins. If the target threshold is met, deposits will be rebalanced into the initial composition. Formal product launch will occur 30 days after the pre-sale successfully closes, at which point anyone can issue, redeem, or swap for the product. hyETH product revenue tokens (PRTs) will also be distributed to pre-sale participants after formal product launch.
If the target threshold is not met at the end of the pre-sale period, depositors may withdraw their funds with no fee; however, during the 30 day pre-sale period and subsequent 30 day pre-launch period, early withdrawals will be subject to a 10% fee. In the case of an unsuccessful pre-sale, $INDEX incentives will be distributed pro-rata to depositors to compensate for their support and opportunity cost.