Request for Discussion: Methodologist Accelerator Program

Title: Request for Discussion: Methodologist Accelerator Program
Authors: @Thomas_Hepner
Created: 8/3/2021

“Show me the incentives and I will show you the outcome.” - Charlie Munger

The goal of this forum post is to receive community feedback and consensus around a proposed alternative model of incentivizing and compensating Methodologists that aligns the interests of all INDEX tokenholders and stakeholders.

Full Disclosure: I am a member of Titans of Data, the DAO that has proposed the Data Economy Index (DATA).


  • Name: Methodologist Accelerator Program.

  • Goal: Align the economic interests of INDEX tokenholders with Methodologists to drive long-term value creation.

  • Principle: Methodologists are only rewarded for generating Unincentivized Revenue for the Community Treasury.

  • Proposal: The Community Treasury invests in new products launched through Index Coop. Through the Methodologist Accelerator Program, new products launched by Methodologists unlock successive investment (i.e. INDEX rewards) from the Community Treasury for achieving Unincentivized Revenue milestones.

  • Key Results:
    1. More New Products & Methodologists: The program incentivizes the creation and ongoing development of many new products by External Methodologists.

    2. Value Accrual to Community Treasury: The USD value of INDEX held by the Community Treasury increases by ~10x more than the cost of the Methodologist Accelerator Program so that the program can be sustained indefinitely for all future products and methodologists.

What is the goal of the existing Index Methodology Bounty Program?

Index Methodologists are data providers which publish research and data on compelling Index strategies.” - Index Coop Community Handwork

The goal of the Methodologist Program was stated to:

“…to attract and reward index methologists a share of emitted tokens based on the success of their indices.” - Introducing the Index Cooperative

In the first 8 months of the 18 month program, over 98% of the program’s rewards have gone to DeFi Pulse and only two additional External Methodologists have been onboarded thus far (Bankless launched the BED index on 7/22 and CoinShares CGI was deprecated).

Early in the Coop’s history, many community members expressed reservations here, here, and in many other venues before the start of the program. DeFi Pulse is the only External Methodologist that has earned rewards from the program.

It is now abundantly clear that the program has failed to achieve its publicly stated goal of attracting and rewarding Methodologists.

Let me be clear - the intention of this proposal is NOT to renege on the Coop’s commitment to Honor the Methodologist Program. In June, DeFi Pulse products accounted for ~98.5% of the Index Cooperative’s revenue. I am NOT proposing any change to the existing Methodologist Program that would adversely impact DeFi Pulse, the Index Coop’s most important Methodologist partner.

I am proposing a new, alternative program, the Methodologist Accelerator Program, that all Methodologists, including DeFi Pulse, may choose to opt-in to, for both existing and future products.

Important Reference Points:

  • Existing Program: A Methodologist launching a simple index product with the standard 95 bps streaming fee at a 30% fee split would need ~$20m in TVL for the remainder of the program to earn as much in annual fees as the income of 2 Community Methodologists supporting a product at Index Coop’s current revenue levels.

    For additional context, DeFi Pulse earned ~166,667 INDEX, or ~41,666 INDEX per month in the first 4 months of the program, when DPI was the Index Coop’s only launched product. DeFi Pulse introduced ETH2x-FLI in mid-March, and by June the product was generating ~55% of the Index Coop’s revenue compared to ~38% for DPI. Despite more than doubling the Coop’s revenue without using additional liquidity mining rewards, DeFi Pulse earned less INDEX tokens per month from the Methodologist program because MVI was ~1.6% of revenue from April through June. The program isn’t even properly rewarding DeFi Pulse for introducing new, profitable products to the Index Coop!

  • After Program Expiration: A Methodologist launching a simple index product with the standard 95 bps streaming fee at a 30% fee split would need $163m in TVL to earn as much in annual revenue as the income of 2 Community Methodologists supporting a product. This is unreasonable, even DPI, the Index Coop’s flagship simple index product, currently has ~$138m in TVL.

We must improve the incentives for External Methodologists if we want them as first-class partners in the Index Cooperative.

What is the principle for the proposed Methodologist Accelerator Program?

Methodologists are only rewarded for generating Unincentivized Revenue.

This principle aligns the economic interests of INDEX tokenholders and other stakeholders with Methodologists to drive long-term value creation.

Desired Outcomes

  1. Reduce Expenses: Methodologists are incentivized to grow TVL and revenue of their index products using the minimum required resources from the Index Cooperative. Costly and unprofitable programs like liquidity mining incentives are discouraged and used strategically and sparingly at the Community’s discretion.

  2. Better and Faster Product Onboarding:

    • Reduced Urgency: Methodologists feel less urgency to get their products out the door as quickly as possible at the expense of other Community priorities.

    • Simpler Negotiations: Negotiations are more objective, reducing the time during the product onboarding process from DG1 to DG2.

    • More Products: Many new Methodologists and new products can be onboarded at minimum financial cost to the Community Treasury.

  3. Experimentation with New Revenue Models: Methodologists will be incentivized to experiment with new revenue models to increase the unincentivized revenue of their products.

  4. Decentralized Governance: INDEX is distributed to a wider array of stakeholders and partners.

  5. Increased Value for INDEX tokenholders: Increased revenues and profits are returned directly to the Community Treasury.

Proposed Specifications

  1. Fee Split: Builds on the Methodologist Fee Menu, but excludes liquidity mining incentives as part of the criteria.

Fee split

The minimum score available to a methodologist is 0.5 and a maximum score is 3. Each 0.25 increase in the score corresponds to a 5% change in the fee arrangement.

  • Score 0.50 - fee split 70% Index Coop & 30% methodologist
  • Score 1.00 - fee split 60% Index Coop & 40% methodologist
  • Score 2.00 - fee split 50% Index Coop & 50% methodologist
  • Score 3.00 - fee split 40% Index Coop & 60% methodologist
  1. Methodologist Accelerator Program Framework:

    • Removed from Existing Methodologist Program: The product cannot be included in both the pre-existing program and the Accelerator Program. The product is opted-out of the existing Methodologist Program. The product’s revenue is not included in the Methodologist Program calculations for rewards so that existing partners (i.e. DeFi Pulse and Bankless) are not negatively impacted by the Accelerator Program.

    • Products that have used or plan to use Liquidity Mining Incentives are ineligible for the Program. DPI and MVI are ineligible for the the program, but ETH2x-FLI, BTC2x-FLI, and BED would all be eligible for the program.

    • Accessible to all Existing Partners: Existing External Methodologists (DeFi Pulse and Bankless) will be able to participate in the program with both current and future products .

    • New INDEX Rewards Framework: A new INDEX rewards structure that awards INDEX tokens based on USD value relative to the Unincentivized Revenue created for the Index Community Treasury in the trailing twelve months.


  • Rewards are based on USD value and awarded via equivalent market value of INDEX tokens when unincentivized revenue milestones are reached.

  • Unincentivized Revenue is only the unincentivized revenue collected by the Community Treasury; fee revenue earned by the Methodologist is excluded.

  • Each product can only participate in the Methodologist Accelerator Program one-time; it is not an ongoing program. It is intended to accelerate growth and development of new products launched by the Index Cooperative in collaboration with External Methodologist partners.

Frequently Asked Questions

  1. Why use unincentivized revenue (TTM)? Why not use TVL or just revenue?

    The existing Methodologist Program incentives Methodologists to extract resources from the Index Cooperative. Calculating unincentivized revenue over the trailing twelve months locks in Methodologists as long-term partners and disincentives behaviors like providing short bursts of TVL to quickly earn INDEX tokens that are not representative of market success.

    Under the existing program, the Index Coop pays INDEX for liquidity mining incentives that boost revenue of a particular Methodologist’s product, which increases their share of Methodologist Program rewards. Under this incentive structure, the Index Coop is effectively paying the Methodologist twice!

    Unincentivized revenue disincentives Methodologists from requesting liquidity mining rewards to boost the TVL and revenue of their products.

    It is a closer metric to Gross Profit (i.e. Revenue - Cost of Sales) generated for the Community Treasury than TVL or Revenue alone.

  2. Isn’t this program expensive? Won’t it deplete the INDEX from the Community Treasury?

    The program is designed so that the USD value of the INDEX held by the Community Treasury increases by ~10x more than the cost of the Methodologist Accelerator Program. Rewards are calculated in USD and distributed in INDEX so that the program can be sustained indefinitely by the Community Treasury for all new products and methodologists.

    Based on June revenues, Index Cooperative’s Community Treasury generates ~$2.3 million in annual revenues. The fully-diluted value of INDEX tokens is >$250 million, implying that INDEX tokens trades at ~120x total product revenue.

    Assuming a 100x revenue multipler, a $100m TVL product generates $50 million worth of market capitalization to INDEX tokenholders at a cost of $5 million in Methodologist incentives, resulting in a net benefit of $45 million to INDEX tokenholders. Assuming a conservative 25x revenue multiplier still results in $7.5 million net benefit to INDEX tokenholders.

  3. Isn’t this program risky? Won’t it cost the Index Coop a lot of money if a new product fails?

    This is actually the beauty of the proposal.

    The Index Coop does not pay any INDEX tokens to a Methodologist unless their product reaches unincentivized revenue milestones that indicate there is strong product-market fit and a path to long-term profitability.

    If a product fails to achieve $25k in unincentivized annual revenue for the Coop, then the program has cost INDEX tokenholders nothing more than the time and effort that went into onboarding and launching the product.

  4. Should there be a new product launch bonus for Methodologists?

    Methodologists go through a lengthy onboarding and vetting process to launch their products. With this proposal, it would likely take at least 1 year to earn the first INDEX reward (~$250,000). A launch bonus could be analogous to a “seed round” from an Angel investor or Startup Accelerator, or to the salaries Community Methodologists receive, to create and develop the index product before achieving its first revenue milestone.


@BigSky7 @verto0912 @fallow8 @Matthew_Graham @jdcook

I am requesting your comment and feedback to make this proposal better. All of you expressed interest, or at least opinions on the topic, in mine and @Kiba Data Economy Index: Forward to DG2! post.


I’ll be straight up honest here, I have zero appetite for adding additional cost on top of the existing methodologist allocation. Period.

7.5% of total supply to methodologist is sufficient. If the entire methodologist program can be restructured, then you have my ear. If any additional cost to the community is put forward, I am dead against that. A methodologist trying to position their product to benefit from an alternative system doesn’t sit well with me. So, instantly I am on the back foot based on the proposals origins.

If I am perfectly honest here, the streaming fees alone should be a sufficient incentive to partner with the Index Coop community. The Index Coop community is the moat that can not be forked. Products are more successful with Index Coop as a partner because of the community that is Index Coop. DATA will be more successful with Index Coop and I believe Index Coop can grow the pie significantly larger than other partners could. This means the streaming fees nominal USD value going to the methodologist is larger than it otherwise would. If the streaming fees are enough, then please see the methodologist program as cream with a cherry on top.

I understand the current system means new products need more AUM to receive the same reward as those that created AUM earlier in Index Coops life time. But if we want to consider a proposal linking contributor rewards to early value add tasks, (ref different forum post) then methodologist that added early value which enabled the Index Coop to become the reputable partner it is today are due higher rewards.

Also, by linking the bonus like program to un-incentivised supply seems rational at first glance. But this approach is somewhat front running a community lead direction which is to move away from liquidity mining. I feel the community is heading in a direction to eliminate inefficient incentivises anyway.


100% echo these thoughts.

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Thanks for giving your feedback, @Matthew_Graham - I hope you will join the DATA Community call today to discuss further!

@Matthew_Graham I think this perspective is "penny wise and pound foolish". The Methodologist Accelerator program is constructed to increase the market capitalization of INDEX by ~10x more than the cost of the program. The Index Coop community is now closely examining costs, but not return on investment (ROI). This proposal is oriented towards maximizing ROI, not minimizing costs. Index Cooperative is a startup and should be focused on maximizing ROI for tokenholders.

I would agree with you if every product launched with $100m+ in TVL at no cost to the Index Coop or Methodologist. That is simply not the case. The implicit assumption here is that Methodologists are handling their own startup financing before a product is self-sustaining profitably by doing the following:

  1. Becoming a community methodologist
  2. self-financing,
  3. creating a company to sell equity to investors
  4. creating a DAO with tokens that given tokenholders rights to future streaming fees.

I’d argue Index Cooperative has already done #4 so the Methodologist Accelerator Program is simply making Index Coop a co-investor alongside the Methodologist in the product.

This is a sunk cost. It is not incentivizing Methodologists and the program will not even exist in 10 months. We should be focused on making decisions and building a foundation for future growth, not dwell on past mistakes or decisions.

The intention is not to “front-run” a community led direction, but respond and build upon the community’s new thinking around incentives. The Methodologist Accelerator Program was built on the understanding that BED was not supported with INDEX liquidity mining rewards and DATA is not expected to be supported with them etiher.

This sunk cost mentality is why the easy route is for a methodologist to write their own incentive program.

The person with Index Coop’s interest at heart is looking at how to optimise what is left of the 7.5% allocated to methodologists, rather than calving our a new system. Or perhaps no action is needed. Again, look at the origins from which this forum post originated.

I really detest this framing. I think we will reflect on Q3’s transition to a more capital efficient community. Units in circulation are growing and the unit cost base MoM is falling. Unit supply seems correlated with market sentiment more so than anything else atm and that makes sense given our products create value in up cycles.

Pound Smart was winding back on Liquidity Mining when all the data suggested it was not adding on chain liquidity nor leading to increasing circulating supply for DPI. Do you think otherwise ?

I don’t think additional benefits to streaming fee revenue is the difference between 10x or not. There is a case to be made that anyone with a good idea, that is passionate about their idea, will feel blessed to work with Index Coop when there are zero additional incentives. I come back to my earlier point, the portion of the pie that the methodologist receives is larger with Index Coop than without. This is sufficient profit driven incentive enough.

@Matthew_Graham Please attend the Community Call in 20 minutes! We really want to discuss this proposal with you and make it something that doesn’t just benefit Titans of Data, but benefits the entire Index Coop community from tokenholders to new Methodologists. We would love to hear your feedback and listen to your concerns there. :smiley:

My intention is not to “take a pound of flesh” from the Index Coop. It’s really that we want to be External Methodologists and the current program doesn’t work for us. If anything, it incentivizes us to be Community Methodologists and that is not our goal.

We really want to launch DATA with the Coop and no one was taking action on getting the incentives right (at least not publicly) so I decided to take a stab at it and get community feedback and consensus around it by posting my ideas publicly for community discussion.

I think there’s a misconception that there is a “community methodologist” role available.

I might be misunderstanding, but my perception is DFC and Verto were chosen as FTEs who happened to be proposing a methodology, and that is why there is this (albeit awkward) arrangement.

My understanding is a “community methodologist” gets a portion of a fee split, and I could perhaps see them earning a stipend for maintenance, but they shouldn’t, in all or most cases, have an expectation of DFC and Verto’s package.


When I first saw the title of this thread… Methodologies Accelerator Program; my immediate thought would be something similar to how a the startup scene kind of Incubator/Accelerator program.

Where by its to cater and help budding methodologies or those who’s interested in being one, goes through a program that teaches the best practices of being a methodologies and with the guidance from IndexCoop and as a graduation from the program; the participants will either able to propose an Index Product (which the graduate will be park as a Community Methodologies).

And if it’s for External Parties proposing an Index Product, personal it should go through the rigorous vetting and process of getting a buyin from the community itself. Hmm.

I personally would love the above idea (my initial assumption) of an Accelerator program for our communities aspiring to be a Methodologies. Where one of the things I want to learn and grow is by being a Methodologies myself or at least learn it’s fundamentals. Or maybe I’m wrong in my assumption.

Eitherway I’m still learning and reading all this technicality and the intricacies of this aspect of the Coop. As I do have an Index Product I have in mind. But would need help… :sweat_smile:

Anyways apologies if my post seems naive. :joy: just an Owl wishing to understand more. Hehehe. Cheers~

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Thank you for the thoughtful comment!

That is definitely what I wanted to evoke in your mind when titling the post!

If you have an idea or need guidance, always happy to share feedback or give you insight based on my experience with the Index Coop onboarding process so far. Please feel to DM me on Discord!

This comment confused me - I am not sure if this is true or not? Maybe @DarkForestCapital or @verto0912 can clarify?

My understanding about the Community Methodologist Role comes from this forum post: Re-introducing the Community Methodologist Role

Yeah I’m not sure where LA’s comment comes from but the community methodologist role is not exclusive to me and Verto, and could be used as a basis for an evolution. Perhaps it’s seen as awkward though and we should use this conversation to overhaul the entire methodologist comp.

To clarify, as it stands now the Coop gets 100% of fees and methodologist bounty from MVI. We get 5k/month plus the 0.15% over 2 years with 6 month cliff, plus the AUM bonuses as set out in the post you linked Thomas. For that we have been contributing across a number of areas in the Coop and managing MVI.