This product is a massive improvement on existing strategies. An exchange traded token that enables the holder to quickly enter and exit positions fills a massive consumer need. They do this in the following way.
Money market funds need to be highly liquid. Token holders maintain liquidity to ensure against liquidity crunches or market crashes. Current solutions force the token holder to take multiple steps to unlock their liquidity. SYI is extremely flexible and gives token holders instant liquidity without having to enter and exit vaults.
Venue for taking profits. Right now if I want to take profits and have those profits remain liquid enough for me to quickly re-enter the market (ie not deposited in a vault) I am constrained to holding pure stable coins. This product gives traders a clear option for taking profits, continuing to earn yield, and maintaining liquidity.
IMHO the customer is any crypto user / organization that wants to maintain liquidity while holding a yield bearing asset. Guarding against liquidity shocks is fundamental for any sustainable portfolio.
If this product was on the market today I would immediately place 20% of my net worth in it. Optimized stable coin yields is an absolute must have in the market right now. Products like SYI and SDI fit an immediate needs within DeFi. @verto0912 has been talking alot about expanding our indices offerings to more products that offer downside protection - in my eyes this is the perfect starting point.
On a final note, this is the perfect product for us to work through many of the intrinsic productivity problems our community has been grappling with for the past 9 months - we don’t have to worry about governance or constant rebalances. This will be one of our flagship product and a perfect fit to introduce our customers to the power of intrinsic productivity.
I agree with @BigSky7. In traditional investing, bond funds looking yield have a giant demand. Creating a product that will provide 10%-12% with very little market risk can open doors that traditional defi products can’t.
When on chain asset management really gets going, products like SYI will become backbones of optimized portfolios.
I agree with @BigSky7 latest post here. The potential for this index product is huge across so many user types; it’s a product for diversification and down cycles (h/t @verto0912) - which the industry desperately needs; and it’s a big motivator to make us solve the intrinsic productivity stuff we often talk about but don’t do much about (yet).
To me, this index product makes most sense for us to launch right now while we build out the FLI family.
What about building a forward looking tracker / voting tool using Google Sheet/other to see where the Coop thinks we should focus not just at a point in time but over a 3-6 month period?
We tend to launch products at local tops. The reason for that, imho, is that we only launch products in response to hype which, in turn, is driven by price. By the time we respond to the hype with a product we are usually at the market top.
What I’m trying to say is that we are not proactive and forward looking with product launches. There’s no doubt in my mind that there’s significant DAO demand for SYI-style product. DAOs just started looking at Treasury diversification. Just like it takes institutions 3 to 6 months to allocate to BTC, it will take DAOs 3-6 months to figure out their action plan in regards to diversification. Many will run into the same problems we are running into ie having to find OTC deals for initial diversification.
The point is that the demand is more or less inevitable. It’s best that we already have a product when that demand manifests itself.
I also think there’s retail demand here but that’s less relevant. Although just looking at vault and yield-focused stablecoin products the market opportunity is rather clear.
I fully agree with everything. I’ve been looking for such a product for weeks now. Yearn as a lot of confusing products, mUSD is quite good but not super clear neither. You want something diversified (in term of underlying stablecoins, in term of protocols aava vs Compound), easy to understand and with low risk. Index is also a good brand.
For the name/ticker, Money Market Fund (or Index) / MMF is probably clearer to institutions if they are the main target.
Hi @Matthew_Graham , super interesting and useful competitive analysis for both SYI vs YLA and SYI vs imUSD
Regarding this part:
I am not sure we can say YLA is income-generating while SYI would be auto-compounding NAV. From what I understand, YLA is actually also auto-compounding NAV, by being composed of LP tokens themselves auto-compounding NAV. The only part which is “external” yield generating is the additional APY programs (sushi and CVP).
This is a cool idea and a space that Index Coop should be in. I still think we need to have a really clear differentiation with competing products out there.
There has been comparisons to YLA and mStable, i think another one to look at is the stable yield pool from Rari Capital. That pool allocates stablecoins across different external protocols (aave, compound, dydx, mStable) but also started to allocate stablecoins in their own money market pools (called Fuse) today.
What would differentiate SYI from something like the above? Admittedly this is outside my expertise so I don’t have an answer to this. As a user, I think having a clear product differentiator will help me decide why I should invest in SYI, vs going for the alternatives with the highest APY.
Below are two charts that reflect the possible configuration of SYI. I am looking at the different variations to see what affect it has on the appreciation of SYI over time. Also having flexibility horizontally within the tranches allows for greater diversification and can make rebalancing a bit easier.
Key Take Aways:
Estimated yield generated by passively holding individual components is around 18-20%
** No Compounding
** No Fee Structure TBA post DG1 ie: fees need to deducted
** Yield is time stamped time, 24th April, and changes with markets conditions
3 Risk Tranches - 4 Assets in each tranche - ROI 19.65% w/out compounding or fees
Hey @Matthew_Graham & @puniaviision - following up on @fallow8’s question - it seems like the large sentiment for the community is that this is a huge opportunity and should be prioritized. I know there have been a lot of conversations between y’all as you have been trying to work out the mechanics behind SYI - is it possible to get an update on where exactly SYI is in the product adoption process? Are we close to DG1? What is still being worked on? Are there any ways the community can help here?
SYI has seemingly been in the same state (in the eyes of the forum) for a long time, although I know a lot of work has been done on the background - I think it would be helpful for the community to get clarity on the questions above! Incredible work on this @Matthew_Graham
I want to echo everyone’s sentiment here- this product is an absolute must launch for us. The longer we wait to launch a yield earning money market fund the sooner our competitors will. Every single protocol in this space is laser focused on optimizing stable coin yields.
In the last few weeks alone we have heard from numerious DAO treasuries highlighting their desire for a product like this. Our products are quickly becoming the cornerstone for managing risk within - while many of our products are optimized for a bull market - we need to start building assets that will hold through a bear market. $SYI is the perfect example of the kind of products that we need to be focusing on.
We need to move $SYI to DG1 - we need to get it passed - and we need to get it launched!
Hey guys, we’re planning on starting off the governance process next week so its coming up!
For context, the fundamental struggle with new products right now is how they are prioritized against the FLI suite which we are not only trying to expand, but also to make more scalable and safe.
It’s great to see everyone excitement about the SYI on this thread, but it is still unclear if the SYI hits the target customers that are necessary for successful products at this point in the technological adoption curve (at least relative to our other products). As we’ve seen with the FLI and DPI, our most successful products have really strong appeal to the whale and sophisticated trader demographic.
We may be able to hit that demographic with DAOs regarding the SYI. So far we’ve heard low 7-figure long term commitments for 2 DAOs which is not enough to prioritize immediately.
The bar has been raised significantly over the past few months. Every time we launch a product that isn’t a huge hit, we’re taking away time from another product that could have been.
@Matthew_Graham and I are working on reducing this risk by exploring non-Set engineering resources to get it launched and, if we are able to do so, we can get this out way faster.