The Owlbserver : distilled insights on Index competitors - 2022.02.11 Friday

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Dear owls,

This week makes no exception compared to the last editions of the Owlbserver, with looooots of interesting developments to report in our sector of the crypto industry.

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In a nutshell

→ Scalara, Pulse Inc.'s newly unveiled branding, are launching an NFT Index on Kuiper Finance that also leverages NFTX’s inventory staking functionality to earn yield on floor NFT’s. The index is not available for investing as yet.

→ Amun have launched $SOLI, a Solana Ecosystem Index Token via an IDO on Starlaunch (one of Solana’s IDO launchpads) and an initial trading offering on Raydium.

→ 2 proposals have passed on Cook Finance’s governance forum, both aiming to remove tokens emitted by Wonderland from their Avalanche ecosystem indices after the latest controversy on the project’s CFO identity.

→ We touched on PieDAO’s Product Refinement Initiative last week with the deprecation of their DeFi+S and DeFi+L indices. It turns out they are also considering deprecating their Yearn Finance Ecosystem index $YPIE.

→ The Galleon DAO / Beverage Finance partnership launched the SOLUNAVAX index on Optimisim, leveraging the Perpetual Protocol integration simultaneously unveiled by Set. The index bundles 3 single perpetual positions on $SOL, $LUNA & $AVAX with a target leverage ratio of 1.0. AUM 72h after launch is around 42,5k$.

→ IndexZoo, one of the youngest multichain index protocols (still in so-called “demo-mode”), have partnered with Acala to launch a Polkadot Ecosystem Index as well as leveraged tokens (3x) for $DOT & $ACA.

Acala is an Ethereum-compatible DeFi hub in the Polkadot ecosystem. IndexZoo araguably have plans to deploy on multiple different L1’s and support native ecosystem indices (Polygon, Near, Avalanche, BSC).

This week’s insight

Talking about multichain, this week I’ve tried to pull out a few social and development metrics from Santiment in order to dissect to which L1 projects both crowd and developers are currently turning their attention.

Below is the evolution of Ethereum’s social dominance compared to the main L1 tokens since last year. This is practically the share (%) of a coin’s mentions on crypto-related social media, compared to a pool of the most talked-about projects online.

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While Ethereum generally dominates the crypto social chatter, and besides the different phases of hype surrounding the year, it is interesting to notice how BNB’s share is progressively increasing since Oct / Nov '21. Note that this metric will reflect the exposition of Binance both as an exchange and an L1 project.

And now onto development activity : this shows a project’s development activity over time based on the number of pure development-related events, for example Github repository updates.

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The data collected by Santiment for the month of Oct’21 were corrupted.

Interestingly though, SOL is currently clearly leading the pack, ahead of DOT then ETH and NEAR while the development activity on BNB seems paradoxically very low. It will be interesting to continue monitoring how both of these rankings evolve in the coming months.

That’s it for now, I hope you enjoyed this week’s reading, and look forward to any questions or comments !

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Monportefeuille - great report, I am adding this to my weekly reading list, and I went back and read your prior reports. Great stuff. Do you have a comprehensive list of IndexCoop competitors? merci beaucoup!

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Thanks for doing this. Its really helpful. It will be great to have a simple AUM comparison across competitors to see where we stand and potentially filter out which new products are gaining tractions.

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Thank you so much for your feedback, this + a good WE give a lot of energy to keep doing even better ! :wink:

I can certainly build a sort of database that will also be useful to follow AUM across competitors, as suggested by @Lucius below. Even though DeFiLlama have a pretty comprehensive list these data are still fragmented across blockchains / protocols at the moment.

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Thanks a lot for your positive feedback ! Will try to work on something simple as you and @shawn16400 suggested above :wink:

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Just discovered this is great report thank you @Monportefeuille this is on my to read list too, is this promoted in Scoop @coolhorsegirl?

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This is a great idea. I tend to go overboard on metrics and scorecards, but I could see this AUM chart over time as a method of tracking marketshare - if we don’t already have a function for that.

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Speaking candidly, I think benchmarking against other DeFI index protocols is not nearly ambitious enough and is a very bad idea. Our competitors in the next few years will be BlackRock, JPM, and Vanguard and not a neighborhood defi protocol. Also, our focus should be on growing the market as opposed to capturing market share from small AUM projects. Following on Bigsky’s comments in today’s stand-up we should be benchmarking against defi generally or tradfi crypto indexes. Index Coop has an enormous opportunity if it chooses to go for it.

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Actually, that is in interesting comparison. Blackrock was founded in 1988 and has $9T in AUM. So, in year 2 we should be at about $500Bn. Ok, that analysis might need some work. : )

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I strongly disagree @JosephKnecht. Of course our long term vision should be the one you describe.

But as @BigSky7 also pointed out, we need to stay humble enough and acknowledge how early we still are. Personally, the more I look at what’s going on in our neighborhood, the more I’m worried that the approach you describe is paradoxically too short-sighted.

Some of these newer / smaller protocols are already delivering yield-bearing incides, NFT indices, alt L1 indices, smart beta indices to focus only on products.

I don’t think the point is to capture their actual market share, but rather that the earlier we’re able to detect how much traction they generate, the longer we can safeguard our own competitive advantage.

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I think we can certainly look to these smaller protocols for ideas, inspiration and sources of innovation but AUM is not the name of that game.

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Agreed. We’ve consistently made this point in IB since last spring: while we are unquestionably the on-chain leader, that space is small. The real competitive threat is off-chain because they have existing distribution. Distribution is everything.

I disagree with the either/or framing. We must be #1 on-chain and use that to drive a burgeoning narrative about how DeFi products are at least positively differentiated if not outright superior when it comes to purchasing digital assets, relative to TradFi vehicles. And we should also be thinking of a hybrid strategy that bridges our products into traditional vehicles that many buyers are more used to.

And part of how we do both is to have competitive intel (ie, posts like these) in what the on-chain competition is doing, so we’re always mindful of best practices and new innovation.

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I agree with Joseph and Mike. We should be comparing ourselves to Index providers in general. I’d also argue that Yearn and the like are also competitors we should be tracking. Any product that takes our place in an investor’s portfolio is our competitor.

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