The road to 1% -

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Or some more random thoughts for @overanalyser

The Secret Master plan proposes a target of getting a single set (DPI) to $50 M AUM.

I don’t like this goal, it sets an arbitrary value while ignoring the wider market valuation, something that we have little influence over.

So, I would like to propose a new Target: 1%

Doesn’t sound very ambitious does it?

OK, how about: INDEX coop $DPI will sustainably control 1% of the market

So, $DPI will control 1% of the circulating tokens that make up DPI, so:

  • 300 TFI,
  • 10,000,000 UNI,
  • 10,000 MKR etc.
  • And I want to do it without needing liquidity mining to maintain the 1% share AUM.

At the moment, DPI is ~$13M and is ~ 0.3% of the available Market cap. If you look at Etherscan, you can see 99 SYFI sitting there with all their DeFI friends. :smiley:
For comparison, in 2017 Vanguard manged 6% of the S&P 500.

Why do I say without liquidity mining to maintain it? Because Liquidity mining is borrowing from our future to build our reputation and AUM. This in unsustainable if we keep going we are out of INDEX by Christmas 2021. The current INDEX mining is issuing 15,000 INDEX per day, ~ $45,000 per day.

So we need to generate cash flow and build with that. $50 M AUM at 0.95% streaming fee is $475 k pa, or $1,300 per day. If we have all 10 M $INDEX in circulation, that is $0.05 per INDEX per year…

So, my suggestion for a road map:

0 to 0.1% (Sustainable) - Completed by Set Labs in September

  1. Launch DPI
  2. Launch $INDEX
  3. Launch Website / discord / discourse

0.1 to 0.5 % (Unsustainable - supported by INDEX inflation) - We are here for another 50 days

  1. Build a community (inc. memes?)
  2. Create an ecosystem (new website?, reference documents?, customer guides?)
  3. Think about our vision
  4. Identify key customers groups / partners / stakeholders
  5. Build bridges with other protocols and exchanges
  6. Build a treasury (currently $340 per day income…)
  7. Minimise expenditure ($INDEX and treasury)
  8. Consider long term LP incentives (can we divert treasury to Uniwasp pool to incentivise LPs?)
  9. Experiment with new revenue streams (50% of the current 99 YFI staked in Yearn governance would yield ~$200 per day)
  10. Delegate some of our governance rights in other protocol to trusted parties (build trust with the DeFi protocols within DPI)
  11. Think about future index launches - burn resources (Time and $INDEX) to launch more Sets quickly, or focus on $DPI growth
  12. Do we taper off the $INDEX rewards for LP’s and let them drift away as farming yields taper?
  13. We could increase the streaming fee to generate more income, 90% of DPI are being farmed, so they will likely be insensitive to a 2% fee. However, we hurt long term holders who don’t farm (a key long term customer)
  14. Establish a track record of securing high AUM.

0.1 to 0.5 % (no INDEX issuance / inflation - “Winter is coming”) - Mid December 2020 until ?

  1. Weather the shock of $DPI AUM cliff when liquidity mining stops.
  2. Try to live off treasury fees (likely <300 / day streaming fees)
  3. Experiment with LP incentives
  4. Experiment with new revenue streams - more staking, yVaults, cTokens, aTokens
  5. Experiment with holder incentives (can we reduce streaming fees to 0, and survive off other income? How good would a 1% annual rebate for all $DPI holders be as a marketing tool "Buy $DPI and your holding will grow with no effort".
  6. Build our community and network effects - get $DPI built into others protocols.
  7. Start using our governance tokens held in the DPI to collaborate and grow the protocols within $DPI. (0.5% of circulating YFI can help build a relationship to get a yDPI vault, similar with MakerDOA.)

0.5 to 1.0 % (Sustainable growth) - ? to ??

  1. This is when we start to start seeing the results of our work during the winter - Growth without INDEX insurance - we are living from our fees.
  2. Build our community and network
  3. Consider INDEX treasury - do we need mint keys, do we need un-issued $INDEX?
  4. Consider tokenomics - staking to reward long term holders / pull INDEX off exchanges, or buyback and burn?

1.0% DeFi AUM without INDEX issuance ???

  1. Party all over Social Media :smiley:
  2. "Release the Memes"
  3. Roadmap for 10%…
  4. Allocate a fraction treasure to public goods -(gitcoin grants matching funds)

We have a fantastic start with $DPI as a launched product and community visibility. We need to form a vision, and then build it.

Personally, I think a index should be simple, reliable, and low cost for users to buy and hold. We INDEX / DPI should be something everyone knows and uses personally and within their protocols.

But this is just my thoughts as a massive brain dump 7 days after INDEX was launched.

How do you think we become the 1%?

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Before I do a more detailed response, I’m on board with 1% of the market and think its a much better improvement on an arbitrary $50M figure. I just updated the Master Plan target to reflect that.

“How do you think we become the 1%?” :laughing:

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This is a fantastic post! Will think more about the specific action items here and share some thoughts on the call tomorrow.

Especially love how you keep reiterating: “Personally, I think a index should be simple, reliable, and low cost for users to buy and hold.” Makes so much sense and is what an index product should be. Would be good to have a product culture within the community focus on these things.

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“winter is coming” memes inbound haha.

Seems like the common thread through everything is business development in one form or another as the main driver. We should start putting together strategy and materials to let people run with it.

I know some people at MetaMask and they are starting to make moves in this area so this might be perfect timing :wink:

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I like the structure of the roadmap and the overall framework; however, I have one fairly large disagreement with what seems to be the general consensus based on comments here and on discord. But before I go into that point I wanted to mention how important I think it is to stay laser-focused on the DPI product which has the Defipulse branding and gravitas behind it. This is the IT product in my mind and while the other ideas are good ones they do not have the promise of DPI right now.

Now to the disagreement, I think we need to go big and make INDEX a part of our liquidity mining program for a few reasons.

One, what value is INDEX without the current program in place? Currently, it is primarily a means to transfer value to the liquidity provider. The governance rights it conveys are not compelling enough to folks outside the community to value highly enough to retain it since frankly it is not BTC or ETH. Even I as a part of this community would have a difficult time thinking of a reason to hold on to the token without some reward and not just a promise of some vague future vision. This is our capital reserve and it needs to have value and the higher the better.

Two, by increasing the value and liquidity of INDEX does that not increase the likelihood of a higher APY which would result in a larger DPI market cap & LP, with higher fees, more exposure, better PR, etc? We need the hype while we have the momentum to leave everyone in our rearview mirror and catch the attention of someone like Coinbase. That to me is the holy grail, to be able to offer it to the masses who just want BTC, maybe ETH and are confused by all the other things with crazy names.

That’s my bit for now as I’m going to bed but that for the most part captures my thinking that we need to be aggressive and use this time and reserves to push the envelope. We have a lot of bright folks from what I can see, so I think we can devise and execute an incentive plan that is reasonable, effective, and sustainable which is what I would advocate at this stage.

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Really like the idea. I’m going to think about it in the coming days.

What about another incentive mechanism to mint new DPIs ? We could either send 1 INDEX each time an address mints 1 full DPI. And we could ask for 1 INDEX (to be burnt) + some redeeming fee (0,5%) each time an address redeems a DPI. This kind of mechanism could help us to reach the 1% :rocket:

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1%-ers of DeFi

Good meme potential

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First off great post and gives us something to rally around.

I’d like to focus a bit on the treasury and token distribution as it sticks out the most to me as I read through. What I like about the token distribution of Index is that unlike other projects that slowly bleed out through inflation, we have access to a treasury that will not be released without community say-so. This gives us an amazing advantage with what is normally referred to as a ‘war chest’.

The first opportunity I see is being able to build up hype for each new launch (memes, releasing key facts documents (more on this later - also, double brackets!), potential farming rewards for LP’s) and with low circulating supply it keeps the token price desirable. There are two psychological aspects to this, firstly it will keep the incentive high for users to LP in future, and secondly we can continue doing things like retroactive airdrop rewards. The second point is particularly powerful and is similar to the type of design Facebook use to leverage the science of addiction. While I don’t propose we do anything as insidious, if Index becomes known for retroactively rewarding Index tokens to product users, it leverages the effect of not knowing how much or when the reward will come and encourages holding to find out. Over time I would see this morphing into a dividend as more serious users hold Index products and will expect a more reliable reward structure. Finally, as part of the fee for Index sets goes back to the treasury, the Index token naturally generates value over time and this is yet another reason for users to stay in the ecosystem, creating a flywheel effect.

All of this is just me getting initial thoughts out there and can expand over time.

In terms of creating documents, first thing I think we need is a ‘key facts’ template that can be used on the UI where an Index is purchased and summarises each Index. The info on TokenSets site is already great for DPI, this just standardizes the format going forward and creates a 1-pager that can be easily shared on social media. I’m happy to take responsibility for putting something together initially.

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Really like this post @overanalyser and how you articulate the roadmap to get us to 1% - it makes a lot of sense!

I think the real challenge for the Index Coop and the DPI is after the liquidity mining program ends (as you alluded to). It’s easy to attract capital when you are paying for it but much more difficult when you are not. On top of that, DeFi tokens are currently in a mini bear market that will last for who knows how long which means DPI’s performance will be lackluster until those tokens heat up again so growth may be slowed by this as well.

Anyway, these are just some things to consider and I’m going to go more in-depth about how I view this from a marketing/growth perspective on the marketing kick-off call this week!

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I hope that everyone realises that every time we add a new token to the index, there will be a reballencing to sell the other tokens so we move a step back from 1%.

Lets hope DeFi Pulse just add smaller tokens (and not LINK :smiley: )