Thank you for your comments. Below are answers to the most recent questions raised during the weekend:
1. Token Terminal includes protocols that are not ERC20, but you have not explained why certain ERC20 protocols were included but not others (eg. SUSHI)?
Section 3.2 of the proposal includes an initial set of criteria sufficient to launch the proposed index, and is subject to additional requirements (if any) from Index Coop and/or Set Protocol.
Regarding SUSHI, it is among the assets to be included in the index. The reason it is not included yet, is due to the early stage of the project (see also answer to question #2 below).
2. What does it mean that the protocol must be recognised as having a high-quality product and team? Recognized by whom?
This requirement aims to ensure that the protocols included in the index are developed by a full-time team and/or community. Here, the Index Coop is able to step in to exclude assets that display undesirable characteristics or have yet to reach a sufficient maturity in their development.
3. What does it mean that the determination phase takes place during the third week of the month?
This refers to the monthly process of determining the necessary rebalances to the index. Technicalities regarding specific dates should be specified together with the Index Coop and Set Protocol to ensure best possible execution of necessary rebalances to the index.
4. I don’t see any criteria about what has to be done with sales revenue to be included here. Do all sales have to go into protocol treasury or distributed to token holders? MANA by Decentraland has pretty high sales (idk exact P/S) but all fees earned are used to burn MANA tokens, would this token be eligible to be included in TTI? Would ETH qualify once EIP-1559 is implemented? Are there non-DeFi tokens you guys are considering adding?
The price to sales ratio (P/S) is a top-level metric and is not affected by how the protocol decides to use its revenues. In general, early-stage protocols tend to reinvest the majority of their revenues into growth, often by subsidizing the use of the protocol’s service. The current focus on Ethereum-based DeFi assets is motivated by the index’s aim to find fairly valued and widely used protocols.
Although, we don’t see a reason not to include non-DeFi assets later on, should they satisfy the rest of the criteria in the proposed index.
5. Why use fully diluted market cap instead of 1 year forward market cap?
In our view, a fully-diluted market cap serves as a more accurate comparison point between different protocols. The fully-diluted market cap determines the price that an investor ultimately pays for a given asset.
Hopefully these answered your questions.