Work Team: @metfanmike, @jdcook and myself
Summary:
DeFi Pulse have proposed iETH-FLI (IIP-57: Launching iETH-FLI - The Ethereum Inverse Flexible Index - #28 by Pepperoni_Joe), which is a short position on ETH with 1x exposure to the downside.
iETH-FLI scored a 2.42 in Work Team Analysis. This is a few points below BTC-2xFLI and a few points above ETH-FLI. The minor costs associated with launching this product and high benefits of our DFP partnership (associated with a 5 on revenue structure and 4 on methodologist impact) meant this product scored very highly.
Link to full analysis: Revised Product Scoring Chart - Google Sheets
Reference for scoring methodology: Revised Product Prioritization Framework
Benefits
Market Opportunity: 3.67
This is a differentiated product that fits a “nice to have” need, but we are skeptical that it will command a large market. The customer base of ETH-2xFLI lies in optimistic holders who actually hold onto the product for a long time, rather than trading it. (70% of current holders have held it for 2+ months.) We believe that iETH product will mostly be used by traders, and the ETH-2xFLI data shows that only 600 addresses have made 5+ trades in the history of the product. Another potential iETH customer is the inverse of the current ETH-2xFLI customer (so, a ETH skeptic) – but we don’t believe there is a large market for that, either.
Revenue Potential: 5
The revenue structure is set up as a streaming fee + mint and redeem fees. The revenue split will be using the current, provisional agreement between DeFi Pulse and Index Coop that splits revenue 60/40 towards Index Coop post-gas.
Methodologist Impact: 4
The team earned one baseline point, and one point each for product competency, methodology, and reputation. We did not allocate a point for marketing support, which is given to products like BED where the methodologist actively markets the product within their channels and community.
Costs
It’s worth noting that costs are factored into the rubric such that a lower score results in the product being ranked more highly.
Financial: 1
iETH-2xFLI earned one baseline point here, and that’s it! It should not require Index Coop to seed a liquidity pool or liquidity mining incentives.
Operational: 2
The product earned a baseline of 1 point, plus a point for the possibility of extrinsic blow-up.
Technical: 1
Using existing FLI product infrastructure, this should be fairly quick and straightforward to launch.
Note on Work Team Analysis:
- This is intended to help members who haven’t closely followed product discussions learn about the strengths and opportunities of this product. It’s also designed to help methodologists uncover strengths and opportunities in their proposals.
- Work Team analysis can never accurately predict the future, or how successful a product will be in the months/years after launch. What it does communicate is how much risk the Coop is taking on by launching a product, and a perspective on the strengths/opportunities as stated above.
- Work Team analysis is completed by each of the three members individually scoring the product, discussing their scores, and aggregating results. The final score is an average of the three individual scores.
Note: I updated the title and references to the product to refer to it by it’s proper name – iETH-FLI, not iETH-2xFLI! Old habit from existing FLI products, apologies for any confusion caused.