Add LP to MVI-ETH Pair

[Written by & Submitted on behalf of INDEX Team]

Summary

Propose the Decentral Games treasury diversifies $200K of MANA holdings into a productive MVI/ETH LP position to earn $INDEX tokens and invest in the wider metaverse theme.

Abstract

MVI is designed to capture the trend of business, entertainment and social activity shifting to take place in a virtual environment. The index is built on Set Protocol V2 contracts and managed by DarkForestCapital and Verto0912 as community methodologists from Index Coop. Tokens in the index are rebalanced based on relative market cap and aggregate liquidity every month, full details of the methodology including what constitutes an inclusion and how projects are assessed can be found here.

While the methodologists look to market, integrate and improve the utility of MVI, they also work closely with the community at Index Coop to lean on their expertise and network to make sure the product is the best it can be. Part of that role is to communicate the benefits of holding the index compared to the individual tokens and look to share the benefits with both individual and organisational level investors.

The $DG token will make up 4.3% of MVI after the April rebalance, but with MVI, holders also get exposure to Decentraland’s MANA, NFTX and Rarible to name just a few.

Motivation

The motivation to hold MVI comes down to improving risk-adjusted returns vs holding individual metaverse tokens like $DG (or the $MANA in the treasury). While the Decentral Games treasury is already pretty well diversified, providing liquidity to the MVI/ETH pair will earn $INDEX tokens, currently at 28% APR. This builds a bank of tokens from the DeFi sector adding even more diversification, and compensating for the potential impermanent loss that can take place in a liquidity pool.

There is another aspect motivating this proposal. As methodologists for MVI we are looking to be involved with DG for the long term. Having held our launch party in Tominoya Casino and worked with the DG team to arrange the event we were extremely impressed with the level of professionalism and are keen to maintain a close relationship with the project and community. We have the ability to vote using the DG tokens held within the MVI index and will be looking to get involved in governance and become a trusted partner in time. We see the ability for DG to farm INDEX as a way to solidify the partnership between the two projects.

Specification

Thanks to our exchange issuance module it is possible to purchase $200k of MVI with less than 0.5% slippage. Exchange Issuance has been designed as a one click solution in cases where reducing slippage is more important than the gas cost associated with purchasing multiple tokens, i.e very large trades. The function will swap the input token (ETH recommended) for all of the underlying tokens in the correct proportion and subsequently issue MVI tokens using the best prices from either Uniswap and Sushiswap. $INDEX rewards for LPs are currently at 28% APR based on a pool size of $7m on Uniswap.