IIP-104 DG2: Launch ETH2X-FLI (Polygon)

Decision Gate 2 is the final vote for onboarding products to the Index Coop. A full overview of the product onboarding process can be found here.

A passing vote here signals a commitment by the Index Coop to launch the ETH2X-FLI (Polygon) in a timely manner.

Work Team Analysis

The Work Team Analysis for ETH2X-FLI (Polygon) has been posted here.

Product Requirements

The PRD document for ETH2X-FLI (Polygon) can be found here

Passing Thresholds:

• 10% or more of circulating supply must participate (2,181,385 * 0.10 = 218 138)
• 60% or more of participating tokens must vote FOR

The full-text ETH2X-FLI (Polygon) proposal exceeds Snapshot’s character count limit. Below is an abbreviated proposal. Check out this forum post to read the full proposal.

================================================ Title: Launching ETH 2x Flexible Leverage Index (ETH2X-FLI) on Polygon Status: Proposed Author(s): Pulse Inc Created: 11-Oct-2021 ‌

Simple Summary

Pulse Inc proposes that the Index Coop manages a new index that provides 2x leverage exposure to the performance of ETH, using the FLI strategy that was proposed in IIP-13.

In contrast to the existing ETH2X-FLI product, this index will be launched on the Polygon network.

Abstract

ETH2X-FLI on Polygon is based on V0.1 of the FLI methodology that is also used for ETH2X-FLI and BTC2X-FLI on the Ethereum network.

Motivation

Manually maintaining a leverage position requires continuous monitoring of the health of the position in order to avoid liquidation and incurs high gas fees when the position is frequently rebalanced.

‌Rationale

Flexible Leverage Indices (FLIs) solve this problem by wrapping a collateralized debt position in a single token that can be bought and sold on an exchange and by socializing implementation costs. Furthermore, FLI’s unique index algorithm reduces rebalancing needs by an order of magnitude. Emergency deleveraging is possible during Black Swan events for additional safety.