IIP-104 DG1: Launch ETH2X-FLI (Polygon)

This is the first of two votes required for a new product to be onboarded to the Index Coop.

A passing vote here signals the Index Coop's intent to further research the ETH2X-FLI (Polygon) Index feasibility resulting in a product prioritization score.

Passing Thresholds:

• 5% or more of circulating supply must participate (2,181,385*0.05 = 109 069)
• 50% or more of participating tokens must vote FOR

FOR - Pass ETH2X-FLI (Polygon) Index through Decision Gate 1. Begin work to research & assign ETH2X-FLI (Polygon) Index a product prioritization score.

AGAINST - Do not pass ETH2X-FLI (Polygon) Index through Decision Gate 1.

DG1 is a signaling step to gauge community sentiment. The full-text ETH2X-FLI (Polygon) Index 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.