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 Bankless DeFi Growth 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 Bankless DeFi Growth Indexthrough Decision Gate 1. Begin work to research & assign Bankless DeFi Growth Index a product prioritization score.

AGAINST - Do not pass Bankless DeFi Growth Index through Decision Gate 1.

DG1 is a signaling step to gauge community sentiment. The full-text Bankless DeFi Growth Index exceeds Snapshot’s character count limit. Below is an abbreviated proposal. Check out this forum post to read the full proposal.

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Title: Launch the Bankless DeFi Growth Index ($GMI) Status: Proposed Author(s): Lucas Campbell, Ben Giove, Peter AKA “Lemonade” Created: 10/26/2021

Simple Summary

The Bankless DeFi Growth Index (GMI) seeks to capture the performance of emergent DeFi application themes. By relaxing some considerations for selection into Index Coop’s flagship DeFi Pulse Index, GMI seeks to provide exposure to experimental DeFi project tokens which are further out on the risk curve. Notably, GMI will seek to capture exposure to DeFi upstarts on a rolling basis by establishing a time limit on inclusion.

The utilization of an indexing strategy--and the provided diversification--offsets the risk of anyone or a small group of assets rugging or otherwise failing. Through this curation, GMI allows passive exposure to this area for those lacking time or expertise.‌

Abstract

The Bankless DeFi Growth Index is a simple composite index that will be built on Set Protocol. The index screens for promising early-stage DeFi projects which are not yet considered “blue chip” and attempts to produce an optimal weighting via the use of a combination of square-root market cap, relative secondary market liquidity, and relative token dilution/emission scoring.

GMI maintains rolling exposure to early-stage and experimental DeFi upstarts by employing a ‘graduation’ system that retires components after specific term lengths (or if they become part of DPI’s constitution).

Motivation

Customer feedback has indicated that exposure to DeFi assets further down the risk-curve coupled with an indexing strategy would represent a compelling solution for them.

The DeFi landscape moves fast, and while customers are able to capture the appreciation of standard-bearing DeFi protocol assets through DPI, a vehicle taking a more risk-on approach and relaxing some requirements--including time in the market, audits, anonymous teams, etc--allows us to capture the aforementioned desire for exposure.

GMI will seek to have no medium-long term crossover with DPI and a component will exit over the course of 2-3 rebalancing cycles should it be selected in. Additionally, assets within GMI that do not graduate to DPI will have a term limit - the idea being that the index should be ever-changing and not contain constituents for too long of a time frame.

The motivation to implement a novel weighting system including relative liquidity and dilution scoring was born of problems with the decay which can be passed on to customers through the rebalancing of illiquid assets -- and with the recognition that earlier stage projects not only typically have poorer liquidity conditions, but also have the potential for more aggressive dilution via token emission schedules.

In addition, the use of a square-root market cap weighting score allows for an emphasis on asset sizing while also recognizing that too much concentration in any one token creates additional risk. Additionally, the square root weighting mechanism allows for smaller components to enjoy higher relative weightings. To further combat the potential for concentration risk, GMI will apply a 15% single component cap.

Specification

Overview

The Bankless DeFi Growth Index (GMI will contain a collection of ERC20 tokens curated to capture broad exposure to emergent DeFi application themes, rebalanced monthly.