Decision Gate 2: Data Economy Index (DATA)

Decision Gate 2 is the final vote for onboarding products to the Index Coop.

A passing vote here signals a commitment by the Index Coop to launch the DATA Index in a timely manner.

Work Team Analysis

The Work Team Analysis for DATA has been posted here.

Passing Thresholds:

• 10% or more of circulating supply must participate
• 60% or more of participating tokens must vote FOR

Voting

• FOR - Accept DATA into the Index Coop.
• AGAINST - Do not accept DATA into the Index Coop.

The full text DATA proposal 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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Status: Proposed Authors: Thomas Hepner (@TenaciousTerrier), Kiba Gateaux (@kiba) Created: 2021-08-09 Quorum: 200,863 [2,008,634*0.10]

Simple Summary

The Data Economy Index (DATA) is a digital asset index capturing the growth of on-chain data economies. The Data Economy Index tracks projects with significant economic activity providing data-based services or products.

Motivation

Decentralized finance (DeFi) is the first of many industries that will blossom on-chain. The Ethereum whitepaper outlined numerous data-intensive applications that the network would support including decentralized file storage, decentralized data feeds, cloud computing, prediction markets, and other on-chain data-based applications.

The Index Cooperative now has two index products, DeFi Pulse Index (DPI) and Metaverse Index (MVI) that provide exposure to two on-chain industries, decentralized finance (DeFi) and the Metaverse. DATA would represent another on-chain industry covered by Index Cooperative. Adding DATA to the Index Cooperative’s product offerings will expand the reach of our brand as the premier on-chain asset manager to projects and communities currently outside of DeFi and NFTs.

Specification

Size of the Opportunity

As of today’s writing, the components in DPI have a combined market value of ~$26.9 billion and the components in MVI have a combined ~$4.1 billion of market value.

The initial 9 components of DATA represent approximately $17.9 billion in market value and have no overlap with our two existing index products. This suggests that DATA would be a highly differentiated product for the Coop with a significant, compelling market opportunity.

Current Market Size and Potential

DATA’s constituent tokens have a combined market value of $17.9 billion. DATA will have ~$20m in AUM if it captures the same share of the Data Economy that MVI has of the Metaverse (~0.11%) and ~$100m in AUM if it captures the same share that DPI has of DeFi (~0.55%).

Data Economy is at the same stage of development that DeFi was at the beginning of 2019. Whereas DeFi is disrupting traditional banking and financial services, the Data Economy is disrupting the data monopolies built in Big Tech over the past 20 years.

Proposed Methodology

Draft Portfolio

DATA initializes a Token List with the following projects and their native tokens:

• Chainlink: LINK (25%)
• Filecoin: renFIL (25%)
• The Graph: GRT (25%)
• Basic Attention Token: BAT (11.6%)
• Livepeer: LPT (5.2%)
• Ocean Protocol: OCEAN (2.5%)
• Numeraire: NMR (2.4%)
• Orchid Protocol: OXT (2.1%)
• Augur: REPv2 (1.3%)

Token Inclusion Criteria

Selection of the DATA tokens is based upon the following criteria:

• The token must be available on the Ethereum blockchain. This will be revised if the Set Protocol infrastructure becomes multi-chain.

• The protocol provides data-based services or products.

• Protocol must have organic network activity or usage. On-chain transaction volume, Total Value Locked (TVL), and/or revenue paid to service providers are all examples of metrics that can be used to demonstrate organic network activity.

• Circulating market capitalization must be over $100m.

• Protocol token must have sufficient DEX liquidity to support inclusion. If a token has insufficient liquidity, it will be removed from the index during the determination phase.

• Protocol must have at least 3 months history of operation and its token must have at least 3 months of price and liquidity history.

• An independent security audit should have been performed on the protocol and results reviewed by the product methodologist. In the case that no audit has been performed, the methodologist applies subjective judgement of the protocol based on assessment of the criteria above and communications with the team.

• In the event of a security issue the methodologist will work with the project team to understand the issue and any effects to DATA holdings. The team is expected to provide users of the protocol with a reliable solution and adequate documentation to ensure transparency about any incidents.

Index Weight Calculation

DATA will use circulating market capitalization to determine the weight of each token included in the index.

The weight of each token within the index will be as follows:

Like the DeFi Pulse Index, the Data Economy Index caps each token’s respective weight at 25%. Excess weight for a given token will be redistributed to the remaining components of the Data Economy Index on a weighted basis. This same process will be repeated for every token exceeding the 25% allocation cap.

Index Maintenance

The index is maintained quarterly in two phases:

• Determination Phase: During the determination phase, the tokens being added and deleted from the index calculation are determined during the final week of the quarter and published before quarterly rebalancing.

• Rebalancing Phase: Following publication of the determination phase outcome, the index composition will change to the new weights during the first week of the following quarter.

Fee Split

Data Economy Index (DATA) will have a streaming fee of 0.50% (50 basis points), a mint fee of 0.10% (10 basis points), and a redeem fee of 0.20% (20 basis points).

At launch, DATA will participate in the Methodologist Bounty Program and the fee split will be 70% to Index Coop, 30% to Titans of Data.

After launch, the fee split and methodologist bounty for DATA may be revised as part of the Index Cooperative’s larger effort to refresh its relationships with its methodologists. Titans of Data has the right to off-board DATA from the Index Coop’s product offerings no later than Ethereum mainnet block 13531000 (est. October 30, 2021) or Ethereum mainnet block 13923000 (est. December 31, 2021) should they not wish to continue with the fee split and methodologist bounty outlined or any new program produced by the Index Cooperative, should one be proposed after block 13333000 (est. Sept 30th, 2021).

Author Background and Commitment

Thomas Hepner and Kiba Gateaux are members of a DAO, tentatively named Titans of Data, responsible for the ongoing maintenance and development of the Data Economy Index.

Thomas Hepner

• Won the Index Creative Challenge by publishing Why I Invested in the DeFi Pulse Index and Index Cooperative.
• Gold/Silver Owl (December 2020 - February 2021) 🥇🦉🥈; Helped @jdcook form the Analytics Working Group.
• Creator of the ₿EST Portfolio.
• Numerai Data Scientist (2016) and Numeraire holder since 2017.
• Data Science Manager at PrecisionLender (2017 - 2021); successfully created and launched several data products now in use by some of the largest banks in the world.
• Financial Analyst, Amazon Prime & Kindle teams (2012 - 2015)

You can reach Thomas on the Index Cooperative Governance Forum (@TenaciousTerrier), Twitter, and through his blog.

Kiba Gateaux

• Prev. Full Stack Developer @ Consensys
• Gold/Silver Owl 🥇🦉🥈 for the first three months of coop and April
• Top degen score
• Link marine since 2017
• Originally proposed DATA Index in October 2020, original concept in June 2020

Korea/China Team

Titans of Data will have dedicated members responsible for sales, marketing, and investor relations in Korea and China. Titans of Data also has connections to top Korean exchanges to get DATA listed in the country.