Agree with @Dynch about questionable composition of index.
I think it’s more reasonable to make 2 separate indexes due large difference in market caps, active users, etc.
First index composition - giants. Yfi, Sushi, Cream. Products that here for a while, have big market caps, etc
This index is less risky.
Second - smaller partners. Cvp, Acro, Cover, K3PR and Pickle.
Higher risk, smaller market caps, etc.
I think due to proposed wights (YFI+SUSHI=52% of total composition) it’s either way giants who will rule the price of index, but with higher risks.
Just don’t feel right about it.
Also every time adding new YFI products in YETI sounds like pain in the ass.
Remember that K3PR has 3 failed iterations (famous Andre’s test in prod) before fully launched.
EMN was exploited in test in prod phase and we still didn’t hear anything about it.
What if community add something like this and after week or two need to erase it? My point is - it would be better to add fresh projects to more risky composition, while main composition stays permanent or close to permanent.
Also would love to read explanations about wights in YETI.
Why this wights?
What do you think about changes in composition? How wights rebalance?
YFI - fast-growing ecosystem. Definitely there will be plenty of projects in nearest future.
Can you please clarify this section? Confused 250K CVP Rewards in 1st month goes to whom? It also says 80-20 Balancer Pool gets 200K CVP. I also think a Uniswap Pool should be available to help adoption.
Allocate CVP rewards for the first month of index operation: 250k CVP for 1st month with 10 weeks vesting and yPIPT/ETH Balancer 80-20 pair with 200k CVP for 1st month with 10 weeks vesting. Re-define LM incentives at the end of the first month via the additional follow-up proposal.
Damn I love the name) Just awesome)
But I think that there is no way to launch an index of YFI ecosystem till the moment this ecosystem becomes stable. Remember that Andre dont ask community about projects he wants to merge with: there are no proposals, no formal structure etc. So either this index has to be very flexible and change its composition couple times per week, either launched later when YFI will devour last project needed for Andre`s great plan.
Well, on second thought, due to a number of reasons I would vote FOR and prioritize quick delivery over the best index design
Despite I think it would be better to focus on more fundamental work with new indexes composition and launch (to demostrate a clear strategic vision of what and why we are doing to the market), I believe there is a request from the DeFi community for such products as YETI. and there is nothing bad if we deliver it.
Please just specify how you guys selected the weights for index composites
Hi guys, I appreciate the proposal and the activity of this great project, however I am a bit worried about some of the project (coins) included in the index. Such project as sushi, cream, pickle and other are often perceived as vampire clones of Uniswap or YFI and could be also seen as (nearly) scam project with high risk. I am not sure, if it is a good idea to include those in the YETI index and incorporated in such a great project as power index seems to be, and if so, maybe it should be explicitly mentioned that this index is a risky one. I would be much happier, if there would be other serious defi projects included instead. I would also like to see some comments or explanation on this from powerpool devs or active community members. Thanks in advance.
While i am fully agree with your comments, I believe that there is a request from the market for such a product.
Yes, the Mcaps, and ADTVs and other metrics differ a lot, but this is like having an ETF on Tencent supperapp business
Yes you have (i) WeChat, (ii) ticket booking service inside, (iii) taxi and (iiii) tinder-like service (?) inside - very different business models, but you are betting on how this works as an ecosystem
So I think we should give it a chance and then see how we can amend the index.
For the index weightings we went with a modified market cap weighted index using the two largest projects (YFI and SUSHI) as the anchor assets and then equal weighting the rest. The goal was to ensure 1) that the index has the potential has the potential to attract enough liquidity (hence the larger allocations for YFI and SUSHI) 2) the index still provides meaningful exposure to the smaller tokens in the Yearn ecosystem (rather than just being extremely lopsided with YFI and SUSHI).
Typo in the original post, thanks for catching that. Should be YETI/ETH Balancer 80-20 pair. Ideally want to keep liquidity consolidated into one pool rather than fragmented across Balancer and Uniswap
Hi Sergy, it will be really great if you can join us on telegram t.me/yearnecosystemtokenindex lets deliberate YETI and form a functional use case for YETI.
There’s some degree of acceptance through @iearnfinance retweet of YETI proposal.
I believe this is great proposal.
Everyone should join telegram channel we will work on Fundamentals like Sergey said and working market structures till then community should keep pondering on YETI proposal
I like this idea mainly because of the hype around yfi. Its undoubtedly the largest name in defi right now, so attaching the powerpool brand to it could let us ride in its wake.
for the folks who didnt have a chance to read discord: we discussed the weights and I provided some numbers for the logic behind the YETI components weights
TLDR
Proposed 35% / 17% / 8% weights are proven by numbers with certain level of deviation which we can put aside of consideration as most of the projects included in YETI are very new (thus these deviation are statistically insignificant).
METHODOLOGY
This conclusion obtained from a simple analysis of MCap, FDV, ADTV and TVL I ranked 3 market metrics (MCap, FDV, ADTV) and 1 operational metric (TVL) (see columnsV-Y) by weights, sum up these 4 ranks for each project to calculate cummulative index (see columns AA-AE), inverted the cummulative index and calculated INDEX weights (see columns AF-AG) to calculate the implied weights
*please note, column AB is calculated and inverted manually. as high FDV (FDV/MCap) is worse than low
All ranks (AA-AE) are equally weighted for simplicity reasons and as we dont have any analysis allowing us to use tailor weights off the shelf
Then I used the ratios (columns P-T), the metrics from the reference group of tier-1 DeFis and average/medians to sanity check the YETI weights obtained (see column AG)
GMV and Revenues werent considered due to absence of reliable data
Potential synergies and differences in business models were not considered (will do though for further analysis)
CONCLUSIONS
For simplicity reasons I suggest to use the weights proposed by Ryan Watkins. The weights calculated here are slightly different (though pretty close to proposed ones), but this difference is statistically insignificant
We can clearly see 2 groups - YFI+Sushi and others, with YFI+Sushi having ~50% weight.
Exceptions include relatively low trading volumes for CREAM (just $3 mn ADTV), very high FDV/MCap for CVP (16.3x vs 1.7-2.0x medians for YETI and teir-1 projects respectively), and outlying MCap/TVL for K3PR (though it is not a relevant metric for the project)
At the same time suggest to ignore these exceptions as for example PowerPool can burn 25-50% of TTS and significantly decrease FDV/MCap so as it will be in median range of tier-1 projects
Most of the assets in YETI are pretty in line with tier-1 projects from trading comps analysis standpoint, while MCap/ADTV metrics are even better (2.1x median vs 8.1x median)
NEXT STEPS
Add growth metrics for TVL
Add fees collected
Add # of unique wallets / active users and possibly growth metrics for them
