Rewards for Index Design

Product Questions
1

Hey

It is of my understanding that currently there is no incentive to design a new index and maintain it on an on-going basis. The same also leads to a lack of incentive to marketing a certain index and bringing in AUM. CVP in the current state is an infrastructure provider (similar to NYSE or ICE). However it is positioning itself as a marketer for the indices too (similar to greyscale)

I propose that we discuss mechanisms that incentivise individuals for creating, maintaining and marketing indices. This allows individuals to propose a new index, have it voted in and receive fees on an on-going basis. The fees can come from

  1. A flat fee from powerpool for proposing and having it passed - I would keep this at $10k worth of CVP
  2. Added fee from withdrawal and deposits into the index. This can be as low as .05% of the index size.

For individuals that have research skills, this would mean collaborating with a platform that has the distribution (like delphi digital) and creating indices and bringing them to scale.

Would love to brainstorm this and ask if there are any plans for implementing something along this lines.

TIA

1 Like
2

I like the overall idea! It definitely provides better incentives alignment going forward and help us attract people with good ideas for future products

3

I would think this needs to pass as a proposal to be a real thing?

4

yes, a standard procedure applies:

  1. Create a forum discussion with specific and actionable information
  2. Let this discussion go for some time, gather feedback
  3. Launch a snapshot proposal
5

Thank you. I will keep this open in case any of the management board members and those from Delphi want to collaborate. If not, i will make a pro-longed post myself over the weekend.

6

I support your idea, share your thoughts please

7

I like the concept but have two questions:

  • how to make it work so that indices are truly original and value adding? We don’t want to drown in fifty indices with 95% overlap either simultaneously proposed much less live
  • i suggest instead of subs/reds as the fee mechanism, but rather annual as proportion of holdings, paid in kind and locked for a year. This would align incentives. Absolutely we don’t want to give % of withdrawals as that gives toxic incentive

How might the workflow work? Would a proposer need to write the starting code set or just pseudo code or just rules? Do you still get reward if the proposal is heavily modified before implementations? Is there a mechanism to remove the proposer and replace with a successor if index is not maintained well or just redeem out?

I’m going to think about these and maybe make another post later but wanted to throw the questions out there.

8

My personal opinion is that “value adding” can be reflected in TVL metric. If you proposed an index which is used by Defi community, and they agree to place their money there - it is the honest metric.

I suggest to provide CVP grants for creators of new products that achieved certain results in terms of TVL, trading volume, etc. Let’s create a proposal for this? I will be happy to support this idea, and help you to draft the proposal to the DAO. DM pls.

9

I think two things
1 define some kind of process for picking which projects to implement and thresholds
2 etf providers pay index creator a license fee. I’d propose rather than an index grant a fee of 0.x% of TCL annualized. And eat your own cooking, so paid in the same underlying (e.g. Jane proposes a new fund, we implement, she gets paid in units of her fund) with a one year lock to ensure aligned interests.

Maybe x varies depending on the level of maintenance work required post launch by provider.