$INFRA Index Creation

This proposal is a work in progress and below represents a draft for the future “Infrastructure” Index.

Cover Image

I don’t have one but if someone could put “$INFRA” with a pie emoji on top of a futuristic server room that would be swell.

Rationale

Over the life of Ethereum numerous projects have emerged that are less so the center of attention, but rather the backbone infrastructure for larger projects. These infrastructure projects have made themselves indispensable for integration and utilization of the Ethereum blockchain but as of yet have not been packaged into an Index product (Excluding the ORACLE index). These projects are largely broken into five sub-sectors:

Dex Aggregation - Projects which find optimal trade prices across multiple Dexs, typically offering additional services.

ETH Staking - With the launch of ETH2 comes staking. Projects in this area aim to provide something similar to “Staking as a service” allowing for individuals to deposit any amount of ETH and receive tokenized staked ETH.

Interoperability & Integration - The broadest category by far, projects in this area enable the integration or utilization of computing resources (storage, CPU time) provide access to blockchain indexes, or otherwise enable non-native code access to the blockchain. Currently around 250 billion in revenue is seen per year by the largest cloud provides for compute time (AWS, Azure, Google Cloud, Alibaba Cloud).

DAO Infrastructure - Dominated by Aragon, DAO infrastructure projects remove admin and governance work from the core dev teams of a DAO so they can focus on the objective of the organization.

Oracles - Real-world data access was perhaps the first form of infrastructure on the blockchain, allowing for access of a real-world data for use in smart contracts. Given the number of Oracles that currently exist it may be prudent to create an additional index for only Oracles or reorganize in some other way.

Miner-Extractable Value - MEVs focus on ETH mining optimization, insuring maximum profit for thee miners. As we transition towards ETH2 its likely that investing in this subsector will mean needing to time an exit.

In short: During a gold rush, invest in the guy selling shovels

Index Composition

Five major sub-sectors have been considered thus far, some are rather crowded and may require pruning to not over crowd the index. Please note that these numbers were pulled before the recent 10-20% pull back that is occurring now on April 17/18th.

Market Cap 24hr Vol Include Strategy Notes
Dex Aggregation
1INCH 966 209 Yes LPOOL stake
ZRX 1682 300 Yes
ETH2 Staking
RPL 291 4 Yes
SWISE Unreleased NA No Possibly add after Launch
LDO 30 1 Yes
Interop & Integration
GRT 2558 318 Yes
CTSI 194 21 No In $SCALE, fits better there
UBT 320 4 No
STORJ 367 231 Yes
ANKR 1405 1134 Yes ONX Stake
GLM 531 8 Yes
OCEAN 712 109 Yes
COMBO 14 1 Yes
HOT 3000 340 Yes
DAO Infra
ANT 375 83 Yes
GEN 13 0.257 No Liquidity too low, only 97k on UNI
CLNY NA NA No No liquidity available?
EGT 8 0.095 No See Notes below
Oracles
UMA 1811 136 No Excluding all Oracles (for now)
DOS 15 2 No
API3 192 33 No
TRB 137 120 No
ORAI 38 1 No
LINK 18047 2909 No BOR stake
DIA 208 56 No
BAND 598 416 No BOR stake
Miner-Extractable Value
ROOK 194 10 No Should any new index have Eth1 mining?
ARCH 23 2 No

Allocation & Modeling

An even (8.33%) distribution model would seem to make sense as most of the assets are currently correlated with one another with the exception of LDO.

Major Points of Discussion

  • Should Oracles be included at all? (Vote Below) If yes, we may need to prune some to keep the index a reasonable size.
  • Any additional projects to add to the list for consideration?
  • Should this index be broken out into 2 or 3? If so how would we structure them?
  • Should UBT be included? It is more of a consulting firm that helps companies integrate blockchain tech. They accept payment exclusively with UBT. The are novel, but I am not certain if folks are comfortable including a consulting firm in the index.
  • Whats up with ANKR’s liquidity? It seems to only have 700k available on uniswap.

Details

Smart-contract: PieVault
Rebalance: Quarterly
Cap: Unlimited
Strategies: See table above. It is left to the implementation team to determine if deploying the listed strategy is feasible.
Good Faith Clause: Should issues with liquidity or problems arise implementing this proposal the development team is empowered to make changes as needed in good faith to realize the creation of this Index.

Update History

19-04-2021 - Added $COMBO, $ARCH, $ROOK. I have suggest that ROOK and ARCH not be added as they focus on ETH mining and including them would mean timing an exit from the positions.

20-04-2021 - Flagged CTSI as a non-include. Product is already in SCALE and accomplishes its integrations via two L2 implementations . Probably a better fit in only SCALE. Updated GLM to include, no issues found with the project, LP on UNI looks good. Updated all Oracles to “No”. This could obviously change with further discussion.

21-04-2021 - Added EGT (Elastic DAO) to Dao Infra, we are unable to include this token due to the unique governance model that would require us to vote in every DAO snapshot or risk being penalized. Also added CLNY (Colony), but liquidity does not appear to be available on any DEX.

29-04-2021 - I’ve updated UBT to be not included in the index. Working out a desirable model for this is difficult but I hope to have a reasonable allocation soon. I’ve also added HOT which I intended to add to the list several times now, but continue to forget.

6 Likes

If you wanted to hold 1inch in the contract,maybe we could talk to the team at xTokens. They have xincha and xInchb , that are self staking etc. Would save us from having to do that development in house.

1 Like

I’m also unsure about the oracles. I do want to be exposed to oracles (I hold the top 5 oracles indexed.finance token) but I think I prefer this pie without. If I were building this pie for myself I would exclude the oracles and exclude eth2 staking and try to add more “DAO Infra”

During a gold rush, invest in the guy selling shovels

yep!

5 Likes

I think this is a bit of a larger inclusion of the already proposed $CONNECT pie found here.

1 Like

Thanks for pointing this out. I’ve added the 3 missing tickers to the above list. I’m not sure its a great idea to add MEVs to the index as we will surly see a decline in the area as we trend towards ETH2. I looked into both ROOK and ARCH and it doesn’t appear they have a pivot plan, but obviously if anyone knows better please share.

Currently 10 tickers are flagged as include, these are all the ones I have done research on, found no major issues or concerns with, and I believe fit into the sector. One issue that has been raised is if ETH2 Staking should be included. To me this is the new version of the MEV sector. The sector will see adoptions as we roll onto ETH2, as perma bulls lock-up ETH for the long term, and as defi continues to grow and folks migrate away from centralized solutions.

Informal polls on what sectors should be added to the index:

Include the Oracles sub-sector in the INFRA Pie
  • Yes, include oracles
  • No, do not include oracles

0 voters

Include the ETH2 Staking sub-sector in the INFRA Pie
  • Yes, include ETH2 staking
  • No, do not include ETH2 staking

0 voters

Include the MEV sub-sector in the INFRA Pie
  • Yes, include MEVs
  • No, do not include MEVs

0 voters

1 Like

This is really well put together and I appreciate the mini-polls.

I voted yes for oracles, but maybe it makes sense to break them out?

They seem like infrastructure to me and I would prefer to invest in infrastructure as a whole rather than various subsets. On the other hand, maybe this is too much for one pie to handle and we are better suited if we have sub-index pies like the Oracle pie Cass mentioned.

On the DAO side, I would need to do more research but there seem to be various players that I want to look into more. My only concern is that these might not be base layer enough: ElasticDAO, Colony

ElasticDAO is particularly interesting to me and I would be interested in exposure through a larger index.

Dex aggregation and ETH2 Staking, I’ll trust the pros here. I like the exposure, no familiarity with the players beyond name recognition.

Interop & Integration - very cool.

I voted no on including miners – but I am not sure if it makes sense to retain a small allocation or to fully bet on PoS. I don’t have a strong feeling here.

EDITING: As discussed with Adam, ElasticDAO while cool would be antithetical to the passive income strategies that PieDAO aims to offer. ElasticDAO requires voter engagement to retain value share.

1 Like

Wondering whether this could be re-positioned as an $ETF-INFRA index for flexibility?

One question on my mind is whether PieDao is blockchain agnostic

Perhaps not now, but wondering whether an ETF could eventually be structured across Eth (& its L2 solutions e.g. Polygon/Matic), Polkodot, Cosmos, Terra, Avax etc alongside supporting horizontals like Link and Band Protocols etc.

From an investor perspective, I’m long on ETH scaling but would also like to diversify across the different blockchain infra. Thought such an ETF would be interesting, as the space is large enough for different blockchains to participate.

Could elaborate on “re-positioned as an $ETF-INFRA index for flexibility” ? I’m not sure what you mean, could you give suggestions as to what you would like to see added?

whether PieDao is blockchain agnostic

I think that is a much broader discussion that should probably happen outside any thread for an individual PIE.

Be sure to check out $SCALE which is being voted on now

Great proposal Adam, detailed and informative.

Re Oracle: I personally voted as it would be imo an easy spin-off pie to create. I’m all up for ETH2 staking tokens instead.

Regarding DAO infra, I don’t see many eligible tokens besides ANT from a liquidity perspective

Re Interop & Integration: :white_check_mark:

Hey Alex, two questions for you:

Is there an easy to to create an even allocation in Tiramisu? When I set a max weight of 10% in a model with 10 coins I get less than 100% allocation. Second question: All of the models I’ve played with end up with a very low SR, the assets seem pretty darn correlated to each other. Is this a deal break from a design perspective?

If anyone else would like to weigh in on the second question feel free.

was waiting for a Pie like that since a looooooooooong time

I did this by (I think?) putting in a static weight in computeWeights() on line 130 of IndexCalculator.ts

Thanks for this cass! I’ve added an even weight model to the above. Its not too exciting as most of the assets are well correlated with each other.

Baring any further input from folks I will be moving this forward as PIP-58 by the end of the week. The only issue I see is the liquidity of ANKR which currently only has 300k available on UNI. I’m not sure if anything can be done about this, it looks like liquidity is mostly on CEXs. This could mean we see a price impact on the asset or, if recommended by anyone, we could drop it.

Edit: Got a response from an admin on the Ankr telegram group that confirmed there was nothing to be done about it. Its just low liquidity.

Remove ANKR from the Pie?
  • Yes, remove ANKR
  • No, keep ANKR

0 voters

Late to the party, just added votes, shame that oracles are not included from my pov, just because they are available in other single section indexes, should not preclude them from being in here. What about having a weighting per category so that the oracle category does not consume too much allocation?

Otherwise I really like the concept of the index as a buy the shovel during the gold rush approach. :+1:

Plan to vote yes either way.

2 Likes

Agreed – would like to have Oracles but plan to vote yes either way. Not taking a strong stand here, but want to share my interest in Oracle exposure.

3 Likes