Following up on the discussion kicked-off during the last community call and the multiple inputs collected from the community, we’d like to formalize a proposal for a PieDAO DeFi++ Index, representing a balanced allocation of relevant assets within the DeFi ecosystem.
In order to cope with the current Balancer limit of 8 assets/pool, the suggested approach would include sub-indexes based on assets’ current Market Capitalisation.
The proposed DeFi++ Index at launch would include a balanced allocation of the followings, weighted in as per reached consensus (e.g 70/30, 50/50):
- LargeCaps (assets with current total Cap >= $200M)
- SmallCaps (assets with current total Cap < $200M)
Note: This approach would be flexible enough to allow the inclusion of additional sub-indexes in due course, like a “discovery” MicroCaps, for instance, to be easily weighted in the DeFi++ Index.
Below a summary of assets identified to be part of the respective indexes, based on both their fundamentals, the general community sentiment and more specific inputs collected
Assets represented within the LargeCaps have been weighted in as a function of their current Market Capitalization, capped by a max weight of 25%.
-> Currently 6 assets identified, leaving room to the potential inclusion of 2 additional LargeCaps in the future.
LargeCaps Index would be initially priced at $1,000.
Rebalancing of underlying assets would take place as per agreed frequency (e.g. monthly, quarterly).
Assets represented within the SmallCaps have been weighted in as a function of their current Market Capitalization, capped by a max weight of 30%.
-> Currently 4 assets identified, purposely leaving room for the future inclusion of up to 4 additional SmallCaps, given the development pace of the DeFi ecosystem.
SmallCaps Index would be initially priced at $1,000.
Rebalancing of assets would again take place as per agreed frequency (e.g. monthly, quarterly).
The DeFi++ Index would be defined as a weighted composition of both LargeCaps & SmallCaps indexes, with weights defined as per Governance input in order to factor in the overall market outlook, the risk propensity, etc.
DeFi++ Index would be initially priced at $ 1,000, and trading as a function of both the LargeCaps & SmallCaps indexes.
The DeFi++ token would be pegged to 1/1000 of the DeFi++ Index.
You can find here the full spreadsheet.
Below a visual example of Index performance over the past few weeks, assuming a weighted allocation 70/30 between LargeCaps & SmallCaps.