2020 was one of the most prolific years for DeFi since its inception. Following the crazy returns generated by yield farming, food tokens, and complex multi-protocol strategies, investors experienced numbers as never seen before, such as US$ 14 billion in TVL (Total Value Locked).
Nonetheless, it is not possible to build stability within a financial ecosystem based solely on spikes and trends. Anyone with minimal background in cryptocurrencies knows that the purpose of DeFi is to provide an alternative financial system for those who want:
- Zero censorship.
- Freedom of use for funds.
- Full control of assets.
It is plain to see that, regardless of all the hype surrounding crazy yields and do-or-die strategies, stability is the word of choice for any healthy economic system, which is no different when it comes to decentralized finance.
Index Coop is a crucial project in this stage of DeFi’s trajectory, providing an Ethereum-based platform backed by a multi-platform structure to allow traders and investors to invest in decentralized ETFs.
Back to Basics – How Indexes Work?
An index is a standardized method to track and measure the performance of a certain group of assets. Commonly, this type of investment measures the performance of a “basket” of securities, intended to replicate a specific chunk of the market.
In the United States, the most famous indexes are the Standard & Poor’s 500 Index (S&P 500) and the Dow Jones Industrial Average (DJIA). These types of indexes are more broad-based, capturing the entire market. Plus, there are indexes more specialized in particular industries or segments of the market.
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When talking about indexes, it is common to hear the term “ETF”. An exchange-traded fund (ETF) is a type of security that involves a collection of securities, which means it can contain several types of investments (stocks, commodities, bonds, etc.).
In the traditional stock market, investors say that no investment type is more stable than indexes. One of the greatest investors ever, Mr. Warren Buffet himself said that “in my view, for most people, the best thing to do is to own the S&P 500 index fund”.
Indexes are not a “sandbox” type of investment for conservative or fearful investors who simply avoid risk. Instead, they are a solid, consistent, valuable, and strategic type of investment that benefits all types of portfolios.
What is Index Coop?
Index Cooperative is an Ethereum-based decentralized platform focused on DeFi indexes. Created by industry-leading crypto specialists, Index Coop’s goal is to be a global community where crypto index products are created and maintained.
In this sense, the platform offers a diversified risk profile with several crypto-based index products. Plus, all Index Coop’s products are fully collateralized.
Structured and built using the Set Protocol V2 infrastructure, the platform is backed by experts such as DeFi Pulse, which provides methodologies and data as an ancillary.
Offering much-needed stability while mixing variety and long-term investments, Index Coop is fully decentralized. It is an autonomous asset manager, completely governed, upgraded, and maintained by its community.
Crypto investors have the unique opportunity to invest in a broad array of assets without necessarily buying and managing each asset on its own. This crypto cooperative offers integrated products and tools to bring the idea into reality.
Native Token
Source: CoinGecko
Index Coop has launched its native token called INDEX. This ER20 token is responsible to enable community-led governance and ownership within the platform.
The INDEX governance token allows the community members to participate and assess all major decisions concerning the platform, which includes adding new indices, controlling the community treasury, updating fee configurations, and enhancing indices performance.
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The project has a 3-year release schedule, with a total supply of 10 million INDEX tokens. Most of the tokens are already destined to the community (70% of total supply), which includes initial distribution, a liquidity mining program, community treasury, and other programs.
The team will be rewarded with 30% of the total supply of INDEX tokens, which includes personnel from Set Labs and DeFi Pulse.
DeFi Pulse Index
The platform had already launched its first product, called the DeFi Pulse Index. Using a unique methodology, this crypto-based index was designed to track the performance of several digital assets within the DeFi industry.
Backed by DeFi Pulse’s well-known accuracy and reliable data, the DeFi Pulse Index was created to track DeFi’s most prominent projects, considering significant usage, commitment to development, and ongoing maintenance.
When it comes to the tokens included in the index, the process is extremely selective. To be included in the DeFi Pulse index, a token has to fulfill specific characteristics, such as:
- Being available on the Ethereum Blockchain.
- Being associated with a decentralized finance protocol/DApp listed on DeFi Pulse.
- Must not be considered a security by authorities across different jurisdictions (regarding regulatory procedures and different legislations around the globe).
Plus, tokens included in the index are only a bearer instrument. Hence, several types of digital assets cannot be included in the asset basket, such as:
- Wrapped tokens.
- Tokenized derivatives.
- Synthetic assets.
- Tokens tied to physical assets (e.g., real estate).
- Tokens representing claims on other tokens.
Plus, all selected tokens must have sufficient liquidity across a variety of DeFi trading platforms.
When it comes to security, the team must respond promptly and address any safety regarding the safety of the assets. Despite the community-oriented policy of the project, the team is still responsible for providing users with a reliable solution for any incident.
Tracking Prices and Assessing Data
The platform offers a user-friendly dashboard with all the necessary information investors need to assess gains, prices, and other detailed data.
Plus, Index Coop offers integration with multiple platforms (DeFi Pulse, Dune Analytics, CoinGecko, and CoinMarketCap), where investors can track DPI distribution, DEX liquidity, total mint and redeem volume of a specific token, etc.
Integration of Multiple Platforms and Tools
Variety could be a synonym of Index Coop. The platform exposes investors to a broad range of profitable possibilities, especially for portfolio diversification.
Users can earn yield by staking/providing liquidity in ETH/DPI pools such as Index Coop, Alpha Homora, and Moonswap.
Traders can exchange their assets, including Index Coop’s native token, on platforms such as Uniswap, 1inch, and Balancer. There is also Call-and-Put Options/Hedge (Opyn), lending markets (Cream Finance), and smart contract insurance (Nexus Mutual).
Index Coop also offers integration with multiple interactive wallets, such as Zerion, Argent, and Dharma. Each option offers unique possibilities for users, such as:
- Zerion users can track the performance of their portfolios in detail.
- Argent users can buy and sell the DeFi Pulse Index within their wallets, trading natively.
- Dharma users can seize their “crypto-bank” solution to get exposure to prominent returns through the DeFi Pulse Index.
Conclusion
Index Cooperative is an Ethereum-based platform focused solely on crypto-based indexes. Given that the ETF industry has grown to an astonishing US$6 trillion in asset value worldwide, the project could not arrive at a better moment.
Empowered by a community-based approach that aims to create and maintain the best crypto index products in the world, the project already has one product, called DeFi Pulse Index.
Investors can use the platform in several forms, such as a way to diversify their portfolio and expose themselves to a wide array of cryptocurrencies within a single spot.