Allow users to create and deploy indexes. Users that join these indexes reward the index creator with a fee which is decided by the owner of the index.
In the future allow issuance of governance tokens per index and distributed to the index investors based ok profit distribution. Tokens used to vote on underlying asset changes. You get a decentralized indexes system
Eventually people will be able to showcase their portfolio publicly and still be “anonymous” to a certain degree. While other people can join them, you get Yearn Copy Trading product.
Add a rev-share % for YFI holders. A minim fee, adjustable for higher incentives to push YFI holders to:
A. Deploy capital in these indexes.
B. Small portion could also be reserved in governance tokens for YFI holders in case the index owner decides to go public.
First thing, I’d strongly suggest creating some sort of community-agreed upon weighted benchmark where the weights adjust at a regular time interval (hourly). YFI holders can vote in / out the number of tokens and initial weights. First one should be as close to all-encompassing as possible, and of course users can buy in. This benchmark should aim to be the industry standard. For too long this has been BTC. BTC / ETH can be included, but they should not be the benchmark anymore.
From there, world of possibilities. I’ll jump on later with more thoughts.
I am not sure about the underlying incentives given to the creator of a fund or the creation of additional government tokens, we should first think about the utility for the users. And the utility I see is that there is an investment strategy with no need for rebalancing. I do not want to get into the discussion about which coins should be added, competition between different strategies, etc. I also do not want to address the viability of the idea, I would leave to the more experienced members. My post is related automatic rebalancing:
Automatic rebalancing has to do with the weights one assigns to the different coins in the basket.
There are two extremes, which defines the space in which one should look for weights:
(a) the same dollar value is invested in every coin in the basket.
(b) the basket maintains the same ownership-percentage in all coins.
(a) is self-explaining. To explain the latter, if there is a total of 20M BTC and 100M ETH in circulation, the basket would hold 5 ETH for each BTC. Price swings (a) and different inflation rates (b) cause a need to rebalance holdings, which could be done on a agreed upon time interval (monthly, weekly, daily, hourly).
For me, the final weights would be a convex combination of (a) and (b). As a consequence, one only has to decide on a single number. The updating process is far easier than going through individual weights for each coin.
This is my first post. I have been disregarding the project for two months (having heard about it obviously), but I thought of it as something that would go away when yields decline. Only after studying the project in detail, I noted the underlying potential and its human capital. So, I made a small initial investment (at an objectively too high price), but I am willing to be around for long if the project keeps innovating.
Definitely a + b. It’s way easier from user experience I believe. Maybe even smart contract wise, as user won’t need to approve and deposit 10 assets separately.
The idea is \alpha * a + (1 - \alpha) * b, where \alpha is the weight assigned to (a) and 1-\alpha the weight assigned to (b). If \alpha = 1, then you get (a). If \alpha=0, then you get (b). One only has to update \alpha (which can be voted upon) once the strategy is deployed to shift the investment focus. So, whatever assets you allow as an input, the basket will always apply the above formula…
I wish I was software engineer sometimes.
I understand what you explained as it’s math. Hopefully the idea will be implemented
Hmazawi, I’m a software engineer, I love this idea!
I think that there are two ways to go with it:
- Someone can create an index fund that only allows certain assets to be added, controlled by governance as you said. This creates a stablecoin as claim to the fund, but each index fund would have a different stablecoin. This would be the “governance” token also for that fund. The incentives are still aligned, as the value of the stablecoin will increase with good fund management.
- Someone can create a fund of assets, but all funds mint a single stablecoin. Seperately a governance token is issued to those who support a particular fund, which accrues fees to the governance token.
- a single stablecoin that can be used by anyone, that isn’t fragmented (and might actually be useful to the ethereum ecosystem)
- A governance coin that incentivizes good management of the fund in order to increase fees collected, and therefore the value of the governance token.
Let me know what you think of these ideas!
Wait or why not just create a bare bones stablecoin that is backed by only either ETH or BTC.
This would be a much more capital efficient version of maker, and would be much more decentralized. I don’t believe that chainlink is especially decentralized, but not using centralized stablecoins (USDC etc) as collateral would be a huge win, as well as capital efficiency! (100% collateralization as opposed to 150%+)
All it would require is redeploying the contract to only allow ETH and BTC synthetics to back it.
So if I understand this correct. The end result of an index fund like this would be for the user to be able ro take out a loan against their asset(any of the approved tokens) while also benefiting from the underlying rebasing mechanism of the index fund?
People use Maker generally because want to hold on to their collateral asset (and be able to get it back at any time) while minting a stablecoin that they can use in the mean time. They must overcollateralize (on the order of 150% of the value of the stablecoin they mint/borrow) for this to work
Instead in this system, they get ALL of the same benefits, except 100% collateralization (your collateral goes much further). The system is also orders of magnitude more simple.
Also as a side note…its in the best interest of the defi space to move away from centralized stable coins and into some form of algorithmically controlled stable assets…centralized stable coins are defi’s biggest achilles heel at the moment…someone with a lot of liquidity behind them should look into it(wink wink)…but i digress…back to the topic at hand…
Ah I see thanks for this clarification…now im fully able to appreciate the beauty of this concept
Is anybody interested in working with me on a BTC/ETH Stablecoin and to get it out the door ASAP? I can do smart contract work, but I would need help with front end (I can also do some front end) and marketing
If we wanted to allow the system to be governable we could also allow different collateral types to be added and also supply caps for different collateral types, and allow governance to determine that. Governance tokens could be minted to those who supply liquidity at a constant rate, or a decreasing rate over time
How do you manage the collateral on 100%?
I lost on that
You put in $100 worth of LINK, you get $100 worth of stablecoin. You put back $150 worth of stablecoin, you get $150 worth of LINK out.
MakerDao: You put in $100 worth of link, you get something like $66 of stablecoin out, AND pay a stability fee.
Anyone: send me a dm through this forum if you are interested in helping out
There is a ton of ETH and BTC in the hands of holders sitting on capital gains that in some jurisdictions (including the United States) would potentially be subject to taxation if converted into another coin or token. There is almost certainly a large market for tax friendly options for holders to participate in defi but delay capital gains at the same time. I recommend considering if such a tax friendly solution can be incorporated here.
And what happens when everything goes down 50%?
People redeem their tokens for 50% the value?
From the medium article: https://medium.com/iearn/introducing-syntheticrebasedollar-a-credit-based-rebase-index-7e6e0ce7c24
“Deposit $100 worth of LINK and you receive 100 srUSD. If the value of LINK increases by +50%, you will have 150 srUSD.”
This example broken down:
Say Link is worth 1 USD. You deposit 100 Link, which is worth 100 USD. You get 100 srUSD. Link increases to 1.5 USD. You now have 150 srUSD. You redeem that srUSD for 100 Link.
The opposite example:
Say Link is worth 1 USD. You deposit 100 Link, which is worth 100 USD. You get 100 srUSD. Link decreases to 0.5 USD. You now have 50 srUSD. You redeem that srUSD for 100 Link.
Great. I understood right then.
Thank you for clarifying.