Not sure which of the up-and-coming decentralized finance tokens are the right bet? Why not just buy all of them?
Obviously, the gas costs alone of buying all of them would be prohibitive, never mind the time it would take to just catch each one as they launch.
It’s called the Bankless DeFi Innovation Index, and its GMI token launches today.
For those who don’t dedicate their days to crypto Twitter, “GMI” is shorthand for “gonna make it.”
“Our thesis is, DeFi moves fast,” Peter Lemonade from Index’s growth team told The Defiant in a phone call. “A lot of our customers were looking for something a bit further out on the risk curve.”
GMI can be found through the Index Coop site, Uniswap and various other places on Ethereum. GMI will also be the first index token available at launch on the Polygon network.
For two months, buyers will be able to stake their GMI tokens and earn a share of 18,750 INDEX tokens that will be distributed over that time, with most of the tokens being paid out in the first month.
Bankless’s David Hoffman told The Defiant over Twitter DM:
“We launched the GMI because there’s an emerging trend with new DeFi protocols that we felt was under-represented within the Index Coop products. There’s a lot to digest with these new DeFi protocols, using primitives like protocol-owned liquidity to algorithmic stablecoins and rebases, and more. It’s confusing. GMI simplifies the process and allows anyone to easily get exposure to the rise of ‘DeFi 2.0.’”
The Innovation Index will begin with twelve tokens, the idea being that holding a broad array of tokens reduces investors’ risk and saves them the hassle of scouring the charts for new potential winners.
It’s taken a number of factors into consideration in order to appropriately weight the different tokens in the fund. It also has a system for graduating tokens out so that it can continue to be the home of up and comers.
The initial twelve (listed by the size of their allocation) are Olympus DAO’s gOHM, Fei Protocol’s TRIBE, Ribbon Finance’s RBN, Convex’s CVX, Magic Internet Money’s SPELL, Tokemak’s TOKE, dyDx’s DYDX, Alchemix’s ALCX, Perpetual Protocol’s PERP, Reflexer’s FLX, and Maple Finance’s MPL.
“We think it’s like the DeFi degen type product. You have a more risk-on persona. We take away the complexity of finding new tokens,” Lemonade said.
Index Coop has previously launched the DeFi Pulse Index, which tracks the biggest DeFi projects and takes a fairly conservative approach. It also launched the Metaverse Index, Eth 2x FLI which leverages the price action of Ether up or down, and BTC 2x FLI which does the same for Bitcoin.
The Innovation Index has been designed to give holders the benefit of dramatic gains that can sometimes be realized suddenly for certain coins. To that end, the tokens in GMI will only be rebalanced every two months, rather than the traditional monthly rebalancing. “With the monthly rebalancing cadence you’re just selling winners a lot of times,” Lemonade explained.
At each rebalancing, no token can make up more than 15% of the value of the index. The index is managed by the Index Cooperative’s Set Protocol. It’s stewarded by a small team of methodologists, which include Lemonade and members of the Bankless DAO.
Unlike the DeFi Pulse Index (DPI), which follows all the most senior DeFi governance tokens, but has eschewed yield bearing tokens so far, GMI will be able to take advantage of yield opportunities for tokens. The only yield earning token at launch will be gOHM, the governance token for Olympus DAO.
“We want it to be as performant as possible,” Lemonade explained.