Indexed Finance — Q1 Objectives & Governance
As we all settle into the new year, we want to share our objectives for Indexed Finance in the first quarter of 2021 and provide some information about how we plan to facilitate early governance.
As described in the introduction post, documentation and elsewhere, the team’s NDX are locked in a vesting contract, but we have retained the ability to create and vote on governance proposals. Until enough tokens have been distributed to dilute us to a minority, here’s our plan for governance:
- We will not create proposals except to take actions which have already been announced, for example the start of the second round of distribution, or where doing so is critical to the security of the contracts.
- We will not use our delegation to vote on proposals except for the reasons described in the previous point, or in cases where a clear majority has been attained on the proposal but insufficient tokens have been distributed to reach a quorum.
We want to ensure the security of the project while respecting the ethos of decentralization, so we are committing to non-interference except in cases where funds are at risk or the community has made a clear decision but is unable to reach a quorum. Once we have been diluted to a minority or enough NDX holders are active in governance to reach a quorum on proposals, we plan to step back from governance decisions.
First Quarter Objectives
Here are our top priorities for the first quarter of 2021. These are not necessarily listed in temporal order.
1. Second Phase of NDX Distribution
Governance is crucial to Indexed Finance, and we want to limit our control as soon as possible. The second round of distribution will begin on January 7th and distribute the remaining 2.25 million NDX that have been reserved for liquidity mining, putting Indexed on the path to decentralization.
2. Move to Snapshot
We have an interface for governance on the website, but it uses direct interaction with the smart contracts, which can be expensive. We plan to move to Snapshot for governance in the next few weeks, which will make it easier to create proposals and judge community support prior to executing governance proposals on chain.
3. Track new market sectors
We want to work with other NDX holders to define additional market sectors to track with index pools. We’re still looking into which markets to track — join the conversation on our Discord.
4. Third Phase of NDX Distribution
On January 22nd, NDX governance will receive another 2m NDX. These will not be immediately distributed, but we will work with NDX holders to determine how the tokens should be used — one idea we’ve discussed is to do an airdrop to active users of other DeFi protocols. We also like Balancer’s method of frequently disbursing tokens to liquidity providers.
We decided to space out the release of tokens so that NDX holders are able to determine how they should be distributed once the team has been diluted to a minority through liquidity mining.
1. Expand the development team.
Indexed Finance currently has two developers. We’re proud of what we’ve accomplished so far, but we know we can do a lot more by expanding the team. On-boarding new developers will be a top priority in the next few months.
Growing the team will enable us to experiment with new management strategies, make faster improvements to the website, and otherwise accomplish the goals we’ve set for the project.
2. Complete the keeper smart contract and bot.
Keepers will be the backbone of Indexed, ensuring that regular maintenance is carried out without manual intervention. The keeper contracts will reward users who call periodic update functions on the oracle and pool controller, and the keeper bots will automate the process.
3. Develop a router to aggregate liquidity across pools.
While we currently only have two index pools, we expect governance to deploy new ones and increase the number of market sectors being tracked. Liquidity aggregation will become increasingly important as the number of pools increases, and a trade router will be critical to that.
As examples, Uniswap has a router which aggregates liquidity across token pairs, and Balancer has a smart order router which aggregates liquidity across Balancer pools. While our index pools are based on Balancer, there are some implementation details that prevent us from using their router.
Once we have completed an order router, we’ll add a dedicated exchange interface at indexed.exchange.
4. Develop an informational website.
In the coming months we plan to create an informational website with detailed breakdowns of each index pool and token category. For pools, this will show the current assets, their performance compared to holding, balances of underlying assets over time, reindexing and reweighing events, swaps, joins and exits executed, etc. For the token categories, we want to display token prices and market caps over time, governance decisions affecting the constituent tokens and more.
5. Experiment with new management strategies
We currently have a single management strategy — the capitalization-weighted indexing strategy. We want to explore new management strategies and pool implementations to take the project beyond a single form of index. Once the more urgent development tasks are complete, we will experiment with style indices similar to the S&P’s value and growth weighted funds as well as completely different management strategies.
We want to wish everyone a happy 2021 and thank those who have supported the project so far. We look forward to growing the community, building new features and seeing where the year takes us.