Q1 Retrospective and What’s Ahead for Q2

Roadmap Summary

For those who want the quickfire summary, here’s what we have lined up for Q2:

  • Introduction Of Core Index Exit Fees
  • Protocol Revenue Disbursal [NDX Staking]
  • Algorithmic LP Incentivization
  • KPI Airdrop [Partnered With UMA]
  • Increasing Community Engagement [The IGP]

Introduction

If you blinked, you missed it — Q1 2021 is behind us already. Indexed Finance launched in the run-up to Christmas last year, and we’ve made significant progress towards our goal of providing diverse, cost-efficient ETF products.

Q1 Retrospective

Following a silent launch on the 8th of December last year, Indexed Finance received an investment of US$90,000 from Molly Wintermute via their M&A fund. Beyond its usefulness as money for the Indexed development fund, this investment was a deeply-appreciated nod by one of the most prolific figures within the DeFi space.

NFTP index announcement
  • Bancor held concurrent votes on whitelisting NDX and all of our existing ETFs on their platform, enabling users to provide single-sided liquidity with impermanent loss insurance. With the exception of the DEGEN index, all proposals passed. The NDX pool is already live.
NDX pool on Bancor

Q2 Roadmap

We are taking it as given that the index/ETF space will become increasingly crowded as 2021 burns on, and as such are currently focusing our efforts on evolving the Indexed protocol to further distinguish ourselves from our competitors, increasing the utility of the NDX governance token and indices alike.

Indexed Finance V2

We have begun work on a protocol upgrade that will allow us to deploy new indices using new portfolio structures. We won’t abandon the Balancer model that we currently use as the backbone for our existing ETFs, but we need something more flexible.

Uniswap V3 Position Managers

The launch of Uniswap V3 is coming up, and with it many new opportunities for market makers. For those unfamiliar with Uniswap V3, we recommend you read their blog post, but the basic summary is that it represents a massive shift in how AMM liquidity is handled, with liquidity provided at the level of specific price ranges rather than entire pairs. It will create the potential for much greater capital efficiency at the expense of higher management overhead, and we believe there will be huge demand for strategies that take advantage of these new features while retaining the simple user flow of V2.

Core Index Exit Fees

The launch of our first two Sigma program ETFs — DEGEN and NFTP — introduced a modest exit fee of 0.5%. This is charged when index tokens are burned for their underlying assets — it does not impact the average trader, who is more likely to market sell the tokens than burn them; rather, it’s primarily incurred by arbitrageurs that seek to profit from differences between the net asset value and the market price of the ETF. These fees have thus far been routed to the Indexed DAO Treasury, pending distribution to NDX holders upon the introduction of staking (more on this below).

Protocol Revenue Disbursal [NDX Staking]

Up until now, the NDX token which governs the Indexed DAO has been utilized purely as a governance token in the spirit of UNI, from which it was forked. However, as the Treasury has gathered revenue via exit fees on the Sigma indices — as well as looking forward to future revenue streams such as the above proposal for additional core index exit fees, performance fees on yield-farming strategies, etc. — we now wish to introduce a method to disburse said funds to dedicated supporters of the protocol.

Algorithmic LP Incentivization

Throughout Q1, the Indexed team distributed 25% of the total NDX supply over a three month period to Uniswap LP and ‘naked’ staking for DEFI5 and CC10. The purpose of this was to attract initial TVL for the protocol and quickly dilute the core team’s governance power.

KPI Airdrop [Partnered With UMA]

As we have grown, we have been increasingly interested in seeking out ways to draw visibility to the Indexed platform from various DeFi communities — those engaging in good governance practices, those with objectives aligned with our own, etc. In the search for novel — and mutually beneficial — incentivization mechanisms for onboarding, we are particularly interested in the key performance indicator (KPI) airdrop mechanism that has recently been introduced by UMA for extending user bases.

Increasing Community Engagement [The IGC]

As we continue to develop the Indexed protocol, our focus will shift towards increasing awareness of our products, unique selling points and brand — both within DeFi and when reaching out to retail investors. At the time of writing, we are currently sponsoring the Unchained podcast, but acknowledge that a great deal more needs to be done to improve awareness and refine our marketing strategy.

  • Targeted advertisements (e.g. podcasts, Reddit, Etherscan)
  • Education (e.g. videos, infographics)
  • Partnerships (raising visibility of our index products in popular wallets, DeFi protocols)
  • Influencer collaborations
  • Treasury management solutions
  • Implementation of a referral system