What are Index funds?

Index funds have been seen as a low-risk and cost-effective way to invest in the traditional finance world. They are considered as one of the safest ways to participate in a financial market. Investors do not have to worry about researching and constantly rebalancing their portfolios.

This passive investment opportunity has historically outperformed actively managed funds.

Now, this offering of traditional finance is available to the world of cryptocurrencies as well.

The Crypto market operates 24/7. And it is extremely volatile. There are thousands of crypto assets available. Active management of the assets requires high effort and high fees.

Index Coop solves this challenge.

It is a global community that enables the creation and adoption of crypto index products. The offerings are for retail investors, institutions, as well as investment professionals.

Why Index Coop?

What makes Index Coop special is that it helps the entry of investors into the complex world of crypto with the help of a single token. The investors do not need to purchase all the underlying tokens individually.

It makes the life of beginners easy. Those who don't have technical knowledge of crypto can also get started. Get exposure to the various sectors and themes in crypto.

Index acts as a hedge against a particular sector. It reduces the risk significantly. Beginners who are apprehensive of the risk of crypto may find the index preferable to invest in.

An index fund holding multiple vetted tokens means the investors get more exposure while saving on the gas fees needed to buy individually.

Index Cooperative or “Index Coop” operates as a decentralized autonomous organization (DAO).

Index Coop is governed by the community.

The native token is INDEX. INDEX token holders are collectively responsible for the future of the Index Coop. They propose and vote on new products, Manage the allocation of the treasury which is owned by the community and vote on the governance of the underlying tokens.

What are the various Index Coop products?

The major crypto-native products offered by Index Coop are

• DeFi Pulse Index (DPI)

• Metaverse Index (MVI)

• Data Economy Index (DATA)

DeFi Pulse Index (DPI)

The DeFi Pulse Index is a digital asset index. It is an index representing digital assets that are included in proportion to their total market capitalization. (It is a capitalization-weighted index; The index is weighted based on the value of each token’s circulating supply.)

It tracks the performance of Decentralized Financial assets across the DeFi market. The projects which are innovative and have the potential of high usage are added.

The DeFi Pulse Index makes investing accessible to everyone. Even non-technical investors now can get access to returns that are gained by highly technical investors.

Without any hassle, a non-technical investor can get exposure to the DeFi ecosystem with the help of a single token.

Underlying Tokens

One of the major benefits is that there is no impermanent loss. DPI uses Set Protocol’s audited infrastructure. The impermanent loss experienced with AMM-based solutions is avoided because of it.

The landscape evolves frequently and is highly complex. DPI makes the investment simple for the investors without worrying about multiple tokens.

Metaverse Index (MVI)

Metaverse is a shared digital space that is a combination of many digital products & services which integrate real-world aspects. Think of it as an immersive life inside a digital world. Games, Entertainment, Social media are foraying into the metaverse.

Virtual experiences have been there for years but with metaverse, the virtual world doesn't feel different from the real world. Aspects like identity, ownership are of key importance in the metaverse.

A lot of players are emerging in this space.

But who will win is difficult to predict? By using an objective methodology & combining the insights from industry experts, this index ensures users will have exposure to the top metaverse projects over time.

Underlying Tokens

Similar to DPI, MVI also helps investors get access to the world of metaverse with a single token without worrying about managing multiple tokens.

Data Economy Index (DATA)

An ecosystem of data-based products and services which are disrupting data monopolies that collect, store, and sell data.

Underlying Tokens

The DATA index is a basket of 7 tokens.

Filecoin (renFIL), the Graph (GRT), Basic Attention Token (BAT), Livepeer (LPT), Ocean Protocol (OCEAN), Numeraire (NMR), and Chainlink (LINK).

The DATA index is data-centric and chain agnostic. DATA includes tokens that provide data-based products or services across blockchains.

DATA gives exposure to the sector & makes it accessible for non-technical investors.

It is the first decentralized index that captures the growth of data-based products and services. It is also the first to include non-Ethereum-based tokens.

Benefits of holding Index products like DATA, MVI, DPI, etc

Index Coop enables the creation and maintenance of index products that are crypto-native. Now let us look at a few of the benefits of Index Coop products.

Low costs & efficiency: There is no need for multiple expensive on-chain transactions. So instead of buying and selling individual tokens the gas cost is reduced due to a single token.

Diversified exposure: It leads to better risk management. The portfolios without diversification tend to be more volatile. And the volatility of individual tokens is balanced by a collection of multiple tokens. This wider offering in a single token offers protection from downsides.

Rigorous inclusion criteria: The assets included to be a part of the index must have high quality. They should meet a minimum threshold of token supply, project traction, and user safety. The tokens must be audited by security professionals to ensure the safety of the investors. They also need to have sufficient liquidity across trading platforms.

Simplicity: Easy way to be a part of the Crypto world without getting into the technicalities. It is a hassle-free way for investors to invest without having to constantly research & rebalance a portfolio. The best of Crypto world in a single token.

Transparency: The inclusion and removal of the assets are done with a transparent methodology.

How to purchase Index Coop products on decentralized exchange

As of now Index Coop products can only be purchased with the help of decentralized exchanges like Uniswap, SushiSwap.

To buy the products like DPI, MVI or DATA on decentralized exchanges, another cryptocurrency is needed.

Steps:

1. First step is to purchase Ethereum (ETH).

You can purchase ETH on any centralized exchange like coinbase and then send it to your crypto wallet’s address of Coinbase Wallet, Metamask, Rainbow.

You can also buy ETH directly on Metamask using a debit card or bank transfer.

Option to buy ETH using debit card or bank transfer with the help of Wyre & Transak.

2. Then the next step is to use the ETH to purchase Index Coop products in a decentralized exchange. This is called swapping. Connect your wallet in the exchange and select the amount of ETH you want to swap.

Select the the index coop product you want to buy.

Now click on swap and you will buy your favourite Index Coop product. You can also use Matic to purchase index coop products.

3. If you already have ETH in your wallet you may also purchase the products from Index Coop website directly.

• DPI: https://app.indexcoop.com/dpi

• MVI: https://app.indexcoop.com/mvi

• DATA: https://app.indexcoop.com/data

Index Coop has integrated Uniswap & SushiSwap on their website.

After you connect your wallet you can purchase the products

Enter the amount of ETH you want to spend for buying your favourite index coop product and click on Buy.

Conclusion

Index Coop is bringing the best of traditional finance into decentralized finance. And along with that, they are improving its manifolds.

Beginners can now dive into crypto without the hassle & research. Index Coop with its thoughtful products is making this easier.

• Along with building a great product, they also have a great community on discord Link.

• You can also follow them on Twitter at @indexcoop for regular updates

• For an in-depth technical guide, do check their gitbook here.

This is an educational article and not financial advice.

What is Phuture?

Phuture is a platform which simplifies crypto investing. Instead of worrying about which crypto to buy and which one to sell, Phuture offers managed portfolios through a single token.

Phuture enables anyone to invest in or create a crypto index.

What is an index?

An index mimics the composition of multiple assets into a single asset.

For example, instead of buying 2 axies, 5 mana and 10 sand, you can simply buy 1 token which consists of these assets.

What Phuture offers?

One can access the diverse index products of Phuture to invest or become an index manager to launch their index.

For index managers, Phuture makes it easy to create their index strategy. Phuture has predefined sectors in which the index manager can curate a portfolio of assets.

Phuture operates as a Decentralized Autonomous Organization. DAO empowers each of the members to participate in the governance, discussions, vote of new ideas and vote on existing proposals.

The native token PHTR is used to

• Enforce governance

• Reward users

• Incentivise activities

The technical innovations which make Phuture disruptive.

1. Liquidity sources of Phuture

Phuture uses external liquidity.

It sources liquidity from the Ethereum network. It taps into the Most liquid exchange.

Currently it sources from Uniswap V2 and sushiswap.

This helps Phuture to separate the cost of execution from the size and depth of the index.

Phuture’s design ensures that the trading cost is the same whether minting an index with millions under management or an index with few thousand under management.

How phuture is different from Balancer designs?

A balancer pool cannot accept sided deposits due to extreme slippage.

The user has to deposit the constituent assets into the pool to ensure sufficient liquidity.

Liquidity bootstrapping works without any hassle for a limited number of indices.

But it is unwise to assume that the investors for the index may own the underlying token.

Phuture removes the liquidity bootstrapping phase.

2. Architecture.

Phuture can support infinite indices created on it.

But how does it achieve it?

Rebalancing each index is not a viable option. It requires a lot of additional operations.

So what phuture does to solve this is to group the indices into homogeneous pools of assets. Instead of solving locally, Phuture solves it at a higher level.

Each of the indices is assigned a weight based on the asset’s weight in the index.

When the rebalancing happens between two asset pools, all the indexes holding either of the assets are balanced.

Phuture utilises the assets to generate additional yield instead of sitting idle.

The assets are stored in Vaults. Phuture maintains a reserve level in the vault to support rebalancing and redemption. Rest is utilised to generate yield.

However, there is a challenge.

Smaller indices would not benefit from yield optimisation as their asset needs to be kept in the vault for rebalancing and redemption.

Phuture solves this by maintaining one reserve for each asset pool on the platform.

The yield is shared pro-rata across the indices making up that asset pool.

3. Smart rebalancing.

Phuture is designed to prevent rebalancing when the asset’s weight sits outside of an acceptable range. This is done by rebalancing bands.

It prevents excessive rebalancing for each small price movement as well as provides safety when the price move drastically.

Phuture uses oracles for the pricing data. Oracles aggregate the data from multiple sources and are robust against manipulation.

To prevent rebalancing of assets that do not share common indices, phuture has a rebalancing surface. It maps the relationship between every asset in the Phuture and utilises the relationship to prevent leakage of value from one asset to the other.

So how to get started?

1. Invest in an index created by someone else

Currently Phuture.finance demo is live at https://demo.phuture.finance/indices. The existing indices are shown on the homepage.

On Clicking the View button in the 1st index (DeFi Index), the detail stats are shown.

2. Now lets see how you can create your index

Incase you want to be the index manager and create your index. Click on the create index button.

You may to choose to create a sector specific index. Suppose you want create a index of Lending projects then select the Lending block. Please note that all the options are not enabled in the demo version.

Now select the weighting method. On the demo version, fixed weighting method is available. Once the product is fully launched more options will be enabled.

On Clicking Add assets button, you will be shown all the assets available.

Now I want to create a token having Uniswap, Sushiswap and Compund.

Once the sum of the weights is 100, we can create the index buy paying with USDC.

There you go. All set to make your life easy by investing in an existing index or by making the life of others easy by creating your index.

Investment for Web3 environment.

Phuture is bringing the best of traditional finance into decentralized finance. And along with that, they are improving its manifolds.

• Along with buidling a great product, they also have a great community on discord. Link.

• You can also follow them on Twitter at @Phuturedao for regular updates

• For an in-depth technical guide, do check their gitbook at docs.phuture.finance