Decision Gate 2 is the final vote for onboarding products to the Index Coop. A full overview of the product onboarding process can be found here.

A passing vote here signals a commitment by the Index Coop to launch the Llama Diversified Index $LDI in a timely manner.

Work Team Analysis

The Work Team Analysis for Llama Diversified Index $LDI has been posted here.

Product Requirements

The PRD document for Llama Diversified Index $LDI can be found here.

Passing Thresholds:

• 10% or more of circulating supply must participate (2,181,385 * 0.10 = 218 138)
• 60% or more of participating tokens must vote FOR

The full-text Llama Diversified Index $LDI proposal exceeds Snapshot’s character count limit. Below is an abbreviated proposal. Check out this forum post to read the full proposal.

================================================ Status: Proposed Author: @llama with support of PWG Created: 13th December 2021

Simple Summary

The Llama Diversified Index (LDI) seeks to offer a productive diversified crypto index that is optimized for volatility-based performance. By allocating fixed portions of LDI to key themes, holders will always have exposure to the most consistent winners within each key sector across the ecosystem.

Utilizing volatility-adjusted returns intends to allocate more capital to winning tokens, whilst rotating out of outperforming sectors. By maintaining a cash allocation, LDI buys the dip and rotates towards cash when higher vol assets outperform. LDI is intended to be a truly set and forget productive, diversified portfolio. The interest from DAO treasuries is a testament to the set and forget design features.

Llama is truly excited by the prospect of partnering with Index Coop and looks forward to developing a long-term prosperous relationship. LDI = Let’s Do It!

Abstract

The LDI is a productive and diversified crypto index that optimizes returns relative to risk across various sub-asset classes within the crypto ecosystem built on Set Protocol. The allocation will initially be divided among 6 sub-asset classes: Stablecoins, Bitcoin, ETH, DeFi, Metaverse, and Web3 Infrastructure.

Through this curation, LDI optimizes for intrinsic productive and volatility-adjusted returns whilst providing holders passive exposure to broad market segments, targeting those lacking time or expertise. The cash allocation ensures passive strategies like buying the dip and rotating gains into stables is passive feature. LDI is a product to recommend to DAO treasuries and those new to crypto who want a true set and forget product.

Motivation

This new set has been developed to provide holders with a diversified portfolio of productive assets wherever possible to maximize returns. By providing holders with an automated diversified asset allocation solution, LDI enables passive investment in a diversified set that provides access to the main thematic investment sectors on the Ethereum network. The diversified portfolio construction has already proven to have a strong product-market fit as Gitcoin has expressed interest in becoming an early investor in the product.

In time, LDI will be integrated across DeFi, allowing for extrinsically productive opportunities to be generated on top of a balanced index, further enhancing the appeal of holding a diversified portfolio. Llama has built an extensive network across DeFi and is able to accelerate LDI integrations across the ecosystem. At the time of writing, Llama has approximately 25 contributors that are also members of other DeFi communities.

LDI has several key advantages over traditional diversified portfolios:

• Utilisation of productive assets where possible
• A more sophisticated asset allocation methodology that optimizes for Sharpe ratio while integrating appropriate constraints to ensure diversification among established crypto sub-asset classes
• Low vol USD yield aggregation (PAY or higher-yielding versions)
• Access to a liquid secondary DEX market
• LDI productive use cases

Llama has already received expressions of interest from various parties regarding this particular product and intends to create complementary products as part of our overall treasury management strategy solutions.