Index

IIP: 166 Title: Deprecate MNYe, GMI, FLI-P & DATA products Status: Proposed Author(s): @mrmadila Reviewed by: @afromac , @anthonyb.eth, @DevOnDeFi Created: 19th Oct 2022

Please note: this post was edited on Friday Oct 21st to include DATA to the products proposed for deprecation.

Summary This proposal intends to deprecate the following products:

MNYe (op:0x0Be27c140f9Bdad3474bEaFf0A413EC7e19e9B93 2) Flexible Leverage Indices (FLIs) on Polygon: ETH2x-FLI-P (matic:0x3Ad707dA309f3845cd602059901E39C4dcd66473) BTC2x-FLI-P (matic:0xd6cA869a4EC9eD2C7E618062Cdc45306d8dBBc14) MATIC2x-FLI-P (matic:0xf287D97B6345bad3D88856b26Fb7c0ab3F2C7976) iETH-FLI-P (matic:0x4f025829C4B13dF652f38Abd2AB901185fF1e609) iBTC-FLI-P (matic:0x130cE4E4F76c2265f94a961D70618562de0bb8d2) iMATIC-FLI-P (matic:0x340f412860dA7b7823df372a2b59Ff78b7ae6abc) GMI (eth:0x47110d43175f7f2C2425E7d15792acC5817EB44f 1) DATA (eth:0x33d63Ba1E57E54779F7dDAeaA7109349344cf5F1) Each of these products will have flash minting removed from the app.indexcoop.com, an official announcement of deprecation (including procedures for existing holders), and a 30 day waiting period before any changes to the product are made. At this point, each product will be rebalanced into a single asset to make for easy, efficient, inexpensive redemptions.

Motivation Over the last several months Index Coop has been scaling back in size and expenditure, and refocusing the product roadmap to meet our core objectives. As part of these ongoing efforts, the Index Coop Product Pod has identified several products that have not shown strong demand or demonstrated product-market fit (PMF). These products have lagged in the metrics and KPIs that Index Coop monitors, metrics such as Total Value Locked (TVL), Net Dollar Flows (N$F), and Unique Holders w/ $100+ in Exposure (UH>$100).

Typically, Index Coop products have a relatively low margin and require a sustained, high TVL over time to cover the direct and indirect costs of launching and maintaining products. In addition, Index Coop has also inherited many costs previously paid by Set Protocol such as rebalancing resources and associated gas costs.

As an illustration of the lack of demand for these products below are some figures based of off simple TVLs:

Product Current TVL Peak TVL MNYe $23k $220k ETH2x-FLI-P $450k $3.8m BTC2x-FLI-P $155k $227k MATIC2x-FLI-P $105k $410k iETH-FLI-P $44k $260k iBTC-FLI-P $36k $128k iMATIC-FLI-P $131k $150k Total FLI-P suite $921k $4.98m GMI $480k $4m DATA $476k $2.5m With such low TVLs these products are not generating sustainable revenue. Whilst this is expected at the early stage of a product life cycle, it is now fair to say these products have received an adequate share of resources and time for the market to indicate if any sustainable demand exists for them.

More objectively these products fail to meet some of the requirements set out under the previous Product profitability and retirement framework 4.

Costs were previously mainly attributed to gas costs related to rebalancing. Whilst these costs are negligible on Polygon and OP, there are many indirect costs that are not. As the post notes, indirect costs must also be taken into account. Factoring these costs with the low/negligible revenue from these products has driven this decision at this point. Indirect costs include marketing efforts, launch support, risk management, rebalancing execution, and maintenance of a keeper network (for FLI), alongside general time and internal resources. Many aspects of indirect costs are less tangible than direct costs, in the case of these products these costs are estimated to be materially higher than the revenue they generate.

Revenues

Product Cumulative Revenue (Gross, 3 months) MNYe ~$100 2 ETH2x-FLI-P ~$6k BTC2x-FLI-P ~$1.6k MATIC2x-FLI-P ~$10k iETH-FLI-P ~$1.8k iBTC-FLI-P ~$700 iMATIC-FLI-P ~$1.3k Total FLI-P suite ~$21.4k GMI ~$2k DATA ~$1k Total $24.5k (<$100k annualised) Specification The schedule for deprecation of these products is as follows:

Timeline Date Action 19th Oct 2022 IIP posted to forum 24th Oct 2022 IIP to progress to snapshot Upon IIP passing 27th Oct 2022 Flashmint ability removed from app.indexcoop.com 27th Oct 2022 Product pages on indexcoop.com 1 to show deprecation announcement 27th Oct 2022 Publicly release communications on deprecation of products via marketing channels 27th Oct 2022 30 Day Buffer Period to begin (no product changes during this period) 27th Nov 2022 Rebalance each product into a single asset (details below) 27th Nov 2022 Index Coop to continue supporting users selling or redeeming positions 27th Dec 2022 Active support ends. Users will be able to redeem manually via direct smart contract interaction only. Rebalancing Product Rebalance Action MNYe Rebalance into 100% USDC ETH2x-FLI-P Rebalance into 100% wETH BTC2x-FLI-P Rebalance into 100% wBTC MATIC2x-FLI-P Rebalance into 100% wMATIC iETH-FLI-P Rebalance into 100% USDC iBTC-FLI-P Rebalance into 100% USDC iMATIC-FLI-P Rebalance into 100% USDC GMI Rebalance into 100% USDC DATA Rebalance into 100% USDC Closing The Index Coop Contributor Community views deprecating products as part of the process of bold experimentation and appropriate risk taking within the new and exciting bounds of decentralized finance.

We thank Bankless, Scalara, D4 and all other associated methodologists, partners and collaborators for their help and input into launching these products, as well of course as the important community of users who invested in them. As always, Index Coop looks forward to bringing more exciting products to market in the near future!

Voting FOR:

DO discontinue Index Coop support for MNYe, GMI, FLI-Ps & DATA and follow the deprecation plan as outlined above

AGAINST:

DO NOT discontinue Index Coop support for MNYe, GMI, FLI-P & DATA