yIndex development?

Sorry if I missed this but has there been much discussion on yIndexes? In a world where passive investment is highly sought after I believe index strategies could be super interesting to develop.

Further, a strategy that provides long exposure to a sector of cryptoassets (e.g. DeFi, large caps, NFTs, etc) and provides automated rebalancing following a strict methodology could be a very attractive product.

Another cool thought for indexes is that the yearn ecosystem is uniquely positioned to provide the highest benefits and returns to passive index strategies. Let’s think about a DeFi index for example, where YFI holdings go into the yYFI vault, LINK holdings into the yLINK vault, SNX holdings into the upcoming ySNX vault, etc. By doing so, not only can indexes track the performance of the underlying, but provide a yield ontop of it!

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Hey,

I’m super bullish on Indexes as well. What DeFi Pulse and TokenSet have made with $INDEX is awesome, and I believe we can leverage Yearn success to launch a similar product. I will support this initiative :ok_hand:.

Thanks

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Since there are serious projects in the space already with working products we need a twist in this to make it take off. I really like your idea with getting yield on the assets as additional return because that is yearn´s core expertise. If we construct an index made solely out of yield producing assets that would probably crush it so hard.

Combined with automatic rebalancing according to market cap every so often (like once daily) it would imitate industry standard ETFs like SPY. In this context I suggest that the index vault actually pays out the yields like dividends to the investors on a regular basis (e.g. at rebalancing). That would be the perfect analogy to giants like SPY and especially appealing to rent seekers.

Let´s build the yYIELD index. :smiley:

Edit: I know I would invest myself. What a simple yet briliant idea, thanks @Niffler

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This is something to develop for sure, but I think we are still waiting on StableCredit, synthetic rebased dollars, and single-sided AMM. I think that an index that tracked the performance of yETH, yWBTC, ySNX, yLINK, etc. with a yUSD dividend would be truly innovative. It would have a superior yield and plenty of diversification. It is hard to ideate about such things when there is little in the way of progress reports or timelines so everything is kind of on a wait and see approach. Ultimately, this is the direction DeFi is going.

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Both INDEX and PIEDAO have appealing products. I have begun to farm one of those token myself. But I think both protocol s have finite farming so this is not really a good idea for yearn type vaults. They are also using uniswap and balancers LPs which exposes one to ImpLoss.

However, I think a sort of mixed bag vault where people deposit an array of assets like the DefiPulse 9 (the ones that are collaterable) which are then used to borrow DAI or what have you to run the usual yCRV (or 3pool) strategy might be appealing the masses and get yearn in on the indices hype.

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I like your thinking DefiChad. One vault to rule them all, and in the glory, bind them.

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I think daily rebalancing might result in too much noise and costs associated with index turnover and withdrawing from vaults, but here is basically what my high level thinking is as of now. Design a methodology that:

  • Design an set of eligibility criteria for the index to select assets that meet minimum criteria such as liquidity, size, availability, etc
  • Select index constituents that are ERC-20 (including synthetic tokens (partner with an exchange like Synthetix on this) if they meet other eligibility)
  • Weight the index at the start of every month based on their circulating supply
  • Deposit the assets into yVaults at the start of every month (if a yVault for that asset exists), otherwise just hold the asset passively (note if an asset like MKR has enough weight in the index maybe this would incentivize a MKR strategy that lends MKR on Aave to withdraw stables and put in a stable vault?)
  • Harvest the yield attributed to the index allocation in the yVault monthly and re-invest in the yIndex in proportion to a users holdings (or pay a dividend in yUSD)
  • Rebalance index assets at the end of each month
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Why am I just seeing this for the first time? :exploding_head:

I’ve been working on coding up a vault strategy that involves depositing into other vaults to use their yields as profit. This is pretty similar idea.

IMO the yIndex should only take in a single deposit token, say ETH or stablecoin or whatever, and it should be extremely well defined as having capital at risk.

Trade that deposit (eg ETH) into the basket of chosen tokens, and then send those tokens to do yield things. I would recommend keeping the list of tokens smallish at first, say 10-15 maximum. The more tokens involved, the more complicated the code would get. 10 is a good number to start with.

Weight via square root market cap method (my personal favorite), rebalance the fund once a month in terms of weighting.

Seems doable!

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I support this. The twist I want to see is that the index funds can then be placed into its component vaults. Say the index contains YFI. Some of the YFI should be staked for more yield.