DeFi Deep Dive #5: Indexed Finance

A Series Profiling Protocols Featured on DeFi Llama

🦙 DeFi Llama tracks over a hundred protocols. How well do you know them all? Each week our staff of llamas perform a deep dive on one of the protocols🦙


Cracking the top 100 on DeFi Llama for the first time is Indexed Finance ($NDX), who provide passive portfolio management strategies across Ethereum. They aim to bring products reminiscent of ETFs to Ethereum. Launched December of 2020, the efficient team has already released a fun offering of diverse, cost-efficient ETF products which have attracted upwards of $70MM.

Whatever your angle on the emerging DeFi economy, Indexed Finance has either already launched or is planning on launching a creative ETF-like product for you. Their most popular offering is their DEFI Top 5 Index, which contains a balance of UNI, AAVE, COMP, SNX, and CRV and holds a market cap north of $17MM. They even launched on Polygon during this time.

More recently, they capitalized on the NFT hype to launch the NFTP index of platform tokens, to offer users exposure to tokens like $ENJ and $MANA that are likely to rise or fall with popular interest in NFTs.

They also created a special product inspired by a suggestion from the Twitter account representing whale address 0xb1…484, a person or persons who actively manage over 6000 ETH.

In response they created a special 484 $ERROR token to track the address’s major holdings, currently mostly weighted towards $SUSHI, $BDP, and $ALPHA. Funny enough, this may create recursive effects as 0xb1…484 started investing money directly into their self-same portfolio.

A key aspect to Indexed Finance’s capabilities are the mechanisms to passively manage their funds. Per their launch announcement:

Unlike traditional index funds, these indices are not static portfolios which simply hold assets until quarterly rebalance days. Index pools are multi-asset AMMs that track particular market sectors, represented as lists of tokens managed by NDX governance. As AMMs, they can generate revenue beyond the growth of their underlying assets, and they can rebalance through swaps which generate fees rather than through large orders on external markets

Like a traditional index fund, Indexed Finance weights their pools by the square root of the underlying assets’ market cap. Their governance community votes on the specific weighting with their underlying NDX token. Their documentation provides further detail on the mechanics of token weighting.

Their initial offerings produced good returns in their first quarter of operation, all of them exceeding their benchmark according to their quarterly report.

Their goal for Q2 is to capture $100MM in TVL, with plans to accomplish this by upgrading their protocol, launch Uniswap v3 position managers, and earn interest on their NDX tokens.

If you are interested in Indexed Finance, you can find more information on their website and Github, or introduce yourself via Discord, Twitter, or
Telegram.


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