A comparison of Decentralised crypto funds
A comparison of the organisation, fund structure, AUV, and composition for decentralised index funds.
First published in my old Blog 2020 - with some updates.
Introduction
I am biased. I got involved in INDEXcoop shortly after it went live. So I have a better understanding of how the code works (I’m no Dev) and the community. So, it’s hard for me to be objective when comparing different protocols. So, I think I’ll just let the data speak for it’s self (although you should be aware that I’ve selected the data…;)
Comparison
Other index funds / similar protocols
Powerpool app and Medium
Powerpool is intended to become a DeFI ecosystem, smart EFT like index ($PI PT), cross chain oracle and lending market. One particular focus is on using the governance rights of the underlying tokens. From an external viewpoint the community appeared more focused on the governance aspects of fund management than INDEXCoop, Synthetics and PIEdao. Recently they have moved into a modified structure and the use of income generating tokens.
phuturedao web portal, and Medium
Phuturedao is not yet live on main net. Like $DPI and $DeFi+It is based on ownership of the underlying tokens using smart contracts. It uses a matching engine and liquidity pools to allow users to create (or use others) index designs with set of common liquidity pools containing the assets. This structure allows for many many different index fund designs, while capturing the economies of scale inherent in larger liquidity pools (lager pools make arbitration more cost effective and should reduce the tracking error compared to net asset value (NAV)). Each liquidity pool must contain a base asset (ETH or USDC) and the token of interest. The protocol allows single assets to be used as input, but this will result in a time delay as the matching engine waits for the other member of each pair to become available.
Indexed currently have two DeFi index funds with 5 or 10 large DeFi tokens based on a modified Balancer structure. Liquidity mining is ongoing with $10 M AUV.
SCIFI have launched a market cap index fund (based on Set contracts), The launch product $SPICE contained 14 tokens and a rebalance with addition and removals is planned.
Disclosure and Disclaimer
I’m a long term investor in crypto currencies including DeFi. I hold $SNX, $INDEX and $DOUGH as well as $DPI and $DeFI+S along with other others (You could say that I like to diversify my risks…). I am an active member of the INDEXcoop which manages the $DPI fund.
This is not financial advice, all investments are risky, crypto investments are more risky than most. Do your own research. Do not invest more than you can afford to lose.
Part 1: Diversification is a good thing for most investors
Part 2 — Market cap weighed funds are simpler to implement, but fixed weight may deliver better returns.
Part 3 — Smart contracts are smart! (or how to build a index fund using a smart contract)