Index Coop
Index Coop offers DeFi "structured products."
What are "structured products?"
My last encounter with these was from reading a finance blog which talked about how the author, a former investment banking, was allocating a percentage of his assets to those.
When I researched what they were and whether I could/should do the same, I got as far as "$10M liquid minimum" and bowed out.
So I'm starting my research with that at the forefront: "Should someone with less than $10M still consider structured products? Or was that caveat less a function of risk appetite and more to do with the cost structure?"
So, let's dive in:
What do they do?
For me (and perhaps I am not their target audience), this does resonate - crypto is complex. But then going into the description of sector, leverage and yield-earning strategies....makes me feel I might not be.
In other words, I'm familiar with what those terms mean, but that's a big leap into what I can do about them. Very, very conceptually, I can understand the intent, that I should be able to maximize returns using those factors as part of the strategy....but....
So...while cognitively this doesn't speak to me, and I am guessing it may cause a drop to the traditional self-serve TradFi retail investor (and I'm making a huge leap here assuming that is the case), what is offered?
These sort of have familiar analogs in the TradFi world.
DPI sounds like an Index of DeFi protocols. Seems reasonable.
ETH2x sounds like leverage, similar to leverage ETFs. Here....I think it is not catering any more to the broad investing community than those leveraged products do. To me, those still seem complex and complicated....Boglehead tendencies aside.
Leveraged ETH Staking...this is probably a whole area I'll write about because it is unique to DeFi. And, again, even though I am familiar with ETH Staking, I don't truly know enough about this as to whether I'd want to participate.
At this point in the journey, I'm wondering whether this is meant for institutional investors.
Perhaps I'm a noob and don't understand foundational investing vehicles.
But if we're going to onboard people to DeFi, I think the problem statement should be how do we enable broad adoption of otherwise complex products.
If the barrier to entry has been due to costs, then that's one thing.
If these are due to complexity and risk....I think it's incumbent upon the DeFi industry to not follow in the shoes of TradFi, which has had a vested interest in opacity and complexity as means to justify higher fees and dubious risk-adjusted returns.
If we can turn around those dynamics, and offer transparency, better risk-adjusted returns, and lower fees, that becomes very interesting.
Using the Product
Here, I can see that core product, which is to purchase some of the available products.
It's actually not that much different that purchasing an ETF or stock in TradFi...inclusive of what seems to be relatively high fees!
In addition to the fees listed, there is an additional transaction fee that is revealed in your crypto wallet
After completing the transaction, I needed to make sure that Arbitrum was in my Metamask Wallet.
Once I did it, I can now see the token I purchased -- ETH2X.
How do I evaluate this project?
The broader question with these projects is whether this is a project and product to put real money at risk in.
Just because it is DeFi doesn't always mean it is better for the consumer.