Restructuring nDEFI

As mentioned in the community call on Friday we are working on a proposal to restructure nDEFI.

We have ideas on how to proceed that should make some big/ neccessary improvements as well as a couple of things we would like feedback on before we settle on a direction to take.

The takeaways from our adventure with soft synths on polygon so far are:

  • Liquidity is difficult to maintain, especially if there is no other reason for a token to be on the network.
  • Finding or establishing yield for tokens not already established on a network takes time.
  • Chainlink price feeds need to be established before you can ask other protocols to include them on their platforms
  • We cannot get a chainlink feed for a nest unless all the underlying tokens have one, or there is far greater volume and liquidity than we can reasonably expect to achieve in the near term
  • Low liquidity for underlying tokens discourages larger holders concerned with the costs involved with exiting.
  • The strategy used for nDEFI performed well.

With these points in mind I would like to propose we significantly simplify the nDEFI nest, reducing or removing categories and reducing the number of tokens included.

We also have the option of splitting nDEFI up further and having a DEFI nest and a separate nest for Infrastructure projects like ETH

For now lets assume a criteria of:

  • top 5 tokens weighted by TVL/FDV for the DEFI section and top 4 by SQRT FDV for Infrastructure
  • The token has at least $250k liquidity on a Polygon exchange
  • Has a chainlink price feed
  • At least 3 months old
  • Listed on DefiLlama
  • Have at least 7.5% of the total supply in circulation and have a predictable token emission over the next 5 years.
  • In the event of a safety incident, the team must have addressed the problem responsibly and promptly, providing users of the protocol a reliable solution and document a detailed, transparent breakdown of the incident.
  • Be Ethereum-focused
  • Must be sufficiently decentralised

Seperate Nests

if we elect to split the components, we would end up with 2 different nests. nDEFI and nINFRA and they would look like this according to the criteria above at the time the data was collected about a week ago

nDEFI

nINFRA
-yVLBfW82mxe97yIIeiye5OAQb8l2UFlWyYuujP5wMv1HMFkKyDaEUrfQYUsw1y1gQVNy8hxT5C9w63NY4uJ-qh-MePy7kPVc549HAy3EofhBmdTC25klCD0owfzLYXLgS-eBEGP

Combined

If we choose to leave the components combined we would end up with one nDEFI nest that includes infrastructure projects as it currently does and would look like this according to the criteria on the date the data was collected, using a 50/50 split between both DEFI and INFRA components:

What points have we been considering?

Splitting up nDEFI into its components will be more of a significant change from the current nest being offered to our users - do we want to almost completely change the product on offer?

More granularity lets people select which components/ sections they want to invest in - will that lead to more TVL?

We may have the option of combining nests at a later date, like a DEFI+INFRA+STBL nest.

When we open the platform up so anyone can create nests it might be more suitable to have nests broken into their components so people could use them as an easy way to create their own larger nests.

so, which direction do you think makes the most sense for us to persue?

  • Have nINFRA inside nDEFI - keep the product as close to the original as possible
  • Separate the nests - have more granularity

0 voters

I’ll leave it a few days to get some responses then I’ll proceed with posting a more complete proposal for moving forward with nests on Polygon. Since we are planning on making changes to nDEFI resulting in a correctly balanced nest, they will happen instead of the scheduled rebalance.

What was the thinking behind these tokens in these compositions’? I see some coins like CVX are no longer included.

The expense of maintaining very illiquid liquidity pools for them all is the reason I am suggesting we change the criteria to only include tokens that have organic liquidity on Polygon.

The the compositions are just following the criteria. The selection of tokens available is quite small which is why we are ending up with small nests