Proposal to whitelist DEGEN

OLD GOV (LEGACY)
1

This proposal is due to appear on Snapshot on Monday 5th April, 1pm UTC. Make sure to stake your vBNT for voting before this date and time to participate in the DAO decision.

This proposal is part of the general proposal to whitelist Indexed Finance indices. The parent document can be found here.

DEGEN is the first index originating from our Sigma Program aimed at deploying new indices at faster pace and without going through governance. The Sigma committee is a 3 / 5 Gnosis multi-sig that can deploy new indices and allocate rewards for their staking pools. The signers were elected by the community.

DEGEN was proposed in our forum by @redphonecrypto and approved by the Sigma committee.

As the name implies, the DEGEN Index aims to seek out alpha via higher risk/reward emerging projects with exceptionally high growth potential, predominantly in the DeFi sector. Candidate members have strong communities and large total addressable markets, with circulating market capitalisations ranging from US$50 million to US$2 billion. If any constituent tokens fall out of these bounds, they will be replaced via periodic re-indexing by the largest market cap tokens drawn from a list of alternatives. In this way, the index will constantly evolve to capture upside from tokens during their most rapid growth phases.

It consists of smaller cap token projects which have more growth potential but also more financial risk.
RUNE ($1.2b), 24h trading volume:$51,636,331

  • REN ($4.5b), 24h trading volume: $341,614,509

  • RSR ($1b), 24h trading volume: $341,614,509

  • CRV ($656m), 24h trading volume: $143,302,744

  • 1nch ($636m), 24h trading volume: $289,894,692

  • OCEAN ($615), 24h trading volume: $183,133,749

  • ALPHA ($481m), 24h trading volume: $179,327,526

  • BADGER ($297m), 24h trading volume: $34,776,763

  • POLS ($240m), 24h trading volume: $80,034,989

  • MIR ($350m), 24h trading volume: $22,914,635

How does DEGEN work?

Like all core indices the underlying tokens represented by the DEGEN tokens sit in a liquidity pool and re-balance automatically based on the market caps of the underlying tokens. A controller contract fetches the market capitalization of each token from a Uniswap price oracle and submits new target weights to the index pool based on a capitalization-rooted weighting algorithm.

DEGEN tokens are actually LP tokens that represent a share in the AMM pool. They can be redeemed at all times against the underlying tokens in the pool or sold on a decentralized exchange provided there is sufficient liquidity.

The only difference between Sigma indices and core indices is that they have a circuit breaker mechanism. The committee can enable and disable swaps between assets in the $DEGEN](https://twitter.com/search?q=%24DEGEN&src=cashtag_click) pool via a ‘circuit breaker’ in the event of a vulnerability in one of the constituent tokens. This is to protect the pool from being drained if one token goes to zero. Swaps being disabled don’t freeze anything: this just prevents weightings from being adjusted towards target weightings. Holders can still burn $DEGEN tokens back to their underlyings if the circuit breaker is enabled.

DEGEN contract address: 0x126c121f99e1e211df2e5f8de2d96fa36647c855

Security

The Index Pool contract is a fork of the Balancer Pool. The primary changes made to the contract were to enable more dynamic pool management so that assets can be bound, rebound and reweighed gradually and without the need to access external liquidity.

These changes have been audited by two independent security experts: Daniel Luca, a former auditor for Consensys diligence, and Mudit Gupta, the lead blockchain engineer at Polymath.

Daniel Luca Audit
Mudit Gupta

Volume & Fees

  • DEGEN market cap: $7.4m
  • TVL in the DEFI5 pool: $5.6m
  • 24h volume: $485K
  • 24h fees: $1457

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2 Likes
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CRV has a FDV of 8.37bn$ with a high inflation rate.
RSR (FDV = 7.23bn$) , 1inch (FDV = 5.6bn$) , Alpha ( 1.8bn$) , Badger(1bn$)

$BNT is more degen and has a higher growth potential than all of these coins.

I am sorry but this “DEGEN” index is not degen at all and only naive people unaware about the tokenomics of the underlying tokens would want to invest in it.

I highly suggest either coming up with a new name for this index or changing the underlying assets in it to make it more competent.

2 Likes
3

i don’t think whitelisting is counter productive for us here. in general whitelisting actually makes BNT more scarce because people have to seed the pools and provide a matching 50% in bnt. the economic argument can be made here but it is most valid for co-investment and LM rewards. whitelisting should be about security for the most part and their index was built with community input so this is what their community considers degen. I do believe mbr looked over their security and says there shouldn’t be a problem so it has my support

1 Like