A DeFi portfolio is short for a Decentralized Finance which refers to D-Apps (digital protocols, digital contracts etc.) constructed on the cryptocurrency Ethereum, and all of this software can be joined together. Indexed.finance is designed for passive portfolio management based on the Ethereum network. It features Index Pools that have been created to behave like Index Funds, which have better returns than actively managed stocks and shares. Indexed.finance is operated and managed by the stakeholders of NDX which is a governance token.
Index Pools function by simplifying the assets in the Ethereum market by creating one asset to represent ownership in large and varying portfolios. Each index pool is represented by an ERC20 token. Index Pools are completely passive and do not require any sort of human interference once set-up properly. Indexed.finance is primarily operated by the stakeholders of the token NDX.
The stakeholders have decided to release 10 million NDX tokens and have come up with a distribution model too, which is:
“20% will go to the founders, investors and future team members, subject to vesting periods.
5% will be used to reward keepers who update the Uniswap oracle and trigger periodic updates on the pool controller.
25% will be distributed through liquidity mining to users who stake index tokens or their Uniswap Ether pair LP tokens.
20% will be distributed to DeFi users after January 22, 2021 in a manner determined by governance.
30% will be made available to the NDX treasury over the course of 9 months, beginning March 1, 2021.”
Index pools are portfolios managed by tokens that also act as AMMs. Index pool contracts are constructed to be able to change their composition without needing access to external liquidity through dynamic pool management, I.e, assets being bound, rebound and reweighed automatically.
They have decided to restrict minting (production of new tokens) to only 10 percent of the original release which equates to 1 million new NDX tokens every 3 months, or 90 days and this ability will be unlocked on the first of June, 2021. On the topic of security, they have employed 2 professionals to audit their contracts. The website itself has stated that as of now, it is in BETA and therefore users are advised to proceed with caution, and that they might be prone to unknown vulnerabilities. Until the first 10 million NDX tokens have been distributed, the NDX governance team will hold power over all executive decisions.
New tokens that are to be added to the index Pools must have a value of, at least, 1% of the combined value of the pool itself. Whenever a pool is deployed, it must have enough tokens to cover its weight in order to maintain the weight-to-token balance. If it were to be added without balance, it’d cause losses to the buyers of those tokens. In essence, indexed.finance is an alternative to DeFi Pulse Index where the portfolios are passively managed and the Pools themselves act like AMMs. It is in beta, though, we strongly suggest you proceed carefully. This is a great concept on paper and if the developers implement it properly, it could turn into a major success.