What potential does Index Coop (INDEX) have?

Blackrock is the world’s largest investment company, managing over $ 8.68 trillion. Index Coop (INDEX), a project from Decentralized Finance (DeFi), now wants to become the decentralized version of the investment giant and can already look back on considerable growth – what is behind the DeFi project?

Asset managers like BlackRock, Vanguard or Fidelity manage an incredible amount of money. Together they now represent tens of trillion dollars in capital and their index products are becoming more popular every year. Exchange Traded Funds (ETFs) in particular are continually eating up stock market shares and making these companies bigger and bigger.

For comparison: In the USA, index products represent an asset class with a market capitalization of over four trillion dollars – just under 14 percent of the US stock market. In addition, the global market for ETFs grew from $ 417 billion to over $ 7.7 trillion between 2005 and 2020 alone.

But why are the products from Blackrock and Co. becoming more and more popular with investors? Index products such as ETFs are an important part of the financial system as they make it much easier for private customers to invest in stocks in a diversified manner. They also offer investors the opportunity to invest in specific sectors relatively easily without having to dig deep into each individual company.

For this very reason, index products also have enormous potential in the crypto space. Because decentralized finance projects or non-fungible tokens (NFT) can be complicated for new crypto investors – and not everyone has the time to deal with the individual projects.

However, at the moment there are very few options through which investors can invest in the traditional way in a diversified way in the crypto world. A DeFi project that already offers a solution for this is the Index Coop (INDEX).

“The BlackRock of DeFi-Space”

As DeFi Monitor readers, some of you have probably heard of the DeFi Pulse Index (DPI) several times. DPI is currently the largest DeFi index in the crypto world and tracks a total of 15 crypto currencies from Decentralized Finance.

Index Coop is the decentralized autonomous organization (DAO) behind DPI. The DAO is responsible for managing crypto indices such as the DPI. The Index Coop community creates and manages various index products and pursues goals similar to those of the investment giants BlackRock, Fidelity or Vanguard.

On his mission, Index will be Coop of DeFi Pulse, Set Protocol and CoinShares supported. The focus of the project is on the INDEX token holders. They have the opportunity to participate in the further development of the project.

For example, they can submit proposals for new index products or use tokens contained in the index products to vote on governance decisions of other DeFi projects. At the moment INDEX serves only as a governance token. In the future, however, the INDEX community wants to pay out part of the log income to INDEX owners.

Which index products does Index Coop offer?

Index Coop now managed four different index products (DPI, MVI, FLI and CGI). In the following we take a brief look at the three largest index products. The first and most famous token is the DeFi Pulse Index. This is very similar to the ETFs from BlackRock or other asset managers. DPI is an index weighted according to market capitalization, which is composed of some of the top tokens in DeFi space and shows their performance. The full methodology and composition of the index is given here explained. At press time, DPI’s total market cap is over $ 150 million.

There is also the recently published Metaverse Index (MVI). This index product focuses on the NFT sector and is made up of tokens such as Decentraland (MANA), Enjin (ENJ), Rarible (RARI) and Sand (SAND). MVI currently has one Market capitalization of 5.1 million U.S. dollar. The exact methodology of the index can be found on the website of Set Protocol can be read.

Another new product from Index Coop is the so-called Flexible Leverage Index (FLI). This enables users to buy a double leveraged position on Ethereum (ETH). Simply put, this means that the price of FLI always moves almost twice as much as that of Ethereum.

For example, an ETH price increase of 10 percent would result in FLI increasing by 20 percent. Conversely, a price decline of 10 percent would cause the FLI to fall by 20 percent. In theory, this type of Flexible Leverage Index can be applied to other tokens as well. The exact methodology and functionality of FLI can be found on the website of Set Protocol read up. At the time of going to press, FLI has a market capitalization of $ 42 million.

Can Index Coop become the decentralized BlackRock?

At the moment, it is far too early to say whether a decentralized project can really compete with investment giants like BlackRock or Vanguard. To compare: BlackRock has a market capitalization of over $ 125 billion, while Index Coop has a market capitalization of $ 62 million. Nevertheless, Index Coop is currently playing an extremely important role in the Ethereum ecosystem and therefore has enormous growth potential.

Investors already have the opportunity to invest diversified in the emerging crypto sectors through the products from Index Coop. Another advantage is that the DeFi project can react much faster to new trends compared to the traditional wealth managers.

In addition, investment companies like BlackRock are currently unable to offer index products due to a lack of regulation. Index Coop is currently benefiting enormously from this fact.

The DeFi project has developed very strongly in the last six months. It now manages over $ 210 million and up Twitter some believe it could climb to $ 1 billion by the end of the year. But not only the assets under management, but also the revenues of the Index Coop DAO have grown exponentially in the last few months:

This income is made up of the fees that Index Coop charges for managing the various index products. For the past few days, the log has been making over $ 4,000 almost every day. The funds flow into the Index Coop Treasury and are managed by the INDEX holders in order to finance further projects.

Index Coop plans to publish two more products in the next few weeks. On the one hand, the Token Terminal Index (TTI) go to the start and on the other hand, the DeFi project wants the so-called Bitcoin 2x Flexible Leverage Index launch.