Introduction of Matrix DeFi Index
MatrixETF is the next generation of decentralized ETF platform supporting cross chain.
The Index product of MatrixETF which will be launched is an encrypted index ETF, the goal is to track high qualified tokens in crypto market and blockchain. This fund is based on the asset of a basket of tokens, which users don’t need to purchase in exchanges, they can realize the investment of one asset to another asset (industry, hotspot) only through a simple placement, instead of missing the potential high return of the crypto market. Therefore Matrix Index product is one of the simplest ways for the investors participating in crypto market finance.
After a few months of development and test, we will issue the first Matrix Index product: Matrix DeFi Index(MDI).
Matrix DeFi Index(MDI) provides investors with an autonomous portfolio and DeFi investment exposure which is based on decentralized governance. You can track the trend and development of the whole crypto market DeFi by holding MDI, in addition distribute the risks and gain better profits by various asset placement.
DeFI is one of the most popular and fastest developed industries in crypto market. Along with various Top projects in DeFi protocol such as DEX、Oracles、Lending、Assets、Derivatives emerging in the segmentation market, the DeFi scale generates bigger and bigger, DeFi protocol locked position has skyrocketed to $90.69 billion which is up to 3.7% of the whole scale of crypto market.
As we can see DeFi has become a new trend and direction, meanwhile DeFi is with different protocols, processes, assets and toolkits, how to catch DeFi wealth opportunities is a question to investors. In this case we promote Matrix DeFi Index(MDI).
We have referred to the DeFi category of CoinGecko and CoinMarketCap when we produce Matrix DeFI Index, and have filtered top 20 DeFi assets on Ethereum according to the DeFi locked position data of DeFi Pulse.
Under comprehensive consideration of comparisons such as DeFi protocol market caps, project development situations and the status in crypto market etc., we have chosen 10 protocols to constitute MDI such as UNI、LINK、AAVE、GRT、MKR、COMP、DYDX、SUSHI、YFI、CRV etc., in order to track popular DeFi assets on Ethereum in crypto market.
In the table you can see we have backup Token options such as SNX、REN、PERP、BNT、ZRX、UMA、1INCH、LRC、BADGER、MLN, among them once there is one token is qualified than 10 MDI component tokens, it will get into index pool replacing the old token by Index Rebalance.
MDI Weighting Proportions
MDI is constituted by popular DeFi projects in crypto market such as UNI、LINK、AAVE、GRT、MKR、COMP、DYDX、SUSHI、YFI、CRV etc.
We utilize a method to compute the Weighting Proportions of MDI component tokens: Fundamental Weighting and Market Capitalization Weighting, we compute allocation and weighting proportion of each basic asset by 30% Fundamental Weighting + 70% Market Capitalization Weighting.
According to the article of MatrixETF Index Methodology, there are 5 score standards of Fundamental Weighting:
- Token Economic Model
- Development and potential of the project
- Security of the protocol
- Token trading risk
- Community base
According to 5 weighting factors in Fundamental Weighting, weights of MDI component tokens are as below:
Market Capitalization Weighting
Market Capitalization is the project circulation market value, according to the authoritative data from CoinGecko and Coinmarketcap, we compute the circulation market value by catching Token prices and circulations. There are 3 market accepted methods to weight project market capitalization: Market Capitalization Weighting, Market Capitalization Square Root Weighting and Equal Weights Weighting.
MDI utilize the simple Market Capitalization Weighting to compute component token weights as below:
Final Weighting Proportion
We compute the final MDI component token weighting by 70% Market Capitalization Weighting+30% Fundamental Weighting:
Token Name: Matrix DeFi Index
Token Symbol: MDI
How to purchase MDI
There are 2 selections to buy MDI
1) Buy MDI(small account <$3,000)
The simplest way is to buy MDI on MatrixETF APP or Uniswap.
By Uniswap, please check this link:
Please notice that in the beginning of MDI issuance, the liquidity will be very low in MDI pool. If you buy a big amount of MDI probably will cause the price fluctuation away from the token value. In this case we don’t suggest you buy a big amount of MDI (>$3,000), which might cause high slippage and asset loss.
2) Mint MDI（big amount ≥$3,000)
When you choose this way to purchase MDI, the underlying logic is:
The underlying logic is first exchange your ETH to corresponding 10 tokens according to MDI component token proportions by Uniswap router, then deposit them in MDI smart contract pool. At the same time the corresponding MDI share by MINT will be saved in your wallet.
In this case, there will be a high gas fee by multiple transactions through smart contract, this is why we suggest you to purchase a big amount of MDI in this way.
First you need to have MDI 10 component tokens in your wallet when MINT MDI by Multi tokens, then input the desired purchasing amount, UI will compute automatically the demanding 10 Token amounts, it will be successfully transacted once you have enough component tokens.
Smart contract will save 10 Token to MDI smart contract pool, at the same time MINT the corresponding MDI share to your wallet.
How to sell MDI
There are also 2 selections to sell MDI:
One is to sell MDI on MatrixETF APP or Uniswap.
By Uniswap, please check this link:
Considering the liquidity is low in MDI pool, this sell way can cause a high slippage. We suggest you take over cautiously when there is a high slippage.
Another way is to exchange MDI to ETH/MDI corresponding tokens by Redeem.
Compared to other Indexes, there are no various fees such as subscription fee, Governance Fee or Transaction Fee on Matrix Index. Since now we only have 0.7% Redeem Fee on Matrix Index when you Redeem MDI.
However this redeem fee is point to arbitrageurs who want to Redeem to gain arbitrage instead of selling MDI directly. They usually destroy MDI to obtain corresponding assets when they find there is a spread between MDI price and net value, in order to obtain profits in crypto market.
In traditional finance, an ETF and Index fund provide investors with various choices. In crypto market, we believe that MDI can distribute investment risks and bring better profits to investors by DeFi various asset placements.
For the beginners, if you lack deep knowledge of market fluctuation and DeFi projects, MDI will be a good choice and investment opportunity to get into the DeFi world.
In the near future we will bring more Index ETFs to meet the various investors’ demands in the crypto market. Keep an eye with us!
MatrixETF is the next generation of decentralized ETF platform to run the cross chain，which goal is to establish a decentralized, automated, personalized and diversified portfolio for users, as well as help users easily enjoy long-term, stable and efficient financial services.