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Dear Bankless Nation,
In the back half of 2021, we heard the rumblings of a new market narrative: DeFi 2.0.
It was clear that projects under the DeFi 2.0 heading were built on the backs of blue-chip DeFi protocol like Maker, Compound, Aave, and others, but introduced novel tokenomic designs that promoted greater capital efficiency, protocol-owned-value, and healthy liquidity.
The problem?
DeFi 2.0 was growing so quickly and galaxy-brained protocol designs scared off the retail investor from exposing themselves to these untested assets.
Some of us bought next-gen DeFi tokens individually. Perhaps you heard of OHM and staked it. Or maybe you purchased PERP. Maybe even MPL.
Or maybe you held DPI and hoped the wave of DeFi 2.0 would pump those bags. It didn’t happen last year. In fact, compared to ETH, you lost.
So is DPI dead? Not at all. I think DeFi bluechips make a comeback at some point. From a P/S ratio many of them look both like value assets and growth assets with evolving tokenomics.
But bluechips don’t necessarily capture the latest innovation in the DeFi ecosystem.
GMI is a freshly launched crypto index to solve this from the Index Coop and BanklessDAO.
It includes diversified exposure to some of the hottest DeFi projects on the market.
Lucas tells us how we’re all gonna make it with GMI.
- RSA
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Bankless Writer: Lucas Campbell, Editor for Bankless & Contributor at Bankless DAO
The Ultimate Guide to GMI
“DeFi 2.0” was a major theme in 2021.
While first-generation DeFi protocols like Uniswap and Aave had a sluggish year in terms of price performance, new protocols like Olympus and Abracadabra dominated the DeFi landscape. These emerging financial protocols take more aggressive designs, leveraging new primitives like protocol-owned liquidity and token economic models similar to veCRV.
The issue is that it’s hard to keep up with all of these developments. Not only does crypto move at lightspeed, but it’s also full of genius developers and economists that design advanced financial protocols.
If some of the terms above have you confused, but you’re interested in getting exposure to this emerging field in DeFi, we got you covered.
Introducing the Bankless DeFi Innovation Index (GMI)
⚠️ DISCLAIMER: None of this is financial advice. Please do your own research. Ape at your own risk.
The Bankless DeFi Innovation Index (GMI) is a new index from the Index Coop in collaboration with BanklessDAO aiming to capture the emergent themes in Decentralized Finance.
The goal of GMI is to keep it updated with the newest & hottest DeFi protocols on the market.
Unlike the DPI, which looks to target the performance of “blue chip” DeFi protocols like UNI, AAVE, MKR, and others, GMI relaxes the considerations to target new, rising DeFi applications that are higher up the risk curve. Today, these projects are largely known as “DeFi 2.0”.
To give you an idea, here’s the current weighting of GMI:
GMI launched earlier today. With the launch, there’s a handful of market opportunities to get involved and start getting significant exposure to one of crypto’s hottest sectors.
🐳 Looking to acquire a large amount of GMI? Follow this minting guide.
💰 Bonus: Anyone who mints more than $50,000 of GMI will be reimbursed 2x the gas fees with INDEX and BANK. This program is available for a total of $250,000 GMI.
💭 Have minting questions? Email lucas@banklesshq.com
🤑 GMI Market Opportunities
Resources
1. Provide Liquidity to Uniswap V3
GMI needs liquidity! Rather than relying on a traditional liquidity mining program, GMI is testing out a new approach with a handful of unique incentives.
First, anyone who provides Uniswap V3 liquidity for the GMI/ETH pair will earn 50% of the index’s streaming fees for 60 days. In order to qualify for the rewards, LPs will have to provide liquidity for the full 60 days.
GMI’s streaming fee is 1.95% per year, meaning that the larger the index grows, the higher the rewards will be. For those interested, you can do some basic napkin math on potential rewards depending on the size of the index (in terms of $ market cap).
One can only approximate how much trading volume to expect, but GMI is a hotly anticipated product.
The program cutoff is January 8th, 12pm PST, and will end on March 8th at 12 pm PST, meaning there are ~48 hours left to qualify for the rewards before the cutoff is closed.
Anyone who LPs and qualifies in the next two days, but decides to remove the liquidity at any point before March 7th will be disqualified and removed from the rewards pool. Get in now!
🦄 Note: While the streaming fees are a nice incentive, don’t discount the trading fees from being an LP on Uniswap V3!
Index Coop products have showcased impressive APYs from trading fees alone. The DPI/ETH pool earns upwards of 20% APY while the ETH2x-FLI pool earns upwards of 50% depending on your range!
🏆 Top 20 Uniswap V3 Liquidity Providers
In addition to the streaming fees, there’s also an incentive program for the Top 20 Liquidity Providers!
Any 🐳 LPs in the Top 20 by amount of liquidity provided will also have the chance to win $25,000 of INDEX and a claim on this elite GMI hoodie. The same parameters apply as the streaming fees: LPs must provide liquidity for 60 days with only ~48 hours left to qualify!
How to provide liquidity on Uniswap V3
💡 Unfamiliar with Uniswap v3? Check out our guide here!
Head to the Uniswap Pool
Click “Add Liquidity” in the top right
You’ll be taken to the LP page. Note that it’ll automatically have the pair asset as WETH—you can change this to just normal ETH. From there, you’ll have to determine the range you’ll want to provide liquidity. There may be volatility so choose wisely!
👉 Reference: GMI is currently trading at 31 GMI per ETH with the current range for most liquidity being somewhere between 15 GMI per ETH to 60 GMI per ETH.
Once you’ve determined your desired range, you’ll need to approve GMI and you can deposit. Click preview and submit the transaction on Ethereum.
Once it’s confirmed, you’re now earning trading fees, qualified for the streaming fees program, and maybe even a Top 20 LP.
2. GMI Single-Sided Staking
📅 Single Side Staking will go live on January 10th, at 12pm PST. You can find it here.
While providing liquidity is important, and the trading fees on Uniswap V3 can be rather lucrative during times of high volume, GMI is also launching with a single-sided staking contract where users can earn INDEX for staking their GMI.
Index Coop has allocated a total of 18,750 INDEX to a 60-day single-sided staking program. The first month will distribute 12,500 INDEX while the second month will distribute 6,250 INDEX.
In total, this represents over $350K in rewards for the 60-day program. APYs vary depending on the amount of GMI staked to the contract, so stay tuned!
How to stake GMI
If you’re interested in getting involved with the single sided staking program, follow these steps.
Acquire GMI via Uniswap or minting
Head to the Index Liquidity Mining Page
Once it goes live on Monday, January 10th, there will be an option for GMI staking, click “stake” and confirm all the transactions on your wallet.
Once approved, you can deposit and you’ll start earning INDEX rewards!
3. Win a GMI Loot Pack
If you’re a fan of GMI, there’s an opportunity for five lucky people to win a GMI Loot Pack! This includes the GMI Hoodie, an exclusive NFT, and a GMI token.
All you have to do is help spread the word of GMI around the crypto sphere.
How to enter to win the GMI Loot Pack
Fill out the Entry Ticket
From there, you’ll be asked to create your banner image for Twitter
Share this article on Twitter with a short sentence telling everyone you’re GMI.
Link to your Twitter profile + tweet in the form
You’ll be asked to provide your email as contact information.
That’s it! You’ll be notified if you were one of the lucky winners.
4. Bonus: GMI on Polygon
👉 GMI on Polygon (Warning: low liquidity!)
For those that hate the gas fees on Ethereum Layer 1 (I think we all do), we’ve got you covered! GMI is available on Polygon.
How to get GMI on Polygon
To get GMI on Polygon, head to Uniswap and connect to the Polygon network.
From there, add the GMI contract address into the “swap” field and import the token. (GMI Contract address: 0x7fb27ee135db455de5ab1ccec66a24cbc82e712d)
You’re off to the races! Careful as liquidity is low :)
🇺🇸 Bonus: You can purchase via the Dharma mobile app! New U.S. Users who use this link will get $50 in ETH for purchasing at least $500 worth of GMI.
Conclusion
While the DeFi Pulse’s DPI targets DeFi blue chips, Bankless’ GMI aims to capture the performance of emerging DeFi protocols taking more aggressive designs and leveraging novel primitives.
Many of the DeFi 2.0 protocols were top performers in 2021, and it only made sense to launch an index to capture this rising subsector in the crypto economy.
Importantly, the GMI will be actively managed by top methodologists in the space, including Alpha Lemonade and Ben Giove, to ensure the index always features the top DeFi 2.0 protocols on the market.
The only question left is: Are you GMI?
Action steps
Resources for Protocols in GMI
OHM: WTF is OlympusDAO
PERP: Is PERP Undervalued?
ALCX: A New Era of DeFi
Author Bio
Lucas Campbell is the Editor for Bankless and core contributor at Bankless DAO. He also engages with teams on token economics & governance through 🔥 _🔥 (Fire Eyes DAO), working with industry-leading projects like Aave, Balancer, Gitcoin, SuperRare, ENS and more.
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Not financial or tax advice. This newsletter is strictly educational and is not investment advice or a solicitation to buy or sell any assets or to make any financial decisions. This newsletter is not tax advice. Talk to your accountant. Do your own research.
Disclosure. From time-to-time I may add links in this newsletter to products I use. I may receive commission if you make a purchase through one of these links. Additionally, the Bankless writers hold crypto assets. See our investment disclosures here.
can we increase liquidity during the period?
DPI is a massive underperformer. And it will continue to be since it only rebalances with names that have already moved. Please stop marketing it.