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icETH Delivering 10%+ APY Post-Merge | 10/19 Newsletter
icETH Delivering 10%+ APY Post-Merge | 10/19 Newsletter
In this week’s Index Insights newsletter, we take a look at how icETH is gaining momentum & delivering a double-digit APY post-Merge.
10/19/2022
Index Coop
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icETH Delivering 10%+ APY Post-Merge
Index Insights - October 19th
In this week’s Index Insights newsletter, we take a look at how:
icETH is gaining momentum & delivering a double-digit APY post-Merge
Index Council v2 will continue leading the DAO until year-end
Progress is being made to increase community ownership of the DAO.
— The Index Coop team
icETH delivering double-digit APYs post-Merge
Since the launch of Interest Compounding ETH Index (icETH) in April, the volatility in the stETH:ETH market has limited the yield. But since the Merge, the gap between stETH and ETH has stabilized (1 stETH = .995 ETH at the time of writing) and icETH has been generating an APY in excess of 10% denominated in ETH.
As a quick refresher, here’s how icETH works:
icETH automates a leveraged liquid staking strategy to amplify stETH yield on Aave's money market. Instead of accumulating more tokens, the yield generated accrues into the value of the icETH token.
It’s important to note that leverage is a key feature of the icETH strategy. While there is inherent risk with using leverage, the high correlation between icETH’s collateral (stETH) and debt (ETH) assets mitigates liquidation risk. There are also multiple safety mechanisms in place to maintain a healthy LTV ratio and mitigate risk.
The next major Ethereum upgrade, Shanghai, will enable the stETH to be withdrawn for ETH at a 1:1 ratio. This eliminates the slight gap between stETH and ETH prices and eliminates another source of icETH’s price volatility.
Index Council v2’s leadership extended
Strong leadership is vital for any DAO. Projects that lack a clear vision and processes in place to enable effective coordination are destined for failure.
The current members of Index Coop Council v2 have tackled numerous challenges faced by our DAO and helped set a clear direction for financial sustainability and products that provide access to simple, effective DeFi strategies.
A vote by INDEX token holders recently passed with 99.74% voting ‘FOR’ to extend the mandate of the Index Coop Council v2. The council will use its extended term to develop a new organizational structure in collaboration with the community.
Aligning incentives to build great products
Along with a great leadership team, it’s the consistent efforts of contributors that generate the momentum needed to build great products and benefit our community of token holders.
Index Coop has made progress in increasing community ownership of the DAO. First by implementing a Dynamic Staking Model and now with an improved program that recently passed via an INDEX token vote. This new program will incentivize full-time contributors by compensating them partially in INDEX.
After sharing the new plan with a number of highly involved and experienced Index Coop backers and partners, we believe this plan provides a strong long-term incentive structure for contributors to continue to build a prosperous organization.
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FAQs
Index Coop yield tokens simplify earning yield in DeFi by automating complex strategies and diversifying across protocols. They are user-friendly and cost-efficient, appealing to both new and seasoned DeFi users.
Leverage tokens automate a leveraged position by utilizing onchain money markets like Aave or Morpho to borrow funds, amplifying a user's exposure to an asset without requiring manual management. The token's smart contracts autonomously handle the borrowing, lending, and rebalancing of assets, maintaining a consistent leverage ratio despite market fluctuations. This automation eliminates the complexities of collateral management and liquidation risks, while also charging low, transparent fees that avoid expensive funding rates often charged by perps.
Index Coop is a decentralized autonomous organization (DAO) that specializes in creating and maintaining onchain structured products. Index Coop aims to democratize access to the crypto market, empowering everyone to participate in the growing digital asset ecosystem with ease.
No, yield automatically compounds and accrues to the token price. The value of the tokens you hold in your wallet will simply go up over time without the need to claim or compound rewards.
Index Coop products protect you from liquidation with automated risk management that rebalances assets to maintain a target leverage ratio that avoids liquidation.
INDEX is the ERC-20 governance token on Ethereum for Index Coop. INDEX empowers its holders to participate in decision-making processes that shape the future of Index Coop.
Yes, all Index Coop products are instantly redeemable for their underlying value at all times.
Yes, all Index Coop smart contracts have been audited by leading independent security firms such as OpenZeppelin, ABDK, Isosiro, & more. There is also an active bug bounty program through ImmuneFi. Audit information is published in the docs here.
Streaming fees (an annual fee paid continuously block-by-block), mint and redeem fees (only on leverage tokens), and borrow costs (interest paid to borrow funds from onchain markets when using leverage).