Index Coop CoinDesk ETH Trend Index ($cdETI) FAQ
Dive into our FAQ to unravel the intricacies of the Index Coop CoinDesk ETH Trend Index ($cdETI), and understand how it reflects the dynamic Ethereum market trends.
October 24, 2023
In this post, we'll cover frequently asked questions regarding the Index Coop CoinDesk ETH Trend Index (cdETI). Feel free to reach out to us on Discord with any questions.
What is cdETI?
cdETI is an automated strategy token powered by CoinDesk Indices’ Ether Trend Indicator (ETI). It is designed to take advantage of ETH’s price momentum without the need for constant market monitoring and active trading.
How does cdETI work?
cdETI allocates to USDC and/or ETH according to values from ETI per the following methodology:
- When ETI is 1, indicating a significant uptrend, cdETI allocates 100% to ETH
- When ETI is 0.5, 0 or -0.5, indicating an uptrend, neutral or downtrend, respectively, cdETI allocates 50% to ETH and 50% to USDC
- When ETI is -1, indicating a significant downtrend, cdETI allocated 100% to USDC
For a more detailed explanation of cdETI’s methodology, including backtest results, please read the forum post. You can also review CoinDesk Indices' Ether Trend Indicator methodology here.
How is the trend determined?
CoinDesk Indices’ Ether Trend Indicator (ETI) provides a snapshot of Ethereum's price momentum on a daily basis. It compares short-term and long-term price averages to determine whether the price is in an uptrend, downtrend, or staying steady. The ETI uses price data from the past 180 days to calculate these averages. It then breaks down this analysis into four pairs of short-term and long-term averages, comparing them to identify the price trend.
The result is a daily value of -1, -0.5, 0, 0.5, or 1. A value of 1 indicates a significant uptrend, -1 indicates a significant downtrend, and values in between show varying degrees of upward or downward trends, with 0 indicating no clear trend. This simplifies complex price data into an easy-to-understand indicator, helping individuals gauge Ethereum's price momentum at a glance.
How does cdETI allocate between ETH and USDC?
cdETI allocates to USDC and/or ETH according to values from ETI as per this methodology:
- When ETI is 1 - Significant Uptrend - 100% ETH
- When ETI is 0.5, 0 or .0.5 - Uptrend, Neutral or Downtrend, respectively - 50% ETH, 50% USDC
- When ETI is -1 - Significant Downtrend - 100% USDC
Is cdETI onchain?
Yes, cdETI is an onchain ERC-20 token. The Coindesk Indices’ Ether Trend Indicator is published offchain. cdETI looks at their data via an API and allocates onchain accordingly.
How does cdETI take into account smart contract risk?
cdETI is built on the Index Protocol, a good faith fork of Set Protocol. Both Set Protocol and Index Protocol have been audited. You can find the details of those audits here. As with all digital assets, there are smart contract risks associated with holding cdETI, including full or partial loss of digital assets due to technical hacks, exploits, or failures that may occur at the protocol or smart contract level of a product’s infrastructure.
In what kind of market will cdETI outperform ETH?
Based on our backtests, cdETI roughly kept pace when ETH was in a positive trend but outperformed ETH during downtrends.
"We built ETI to drive ETH strategies that help deliver a smoother ride. We are excited to collaborate with Index Coop for cdETI, the first on-chain ETI-driven product.” - Andy Baehr, CFA and Managing Director at CoinDesk Indices.
Backtest data shows cdETI potentially outperforming ETH over the last two years.
Where can I acquire cdETI?
cdETI is available to unrestricted persons via the Index Coop App for both minting and redeeming.
What are the fees?
The Index Coop CoinDesk ETH Trend Index will have a streaming fee of 1.50% (150 bps) and 0.10% (10 bps) mint and redemption fees.
Does cdETI use leverage?
No, this is a full-collateralized token consisting of USDC and wETH with no exposure to leverage or synthetic assets.
What is Index Coop?
Index Coop is a decentralised autonomous organisation (DAO) that powers structured product and strategy tokens on the Ethereum blockchain. We aim to create decentralised finance (DeFi) products that are simple to use, accessible to everyone, and secure. Our token products are built on Set Protocol v2 and Index Protocol (a good-faith fork of Set Protocol v2). Both protocols are open-source, audited, and battle-tested.
What are the risks associated with buying and holding cdETI?
The following risks may apply to cdETI: full or partial loss of digital assets due to technical hacks, exploits, or failures that may occur at the protocol or smart contract level of a product’s infrastructure; restrictions placed on the digital assets by regulatory authorities in the end users region; loss of digital assets or loss of access to the digital assets due to decisions made by centralised providers of the underlying assets; full or partial loss of digital assets through standard product operations which can be hampered by unexpected market conditions; full or partial loss of digital assets due to changes to underlying product assets made by the originating protocols; full or partial loss of digital assets due to volatility, correlation, value at risk, and contagion risks; underperformance of digital assets due to deviation from intended methodology; full or partial loss of digital assets due to the variability and potential volatility of the yield source.
More Resources
cdETI product page
The Index Coop’s forum post
Index Protocol explainer
ConDesk Indices’ Ether Trend Indicator dashboard
cdETI dashboard on Dune
For more information on Index Coop, please visit: Discord | Twitter | LinkedIn
Disclaimer: This content is for informational purposes only and is not legal, tax, investment, financial, or other advice. You should not take, or refrain from taking, any action based on any information contained herein, or any other information that we make available at any time, including blog posts, data, articles, links to third-party content, discord content, news feeds, tutorials, tweets, and videos. Before you make any financial, legal, technical, or other decisions, you should seek independent professional advice from a licensed and qualified individual in the area for which such advice would be appropriate. This information is not intended to be comprehensive or address all aspects of Index or its products. There is additional documentation on Index’s website about the functioning of Index Coop, and its ecosystem and community.
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