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Index Coop CoinDesk ETH Trend Index ($cdETI) FAQ
Index Coop CoinDesk ETH Trend Index ($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.
10/24/2023
Index Coop
Content
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 pageThe Index Coop’s forum postIndex Protocol explainerConDesk Indices’ Ether Trend Indicator dashboardcdETI dashboard on Dune
For more information on Index Coop, please visit: Discord | Twitter | LinkedIn
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FAQs
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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).