May 2021 DPI Update

The drawdown in May was one of the quickest liquidation events in the history of crypto.

Bitcoin ended the month down -35.4% or -42.6% off the mid-April high. $DPI fell -24.6% and is -37.9% away from the May 14th high. $ETH only declined -2.5% for the month, but it is also down -37.8% from the May 12th high.

During times like this, it is good to step back and remind ourselves how far we’ve come. Year-to-date through the end of May, $DPI is up +253.7%, $BTC is up +28.7%, and $ETH is up +266.7%.

* Inception on September 14, 2020. Cumulative performance. ** Standard deviation of daily returns since inception.

Portfolio Analytics

Whenever there are massive spikes in volatility, there is typically an associated spike in correlations between different assets. This drawdown was no exception, with correlations between $BTC, $ETH, and $DPI hitting recent highs.

Data over the period since the inception of DPI.

Performance was difficult across the board with every constituent contributing negatively to the bottom line. $AAVE, $MKR, $YFI, $SNX, $UNI, $SUSHI, and $CREAM all outperformed relative to the average. $MTA and $FARM both declined over -60%, but given their smaller allocation within $DPI, they only had a negative impact of -0.2% on the total return.

* Contribution measures the degree of each individual token’s contribution to the performance of DPI over a period. This is an estimate. At this point in time, we are not able to account for the constant changes in the weight of the underlying tokens in the portfolio. As such, contribution is calculated based on the beginning portfolio weights post monthly rebalance, assuming they stay static during the month.

DPI Constituent Highlights

YFI: Dog coins were all the rage leading up to the recent market high. Yearn Finance saw an opportunity within the madness and created the $WOOFY token — a bi-directional peg to $YFI branded with a memeable blue dog. Even though the new dog token was solely a redenominated version of $YFI, investors piled in, resulting in a +45% run in less than 24 hours after release. Community sentiment was mixed with some considering it predatory to retail investors while others viewed it as a brilliantly timed unit bias a/b test to see if traders would prefer a greater token supply and lower fiat price.

SUSHI: SushiSwap launched a new product called MISO, or Minimal Initial SushiSwap Offering. MISO will allow token creators and communities to launch new project tokens. Users can mix-and-match Ingredients (off-the-shelf smart contracts) to create Recipes (combinations of smart contracts) that determine everything from token supply (e.g. mintable or fixed) to sale dynamics (e.g. crowdsale, Dutch auction, batch). The simple interface and ease of use should make it a highly competitive token launch platform that integrates well into the broader SushiSwap ecosystem.

The first token to launch on MISO was $SAK3, an ERC-20 token that is redeemable for a physical bottle of rare Junmai Daiginjo sake. The token successfully launched with 888 total token supply in a Dutch auction launch format.

UNI: Uniswap governance saw a surge in activity of late as three proposals were put forth by the community. The first proposal was created by Andy8052 advocating for Uniswap to launch on Arbitrum, an upcoming layer 2. Leading up to this proposal, it was widely known that Uniswap had an existing relationship with Optimism, a competitor Layer 2 to Arbitrum, with plans to launch on Optimism within the next couple of months. The proposal passed with 43.2mm $UNI voting in favor with 0 votes against. This development could be great for users across EVM compatible networks.

In addition to the Arbitrum proposal, Harvard Law Blockchain suggested creating a legal and regulatory defense fund, and the first community autonomous proposal was created to reduce the required threshold for submitting new proposals from 10mm $UNI to 2.5mm $UNI.

SNX: Kain Warwick gave us a little dash of hÖpΞm on May 18th, outlining three new project launches within the Synthetix ecosystem that could potentially airdrop governance tokens to $SNX holders. The new projects are:

• Thales — A binary options platform that will enable options trading on synths. In the future, the project hopes to expand into sports, elections, the flippening, and more.

• Lyra — A L2 options protocol that will include automated risk management for liquidity providers.

• Aelin— Kain’s side project that will allow anyone to raise permissionless private capital pools as a way of democratizing venture capital and OTC deals.

Rebalancing Summary

With the recent market drawdown, most assets took pretty severe price hits. Notable allocation changes include $UNI with a +5.53% increase (hitting the asset weighting cap once again) and $AAVE with a -1.60% decrease from its previous allocation.

No new token additions were included in May.