A proposal for a gamified pToken index

I’d like to see more TVL in our high APY farms.

I think one way to achieve that is to tap into audience that is either:

  • unfamiliar with defi
  • afraid of trading on dexes
  • can’t afford ETH gas (approve, deposit, stake, approve, deposit, stake…)
  • lazy
  • not keen to pick winner coins himself/herself

I propose launching simultaneous 3 indices on ETH, Arbi and Poly:

These indices would contain a proportion of pTokens in a Balancer pool:

Pools and LBPs - Balancer :
Investment Pools - An LBP-like pool with the same rights to disable trading and change weights, but which allows public LPs. It also supports management fees (as a percentage of swap fees), and higher token counts.

The pool could start with 4 pTokens. Trading disabled.
The team could commit to make 2 week long snapshot votes, where owners of the LBP token could vote on which coin they want to increase exposure to and which to decrease exposure to.

There would always be 2 votes:

Which of the pTokens should we dump 5%?
and
Which pToken to buy with proceeds? (some new pools could be available)

Each option could have - do nothing, if the majority choice is do nothing on either buy or sell, you don’t rebalance at all - preferable as trading is expensive and takes time.

Pretty easy to execute by the team, you unwrap, dump, buy, wrap and deposit into the Balancer pool.

Hard limits - minimum 4 assets, max 8 assets, Max exposure to 1 pToken 40%, min exposure 10% (otherwise dump all)

Numbers are arbitrary, could and probably should be changed.

Benefits:

  • an index with reasonable results, the 100%+ APYs should make it good
  • insane memery mocking DPI and other garbage indices
  • gamification, ALCX crowd could fight SPELL frogs for increasing exposure
  • snapshot voting costs 0 and would keep investors engaged
  • hands off approach with investors deciding on allocation
  • only high APY assets could be whitelisted, in that case no need for a fee

Issues:

  • may not take off, pickle treasury could be the first investor, small pickle rewards could be considered to bootstrap if really necessary
  • low TVL on ETH could make it too expensive to handle, Arbi and Poly pilots could be the first step
  • if market turns, it will generate losses and look embarassing against USD
  • every 2 weeks team will have to rebalance
  • small potential for malicious takeover, limited with max 40% exposure to 1 pToken

Other considerations:

  • trading disabled, it would be illiquid anyway, making it tradable would generate v little fees and expose to one rugged asset rugging the entire index.
1 Like

I forgot to say that some clever mind in pickledao came up with the name $uponly!

Please rip this idea apart, suggest changes, make it better. Maybe voting for 10-30% changes in fast paced defi environment is better.

What’s the benefits of gamification as compared with just have some rule based index? I feel like this would be prone to huge momentum risk since I imagine the majority of voters would just want to buy what was hot.

I actually like the idea of an index - I think your critiques of DPI that you’ve made a very good I just wonder why we have to “gamify” it in order to get people to invest if we have a investing strategy that provides superior returns to other indices.

Could really be Pickle’s killer app!

At the end of the day nobody knows what is going up and what is going down.
If you give it to the team, or a special Pickle task force, or the largest holders they will have no clue.
At least let them have fun with it. I think 20% instead 5% rebalances would be more suitable.

There is a self balancing mechanism - as more SPELL fans force others to hold SPELL allocation within the $UPONLY wrapper, the more people are unhappy with the allocation and want it to go down, so the voters will have an incentive to push against proliferation of a single group. And then the 40% or similar cap would stop from one pToken getting too big.

I should have mentioned the creation and redemption mechanism:
When you invest, your money buys the pTokens at the biweekly rebalance, so it waits for up to 2 weeks. Withdrawals are processed at the same time. If withdrawals are above the deposits, the withdrawals get processed from the 20% snapshot voted dump, and nothing gets purchased. If the withdrawals exceed that - I’m not sure what to do. Best to come up with something simple - surplus withdrawals wait for up to another 2 weeks and the following snapshot vote decides what to dump to satisfy the redemptions maybe?

Sure I agree - but I’m not sure why this has to be actively managed as opposed to some sort of rules based approach like the 10 tokens with the highest APR or tokens with the highest marketcap etc.

I think a rules based approach to redemptions is probably not a bad idea either - I like the idea that redemptions do come from the rebalances to save on gas.

Rebalances will be a pain. Will take time of Pickle team. I suggested redemptions from rebalances and deposits to save time for the Pickle team. It would realistically take around 1h of time every 2 weeks to let the investors have fun, join and leave the fund.

If we only whitelist high APY farms for voting, the index will not be able to vote in low APY farms - this is what I suggest.

We can super easily arrange voting through snapshot and let people have fun (balancer pool token will be the governance token). This would be the first defi index of this kind. I think that if we run 100 of these index funds, 50 will be managed by rules and 50 by votes, they will perform the same.
Why not let people have fun? Why not hit the headlines as a novel approach? Why babysit people with skin in the game? Why do we know better what investors want and need?

bonus thought - blindfolded monkeys are likely to perform as good as a rules-managed pToken fund and snapshot voters :slight_smile:

copy-paste from my discord thoughts:

let’s say we offer:
$Uponly Arbitrum
$Uponly Polygon
$Uponly ETH

Pickle holds
20 ETH on Polygon, Arbi, ETH and Zksync, it processes deposits and withdrawals from these holdings and offers freedom for users
if a big deposit comes in, we’re ok to bridge it
there could be some extra deposit fees, higher for ETH, so that ppl don’t take advantage and use us as a bridge

The fundamentals are on our side

Majority of noobs are exploited by holding naked inflationary tokens (and non-noobs like market makers and Pickle investing in DPI)

Meanwhile a small proportion of users takes advantage of inflation by grabbing sweet pool2 LP rewards. Our hedge fund can have this as the motto

we could even offer investing from a custodial address

you send ETH to $uponly Arbitrum - your eth gets invested in arbitrum fund

you sent 1 GWEI - this is the secret code for withdraw all funds to the address where funds came from
no need to install that awful Metamax and limited risk of getting an acct compromised
people run some ETH wallets tied to identity, email, phone, shoe size, these are difficult to hack

I see a nice dynamic with Pickle Finance investing 100k into each fund at the beginning

First of all, bootstrapping. Making initial wave more gas efficient.

But then, if we allow holders of $uponly arbitrum balancer pool token vote on small rebalances every 2 weeks on snapshot, that 100k investment gives Pickle significant influence over composition. It can either be used to steer the pool or only used when thought absolutely necessary. But ultimately, it doesn’t matter whether the pool is heavy on QI/MATIC or DINO/ETH. Nobody knows where the price is going. Letting people vote will be a good meme and Pickle protocol will retain ultimate control because Pickle will write proposals for rebalances and censor options if needed.
so the meme says - users are in control and vote
but the reality is that if DINO maximalists become too annoying, Pickle will censor DINO voting options :man_shrugging:
.
another dynamic:
pool rebalances will be annoying and a bit labour intensive, even if done biweekly

instead of keeping a rigid 100k investment, a 50-150 k commitment can be used

if one epoch has 20k deposits and 20k withdrawals - you just change ownership of the $uponly tokens

if there are 40k deposits and 20k withdrawals - pickle withdraws 20k that week and invests that 20k in the next epoch or in the following epoch

if there are 0 deposits and 40k withdrawals, pickle invests 40k, processes withdrawals from its investment and rebalances in later epochs

That way, we will avoid a human clicking buttons and aping into each of the index farms every 2 weeks. The only rebalance will be withdrawing a bit from 1 jar and moving it into the next jar.