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Methodology

Our full methodology for the PDI index.

Token inclusion criteria

Any token included in the index must meet all the criteria below.

Project and token characteristics

  • The project must have a listing on Defi Llama.
  • The project’s token should have been listed on CoinGecko with pricing data at least 1 year prior to the date of inclusion in the index.
  • The project should have a token that is native to Ethereum L1 or L2. This excludes wrapped variants, where the underlying tokens are locked on an alt-L1.
  • The project should be a going concern, with a dedicated team actively building, supporting and maintaining the project.
  • No rebasing or deflationary tokens.
  • The project must be widely considered to be building a useful protocol or product.
  • Projects that have circular feedback characteristics at the core of their offering will not be considered.
  • Synthetic tokens which derive their value from external price feeds are not permissible.
  • The project’s token must not have the ability to pause token transfers.
  • The project’s protocol or product must have significant usage.

Pricing requirements

  • Token should have a manipulation resistant price feed in the form of a Chainlink price feed or a Uniswap V3 TWAP oracle with a cardinality of at least 300 and a minimum liquidity level of $1mm.

Token Supply requirements

  • The project's token must have a circulating supply greater than 30% of the max supply. In cases where a token does not have a max supply, the minting mechanics would need to be assessed.

Liquidity Requirements

  • The token must be listed on a supported exchange.
  • The token should have in aggregate at least $5mm of onchain liquidity across Uniswap v2, Uniswap v3, Sushiswap, Balancer v1, Balancer v2, Bancor v2 and Bancor v3.
  • The token price should experience no more than 4% price impact when executing a $100k trade.
  • The token must have shown consistent DeFi liquidity on Ethereum.

Security Requirements

  • The project must have been audited by smart contract security professionals with the audit report(s) publicly available. Alternatively, the protocol must have been operating long enough to create a consensus about its safety in the decentralised finance community.

Defining asset weights

  • Assets are weighted according to their circulating market capitalisation as calculated on Coingecko.
  • The maximum weight any one token can have is 30%.
  • All excess weight is proportionally redistributed to all uncapped tokens. After this has been completed, if another token now exceeds the 30% threshold the excess will be redistributed to the remaining uncapped tokens. This process will occur iteratively until there are no tokens that exceed the maximum weight.
  • Any asset with a weight below 1% will be removed from the index.

Suitability of yield bearing vaults

PDI removes the opportunity cost of holding idle assets by depositing a portion of each asset into yield bearing vaults on Yearn.
  • Each asset will support exactly one Yearn vault, unless one does not exist for that asset or the vault doesn't meet our criteria.
  • 50% of each asset's reserve will be deposited into its respective Yearn vault.
The yield bearing vaults that PDI utilises must adhere to several key standards:
  • Returns should not impacted by impermanent loss.
  • The underlying protocol through which yield is generated must pass our security assessment. These include security audits, time in the market and significant usage, amongst others.
  • Where leverage is used, it must be deemed low risk through the lending and borrowing of the same asset.
  • Funds held by the vault must always be redeemable without lockups.
  • Not impose any deposit fees or withdrawal fees.

Index maintenance

Rebalancing

Rebalancing - Occurs on the first business day of each month according to the weighting methodology used for the index. The new assets and weights are determined on the last Wednesday of each month.

Automated management

Phuture handles all index management from rebalancing to allocating and tracking funds in yield bearing vaults.

Investment cycles

24/7, immediately. You never have to wait for your money to be invested.

Redemptions

24/7, immediately. Your funds are easily accessible whenever you need them.