BDI Methodology

Mandate

BDI’s mandate will be to provide diversified exposure to DeFi blue chips, while charging no fees and farming yield safely. It is aimed at the long term passive investor as a safe set-and-forget investment.

Inclusion criteria

The following inclusion criteria ensure that BDI follows its mandate, by controlling the tokens that may be included and the risk appetite of the farming.

Constituent inclusion criteria

  • The token is available on the Ethereum blockchain.
  • The protocol is considered to be building a useful product for the future of DeFi.
  • The protocol has significant usage.
  • The protocol has been launched at least 90 days beforehand.
  • There must be reasonable liquidity available to trade the token.
  • The protocol has been audited.
  • No major vulnerabilities have been discovered and are still present in any contracts.
  • If insurance is available, the insurance implies a low risk of insolvency

Acceptable farm criteria

  • The farm is considered to be low risk and sustainable.
  • The farm protocol has significant usage.
  • The farm protocol has been launched at least 90 days beforehand.
  • There must be reasonable liquidity to enter and exit farming positions.
  • The farm protocol has been audited.
  • No major vulnerabilities have been discovered and are still present in any contracts.
  • If insurance is available, the insurance implies a low risk of insolvency

Weight calculation

The weight of each constituent within BDI is based on three factors:

  • The constituent’s market cap, which we define as the circulating supply multiplied by the price of the token, both sourced from CoinGecko.
  • A unique per constituent weighting factor, which will initialize at 1.0. If the weighting factor is below 1.0, this will scale a constituent’s weight down, and vice versa. This allows the community to change weights.
  • A maximum weight cap, which will initialize at 25%. This ensures that no constituent has too large an impact on the index.

The formula to determine the weight per constituent before capping is:

This means that a $200M market cap token with a weighting factor of 0.5 will have the same weight as a $100M market cap token with a weighting factor of 1.0

Index maintenance

The index will be rebalanced once a month during the rebalance period, which will last a week and begin on the 15th of every month.

Token additions, removals, weight factor changes and the circulating supply will all be determined and published 3 days before the rebalance period begins.

During the rebalance period, the BDI will be updated to reflect the above determinations.

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