DeFi Growth Index (“DGI”)

Index objective

The DeFi Growth Index (“DGI”) tracks the performance of early-stage DeFi projects that demonstrate innovative mechanisms and established market demand,with strong potential for significant growth in user base, transaction volume, and/or Total Value Locked (TVL) as relevant. This is achieved through a curated portfolio of tokens native to these projects.

Constituent Inclusion Criteria

Project

• Offers services or products that enhance or facilitate DeFi applications such as decentralized exchanges (DEXs), lending platforms, bridges, yield farming, derivatives, aggregators, liquid staking/restaking, and more.

• Introduces innovative solutions that address unmet needs or present unique applications within the DeFi ecosystem.

• Operates for a minimum of 180 days with demonstrated and stable growth in user adoption and activity.

• Developed by a team with an established reputation or governed through decentralized frameworks.

• Undergoes at least one audit by recognized security professionals within 180 days prior to inclusion, with all critical and high-risk findings resolved.

Token

• Market capitalization between $10 million and $1 billion.

• Listed on the Ethereum blockchain.

• Available on at least two major decentralized exchanges (e.g., Uniswap, Curve, Balancer).

• Achieves a minimum 7d trading volume of 10% of the market capitalization.

• Complies with regulatory requirements and is not classified as a security by relevant authorities across jurisdictions.

• Must be a bearer asset, not a synthetic asset or derivative.

• Features transparent tokenomics with a transparent or predictable supply schedule.

• At least 10% of the total predictable supply for the next four years must be in current circulation.

• As the crypto ecosystem evolves and additional metadata becomes available, supplementary metrics may be incorporated to refine constituent selection, ensuring DGI effectively achieves its objectives.

List of Potential Index Constituents

(Highlighted protocols are those have not TGE or can barely meet the criteria above but of great potential)

Constituent Weighting

• DGI's constituents are weighted based on their market capitalizations as determined on the quarterly Constituent Review Date.

• No caps or floors are applied to individual constituent weights, allowing the portfolio to reflect the relative size and significance of each constituent within the crypto market.

• As the crypto ecosystem evolves, additional metrics such as liquidity, protocol usage, and staking activity may be incorporated to refine weighting methodologies.

Constituent Review & Rebalance

Review

• The Constituent Review Date occurs on the first business day of February, May, August, and October.

• The review process ensures that DGI maintains alignment with its objectives by evaluating both existing constituents and potential new additions against the Constituent Inclusion Criteria.

• Innovative DeFi projects that meet the Inclusion Criteria for two consecutive Constituent Review Dates and exhibit significant growth potential may be included in DGI.

• Existing constituents failing to meet the Inclusion Criteria will generally be removed from DGI unless they qualify under the following exceptions:

  • The constituent satisfies all other inclusion criteria but has a market capitalization within 25% of falling below $10 million or exceeding $1 billion.
  • The constituent's 7-day trading volume is less than 10% of its market capitalization, but it has generally met this threshold since the previous Constituent Review Date.
  • If a constituent demonstrates any of the two conditions across two consecutive Constituent Review Dates, it will be excluded from DGI despite meeting the rest of the Constituent Inclusion Criteria.

• DGI may exclude constituents due to extraordinary events such as legal disputes, regulatory concerns, or major security breaches.

• Periodic reviews of the Inclusion Criteria will be conducted to ensure they remain relevant and effective in a rapidly evolving market.

Rebalance

• The Constituent Rebalance Date occurs on the last business day of February, May, August, and October.

• Changes determined during the Constituent Review will be implemented on the Rebalance Date, ensuring timely adjustments to DGI's composition.

• DGI will minimize the transaction costs associated with rebalancing through placing limit orders, splitting trades, or requesting for quotes through several audited aggregators.

• In the event of market disruptions or unforeseen events, DGI may delay or adjust the Review and Rebalance timelines to ensure accurate and fair implementation.

• Exceptional circumstances may warrant interim reviews or rebalances outside the standard schedule to address significant market developments.

Governance Process

• DGI governance allows RSR stakers to participate as the Governors in the decision-making process of the protocol by proposing, voting on, and executing proposals.

• Governors should ensure DGI operates in the best interest of holders by overseeing asset selection, risk management, and strategic adjustments to optimize returns while maintaining transparency and adherence to constituent inclusion criteria, weighting policies, and review\&rebalance methodology.

• In return, RSR stakers will be entitled to 50% of the TVL fee and minting fee.

How It Works

1. Propose
   • Who: Any RSR staker with the required minimum tokens.
   • What: Suggest changes such as adding/removing assets, adjusting allocations, tweaking parameters, or launching new features.
2. Vote
   • Your Choice: Vote “yes,” “no,” or “abstain.”
   • Delegate: If you prefer, delegate your vote to someone you trust.
3. Execute
   • After Approval: A built-in timelock creates a short delay, giving all DGI holders time to review before changes go live.

Key Governance Settings

• Proposal Threshold: Minimum tokens needed to create a proposal.

• Quorum: Minimum total votes required for a valid decision.

• Voting Snapshot Delay: Wait time before voting starts to capture staked tokens.

• Voting Period: How long voting lasts.

• Execution Delay: Time between proposal approval and implementation, ensuring a final review window.

Governance Timeline

Parameter Configuration

• Voting snapshot delay: 2 days
• Voting period: 3 days
• Execution delay: 2 days

Constituent Allocation Adjustment

• Voting snapshot delay: 1 day
• Voting period: 2 days
• Execution delay: 1 day

Additional Roles

Auction Launcher:

• Initiates on-chain Dutch auctions to manage trading and rebalancing based on governance decisions.
• Provides advisory support without decision-making authority.

Guardian:

• Can veto any proposal deemed unsafe for DGI.

Risk Disclosure Statement

General Risk Warning

Holding DGI involves risks and may not be suitable for all holders. Holders should carefully consider their financial situation, risk tolerance, and index objectives before participating. Past performance is not indicative of future results, and there is no guarantee of profitability or capital preservation.

Market and Volatility Risks

• Digital assets and DeFi tokens are highly volatile, and price fluctuations may result in significant losses.
• Liquidity constraints or sudden market shifts may impact the ability to exit positions efficiently.
• Token values can be impacted by market sentiment, protocol adoption, and broader macroeconomic factors.

Regulatory Risks

• The regulatory landscape for DeFi and digital assets is evolving, and future changes may impact DGI’s operations.
• Jurisdictional differences in regulatory treatment may affect the ability to list, trade, or hold certain assets.
• Tokens included in DGI must comply with current regulations, but classification as securities or other regulatory changes may impact their eligibility.

Smart Contract and Security Risks

• Despite audits, smart contracts remain susceptible to vulnerabilities, exploits, and hacks.
• Third-party protocol failures, governance attacks, or oracle manipulation could negatively impact constituent projects.
• DGI relies on decentralized governance mechanisms, which may introduce risks related to decision-making and execution delays.

Liquidity and Trading Risks

• Some tokens may have limited trading volume, increasing slippage and execution risk during rebalancing.
• Market disruptions, exchange outages, or delistings may impact the liquidity of DGI constituents.
• DGI’s reliance on decentralized exchanges means it is exposed to risks from liquidity fragmentation and smart contract execution issues.

Governance and Operational Risks

• DGI’s governance framework, including RSR staker voting, may lead to delays or suboptimal decisions.
• Changes in constituent weighting and periodic rebalancing may introduce tracking error risks.
• Extraordinary events, such as regulatory actions, legal disputes, or major security breaches, may require unscheduled adjustments or DGI restructuring.

Custody and Asset Management Risks

• DGI does not offer insured custody solutions, and holders bear the risk of private key management and DGI access security.
• Losses resulting from mismanagement, smart contract bugs, or unauthorized transactions may not be recoverable.

Force Majeure and Unforeseen Risks

• Unforeseen technological, economic, or geopolitical events may materially impact DGI’s performance.
• DGI may delay or adjust its review and rebalance timelines in response to extraordinary circumstances.

Final Disclaimer

This Risk Disclosure Statement is not exhaustive. DGI holders should conduct independent research and consult with financial, tax, and legal professionals. Participation in DGI is at the sole risk of the holders, and neither DGI nor its managers, governance participants, or affiliated parties shall be liable for any losses incurred.