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DPI Token Productivity Guide

For many DeFi Pulse Index holders, the DPI token represents diversified exposure to the blue-chip tokens of the current DeFi ecosystem. In this article we walk through current options to make DPI a productive asset.

Wondering what to do with your DPI Token?

DPI holds up well taking a passive approach, as it is inspired by index products from traditional finance which historically has outperformed more active strategies. This DeFi Pulse Index (DPI) guide to token productivity introduces DPI tokens holders to:-

  • Yield Farming: Staking your LP position in a platform to earn an additional yield

In traditional markets, one of the safest bets for participating in a financial market is to hold an equally weighted basket of companies, picked by a credible research firm. This model is very efficient and comfortable, as holders don’t have to worry about constantly researching and rebalancing the portfolio.

For many in the crypto ecosystem, DPI does just that. However, because this index is built on Ethereum, it acts as a DeFi money lego that unlocks new and innovative ways to allocate capital and earn yield. DeFi also allows users the opportunity to take advantage of a myriad of services only found in traditional finance.

Liquidity Provision

Liquidity provision gives DPI holders the unique opportunity to become market makers for DPI. Thanks to the business model of decentralized exchanges, anyone that holds an equal amount of each asset can facilitate trading on the platform and earn passive income on their deposit. When tokens are deposited into a liquidity pool, the platform automatically generates a new token that represents the share the depositor owns of that pool. These generated tokens are known as Liquidity Provider (LP) tokens, and they can be used for a multitude of functions both within its native platform and other decentralized finance apps. The LP position allows the DPI holder to earn trading fees for any trades that take place within this pair. DPI currently has two main liquidity pools.

Uniswap V2 APY: 8.77%

Sushiswap APY: 5.34%

DPI Yield Farming

Yield farming allows for maximizing profits even further, after having deposited their assets into a liquidity pool, and receiving LP tokens, a DPI holder can stake the LP tokens they receive in order to earn additional rewards. Currently, users can stake their ETH/DPI LP tokens from Uniswap and Sushiswap on multiple different farms in order to earn rewards. For example, users can stake their DPI/ETH LP tokens on Index Coop to earn INDEX.

Index Coop Uniswap LP APY: 10.15% (INDEX rewards)

Furthermore, additional opportunities exist if you would like to earn other platform tokens with your DPI/ETH LP. For example, earning ALPHA tokens on Alpha Homora V2, FARM tokens on Harvest Finance, or IMX tokens on Impermax. Below are the additional yields you can earn by staking on these platforms.

Alpha Homora V2 Uniswap LP APR: 20.21% (ALPHA), 20.59% (INDEX) Sushiswap LP APR: 20.21% (ALPHA), 23.53% (SUSHI)

Harvest Finance Uniswap LP APR: 1.5% (FARM), 7.36% (INDEX)

Imperamax Uniswap LP APR: 62.14% (IMX)

Borrowing and Lending

Decentralized finance has revolutionized the financial sector in many ways, and one of them is the easy accessibility to lending and borrowing of capital. You can easily deposit your crypto in a lending and borrowing platform and earn yield from borrowing demand on the asset. Currently, DPI holders can deposit their DPI tokens to earn a yield on two protocols:

CREAM Finance APY: 0.60%

Alpha Homora V2 APY: 7.16%

Collateral Debt Position

One of the advantages of holding DPI is the fact that you do not need to sell your assets if you need liquidity. A DPI holder has the ability to borrow stable coins against their DPI position. This means a holder can put up DPI as collateral to take out a loan in stable coins and use this liquidity for various cases outside and inside crypto. In finance this is called collateralized debt position (CDP) and is available for DPI holders on the following platforms:

Unit Protocol Loan to value: 64% Debt: USDP Coin Interest rate per annum: 10%

Sushiswap Kashi Loan to value: 75% Debt: sUSD Interest rate per annum: 0.25%

What are the Risks?

Before exploring the above opportunities we recommend that you do your own research. Make sure you deep dive into the project’s Gitbook and documentation to understand how the protocol works and how to use it. Jump into the project’s Discord and follow their Twitter to keep up to date with any news in relation to the protocol so you are not surprised by any changes that may affect your assets. Lastly, make sure you understand the risks involved with using these platforms. We have highlighted a few of them below you should be aware of.

  • Smart Contract Risk: whenever you are interacting with a smart contract there is always a risk of exploits that can put funds at risk. Most credible platforms conduct security audits that are crucial to getting an outside view on the code to make sure everything is doing what it is supposed to and that there are no edge cases, overflows or other issues hackers can take advantage of.
  • Market Risk: if you are using a lending market, there is a chance that in the event of a market downturn, the protocol no longer is over collateralized and is in debt. This means your principal may no longer be safe.
  • Liquidation Risk: if you are using a CDP there is always the event of liquidation, should the value of your collateral decrease, and you violate your collateral ratio.

To conclude, we will be releasing a 4 part series that goes into detail for each productivity opportunity for DPI. What users should look out for and how to take advantage of each opportunity.

How to Buy DPI

There are three main ways to buy $DPI: 1. You can exchange fiat currencies directly for an Index Coop product via an Ethereum wallet 2. Use a decentralized exchange to trade another cryptocurrency for an Index Coop product 3. Or, buy it on a centralized exchange If you’re looking to exchange a fiat currency, like the U.S. dollar, directly for $DPI, then you’ll want an Ethereum wallet like Argent, Metamask, or Rainbow. With each of these wallets, you can connect to your bank account or debit card, which allows you to exchange fiat currencies directly for Index Coop products like NAME. Buy Index Coop products with fiat currencies: 1. First, you’ll need to download one of the above apps. (Metamask also has a browser extension if you prefer not to use your mobile phone.) 2. Next, you’ll set up your new wallet and connect your bank account 3. Once you’ve deposited fiat currency in your wallet you can exchange it for Index Coop products like DPI contain COMP.

Buy DPI Today

Disclaimer: This content is for informational purposes only and should not be construed as legal, tax, investment, financial, or other advice.

Disclaimer: This content is for informational purposes only and is not legal, tax, investment, financial, or other advice. You should not take, or refrain from taking, any action based on any information contained herein, or any other information that we make available at any time, including blog posts, data, articles, links to third-party content, discord content, news feeds, tutorials, tweets, and videos. Before you make any financial, legal, technical, or other decisions, you should seek independent professional advice from a licensed and qualified individual in the area for which such advice would be appropriate. This information is not intended to be comprehensive or address all aspects of Index or its products. There is additional documentation on Index’s website about the functioning of Index Coop, and its ecosystem and community.

You shall not purchase or otherwise acquire our restricted token products if you are: a citizen, resident (tax or otherwise), and/or green card holder, incorporated in, owned or controlled by a person or entity in, located in, or have a registered office or principal place of business in the U.S. (defined as a U.S. person), or if you are a person in any jurisdiction in which such offer, sale, and/or purchase of any of our token products is unlawful, prohibited, or unauthorized (together with U.S. persons, a “Restricted Person”).  The term “Restricted Person” includes, but is not limited to, any natural person residing in, or any firm, company, partnership, trust, corporation, entity, government, state or agency of a state, or any other incorporated or unincorporated body or association, association or partnership (whether or not having separate legal personality) that is established and/or lawfully existing under the laws of, a jurisdiction in which such offer, sale, and/or purchase of any of our token products is unlawful, prohibited, or unauthorized).

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