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In this week’s Index Insights newsletter, we take a look at how:
— The Index Coop team
Since the launch of Interest Compounding ETH Index (icETH) in April, the volatility in the stETH:ETH market has limited the yield. But since the Merge, the gap between stETH and ETH has stabilized (1 stETH = .995 ETH at the time of writing) and icETH has been generating an APY in excess of 10% denominated in ETH.
As a quick refresher, here’s how icETH works:
icETH automates a leveraged liquid staking strategy to amplify stETH yield on Aave's money market. Instead of accumulating more tokens, the yield generated accrues into the value of the icETH token.
It’s important to note that leverage is a key feature of the icETH strategy. While there is inherent risk with using leverage, the high correlation between icETH’s collateral (stETH) and debt (ETH) assets mitigates liquidation risk. There are also multiple safety mechanisms in place to maintain a healthy LTV ratio and mitigate risk.
The next major Ethereum upgrade, Shanghai, will enable the stETH to be withdrawn for ETH at a 1:1 ratio. This eliminates the slight gap between stETH and ETH prices and eliminates another source of icETH’s price volatility.
Strong leadership is vital for any DAO. Projects that lack a clear vision and processes in place to enable effective coordination are destined for failure.
The current members of Index Coop Council v2 have tackled numerous challenges faced by our DAO and helped set a clear direction for financial sustainability and products that provide access to simple, effective DeFi strategies.
A vote by INDEX token holders recently passed with 99.74% voting ‘FOR’ to extend the mandate of the Index Coop Council v2. The council will use its extended term to develop a new organizational structure in collaboration with the community.
Along with a great leadership team, it’s the consistent efforts of contributors that generate the momentum needed to build great products and benefit our community of token holders.
Index Coop has made progress in increasing community ownership of the DAO. First by implementing a Dynamic Staking Model and now with an improved program that recently passed via an INDEX token vote. This new program will incentivize full-time contributors by compensating them partially in INDEX.
After sharing the new plan with a number of highly involved and experienced Index Coop backers and partners, we believe this plan provides a strong long-term incentive structure for contributors to continue to build a prosperous organization.
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.
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