Mar 7 | 2 min read
Hey, everyone. Happy Tuesday. And welcome back. Today, we're taking a quick look under the hood of Index Coop products. So if you've ever found yourself wondering what you're actually getting when you buy tokens like DPI or MVI or how they track their underlying components, then this is the video for you.
To date, all Index Coop products have been launched and maintained on Set Protocol, a founding partner of Index Coop. Set is a battle-tested DeFi primitive that allows for the bundling of multiple crypto assets into single ERC-20 tokens. And they've been a key partner of Index since the DAO was first formed. We asked our head of finance, Matthew Graham, to go into a bit of detail about what's abstracted away behind the scenes when you purchase a token like DPI.
Matthew Graham: So if you think of DPI, DPI the token is essentially a claim on a vault, which holds the underlying assets. So all the constituents will sit in a token set vault. The user will have a DPI token and the DPI token represents a claim on that vault. So that's why when you do the redeem function, you can actually receive all the constituents into the wallet. And similarly, in the reverse way, you can take 14 constituents in your wallet and hit the mint button and mint the DPI token. So all the constituents are basically transferred to the vault. The DPI token, which is a claim on that vault is transferred to the user.
So, yeah. When you purchase DPI or any Index Coop products, you are in effect getting the underlying tokens, which are redeemable permissionlessly at any time. That's our video. If you like the content, make sure to like and subscribe. We release videos every Tuesday. None of this was financial advice, and we'll see you next time.
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