Investing in the Data Economy

The Index Coop is pleased to announce that the Data Economy Index (DATA) is now available for purchase through the Index Cooperative!

The DATA index is a basket of 7 tokens designed to provide accessible, passive exposure to the second largest Web3 sector, the data economy.

The index is represented by a fully collateralized ERC20 token and is available for purchase on Sushiswap, Index Coop, and TokenSets.

In this post, we will cover:

  • What is the Data Economy?
  • Why buy the DATA Index?
  • How to buy DATA
  • Methodology and maintenance


What is the Data Economy?

The data economy is an ecosystem of data-based products and services.

Whereas decentralized finance (DeFi) is disrupting traditional banking and financial services, the data economy is disrupting the data monopolies built in Big Tech over the past 20 years.

Technology companies are the most valuable companies in the world…You don’t need a middleman to own your data…I think the big tech companies will be disrupted as much, if not even more, than the big banks. And considering those are the most valuable companies in the world, maybe that’s what’s worth paying attention to.“ - Fred Ehrsam, Bloomberg (March 2021)

The data economy is growing exponentially in both usage and market value. Data economy protocol tokens have reached market capitalizations eclipsing those of even the most valuable DeFi networks. For example:

  1. Chainlink is a decentralized network of oracles. The market capitalization of LINK now exceeds that of the most valuable DeFi project, Uniswap.
  2. Filecoin is a decentralized storage network. Filecoin’s network storage power has grown nearly 33x in the past year, from 0.32 EiB at launch to 10.52 EiB in September 2021.
  3. The Graph is an indexing protocol for querying networks: The third most valuable Data Economy protocol saw its query volume grow 20x in less than a year, with growth accelerating to 20% MoM in 2021.

Investors have not had a simple way to gain exposure to this exponentially growing sector. Until now.

Why Buy the DATA Index?

The DATA index is data-centric and chain agnostic.

DATA is the first decentralized index to capture the growth of the data economy and also the first to include non-Ethereum-based tokens.

DATA includes tokens that provide data-based products or services across blockchains. This means that the success of Chainlink, the Graph, Filecoin, etc. is independent from Bitcoin, Ethereum, Solana, Cosmos, and other cryptocurrencies. These tokens are inherently multi-chain and grow along with the entire crypto industry’s success.

We’re excited to announce a partnership with Ren Protocol, a bridge between blockchains, to bring Filecoin into the DATA index on Ethereum. Filecoin is a blockchain with its own native cryptocurrency that would not have been available in the DATA index without this partnership.

Beyond its core value proposition, there are 5 major benefits of using DATA:

  1. Simplicity — DATA is a convenient way for investors to gain exposure in a single ERC-20 token without having to constantly research and rebalance a portfolio.
  2. Uniqueness — DATA is the first index in the market providing exposure to the Data Economy.
  3. Efficiency — DATA provides reduced gas costs and tax-efficient rebalancing.
  4. Diversity — The volatility of individual tokens is offset by holding an index and quarterly rebalances prevent overconcentration.
  5. Transparency — The index follows a transparent methodology to assess tokens for inclusion and removal.

How to Buy DATA

We’re excited to announce Wintermute as an official market maker for Index Cooperative and the DATA Index! Wintermute is supporting the launch of the DATA Index with $1 million of seed liquidity for the launch on Sushiswap. Wintermute is also committing to be the go-to-market maker for any OTC institutional flow, providing competitive prices for tickets starting from 100K USD and beyond.

At launch, DATA can be purchased at Indexcoop.com.

In the case of high slippage for large trades on DEX, you can use exchange-issuance via the DATA TokenSets page or reach out to Wintermute for better pricing.

Token Inclusion Criteria

The selection of the DATA tokens is based upon the following criteria:

  • Data-based Protocol: The protocol provides data-based services or products.
  • Ethereum Token: The token must be available on the Ethereum blockchain. This will be revised if the Set Protocol infrastructure becomes multi-chain.
  • Organic Network Activity or Usage: Protocol must have organic network activity or usage. On-chain transaction volume, Total Value Locked (TVL), and/or revenue paid to service providers are all examples of metrics that can be used to demonstrate organic network activity.
  • Market Capitalization: Circulating market capitalization must be over $100m.
  • Decentralized Exchange (DEX) Liquidity: Protocol token must have sufficient DEX liquidity to support inclusion. If a token has insufficient liquidity, it will be removed from the index during the determination phase.
  • History: Protocol must have at least three months history of operation and its token must have at least three months of price and liquidity history.
  • Security: An independent security audit should have been performed on the protocol and results reviewed by the product methodologist. In the case that no audit has been performed, the methodologist applies subjective judgment of the protocol based on an assessment of the criteria above and communications with the team.
  • Safety: In the event of a security issue the methodologist will work with the project team to understand the issue and any effects to DATA holdings. The team is expected to provide users of the protocol with a reliable solution and adequate documentation to ensure transparency about any incidents.

Index Weight Calculation

DATA will use circulating market capitalization to determine the weight of each token included in the index. The weight of each token within the index will be as follows:

Like the DeFi Pulse Index, the Data Economy Index caps each token’s respective weight at 25%. Excess weight for a given token will be redistributed to the remaining components of the Data Economy Index on a weighted basis. This same process will be repeated for every token exceeding the 25% allocation cap.

Index Maintenance

The index is maintained quarterly in two phases:

Determination Phase

During the determination phase, the tokens being added and deleted from the index calculation are determined during the final week of the quarter and published before quarterly rebalancing.

Rebalancing Phase

Following publication of the determination phase outcome, the index composition will change to the new weights during the first week of the following quarter.

Fees

Data Economy Index (DATA) will have a streaming fee of 0.95% (95 basis points).

Resources

About Index Cooperative

Discord | Twitter | Website

About the Data Economy Index

The Data Economy Index captures the growth of data-based products and services.

Twitter | Website

About Ren

Ren is an open protocol that enables the movement of value between blockchains.

Website | Docs | Telegram | Announcements | Twitter | Reddit | Github

Originally published at https://www.tokenterrier.com on September 23, 2021.

Kiba Gateaux

Kiba Gateaux

Founder of the DATA Economy Index
Thomas Hepner

Thomas Hepner

Founder of DATA Economy Index