BED INDEX Proposal

Basic Summary

The following is a proposal to invest $1M, into the Bankless BED Index to diversify their treasury.

The BED is an index, created by Bankless and Index Coop, that represents Crypto’s most investable assets, 33.3% BTC, 33.3% ETH, and 33.3% DeFi Pulse Index (DPI).

Motivation

The main purpose for purchasing $1M of BED is to increase on-chain KeeperDAO liquidity and utility, helping to drive KeeperDAO adoption through the marketing campaign listed below.

Buying the BED index can strengthen the partnership between KeeperDAO and Index Coop. It can also establish a new partnership with the Bankless DAO, and in return Bankless DAO recognized for their educational content and their cultural influence over the industry will manage a marketing campaign with KeeperDAO finance inside and out of the DAO to advertise KeeperDAO Protocol.

The partnership with Bankless could increase KeeperDAO awareness and adoption in the Defi Space. The Bankless DAO is an inventive and leading edge DAO, mixing on-chain and off-chain initiatives. It was born by and for the large community behind the Bankless podcast which has strong brand and marketing channels, with 75k followers on Twitter and almost 70k loyal subscribers on Youtube.

By holding BED Token, we can have additional exposure to DeFi through DPI and also to Bitcoin that is one of the less volatile crypto assets. BED is a vehicle that captures equal-weighted upside from the most promising use cases and themes in crypto: store of value, programmable money, and decentralized finance. It also rebalances to keep the exposure ratio over the long term.

We are proposing a small initial amount that could be increased in the future.

This would be the occasion for a coordinated and combined marketing campaign with the Index Coop and Bankless DAO to make sure everyone in the space is made aware of the collaboration. The ideas are plenty (for example NFTs, BANK token drop for extra PCV diversification, programmed social network communication, etc) so we can see what’s the most exciting and the most impactful for the communities.

How it works

The BED index is rebalanced after the close of trading on the first Friday of each calendar month. The Fund is rebalanced in accordance with its Underlying Index

Index Maintenance BED is maintained monthly in two phases: Determination Phase The determination phase takes place during the fourth week of the month. It is the phase when the changes needed for the next reconstitution are determined. Reconstitution Phase Following publication of the determination phase outcome, the index composition will change to the new weights on the first Friday of the following month. I.e components will be added or removed.

Risk Analysis

Smart Contract Risk:

BED uses Set Protocol smart contracts that was audited by OpenZeppelin in September, 2020.

Despite its recent launch on 07/21/2021, BED has less smart contract risks because it uses the contracts from Set Protocol.

Counterparty Risk:

BED holders have no governance influence on Index Coop or the protocol within the index. The BED utilises TokenSets V2 smart contract that has privilege roles in many of the contracts.

There is a multisig responsible for initiating rebalances, performing meta-governance, adding / removing new protocol functionality. It does not have the ability to arbitrarily move underlying assets, mint tokens, etc. The signers are currently members of the Set team with the intention to add Index Coop community signers over time. While the multisig can’t arbitrarily move assets, it theoretically could rebalance assets into a fake token. The mitigating factors for these risks are the Set Labs, Bankless and individuals personal reputation.

Liquidity Risk:

Minting and redeeming BED represent the primary market of the indices, but many users can buy and sell indices on the secondary markets. The price on the secondary markets are kept at Net Asset Value (the market value of all the underlying components) through a network of market makers that redeem the tokens when price is below NAV and vice versa.

However, as BED holders have the option to mint/redeem the underlying tokens within BED, it draws on the liquidity of the underlying assets and also allows for any deviation from NAV to be arbitraged away by traders. So liquidity goes beyond the secondary market for BED.

Market Risk:

As BED is a basket of tokens, it has less volatility than the component assets by themselves.

As BED just started a few weeks ago, we calibrated the risk exposure by proposing a small deployment.

Specification

$1M of BED can be purchased via Set Protocol.

Alternatives can be taking the composites ETH, BTC, DPI units and swapping it for BED to reduce slippage costs using usdc or other stable coins which can also reduce slippage costs too.

There is the potential for a joint Bankless, Index Coop and KeeperDAO deployment on uniswap rewards and potentially other opportunities. More on this as information comes to hand.

Bankless DAO would do a marketing campaign on twitter and other means of marketing not limited to a potential giveaway such as the gleam campaign which can track how likes, users, countries where the users are located, activity was generated through the Twitter. Along with a portion of the bankless DAO newsletter dedicated to the approval of the Bed Index and a crypto podcast Crypto Sapiens dedicated to KeeperDAO.

Voting Rules

We would like to gather feedback from the community about this post and invite communities to discuss how BED purchase could benefit KeeperDAO.

Disclaimer: The content reflected in the above text does not amount to any financial advice for commercial or non-commercial purposes. Bankless DAO is not a registered investment, legal or tax advisor or broker/dealer in any jurisdiction. All Investment financial topics and the information therein are personal opinions. The above mentioned content is only meant as educational material for general awareness. Bankless DAO is not liable for any loss or damage caused by actions taken by the reader/user based on the above mentioned content/information.

5 Likes

I like it! You have my support

4 Likes

I think this is an appealing proposal - DPI exposure is a reasonable diversification. Thanks for the write up!

2 Likes

Interesting proposal — I wonder

-What is the marketing campaign?

-Why must the investment be so big?

-How much has been invested into BED by others — and who?

2 Likes

Hi @Airbayer and thank you for your proposal.

For KeeperDAO, this could be interesting depending on the particulars of the marketing campaign. Do you have any data you can share on how similar campaigns with other projects went, as well as the reach of the CS podcast? A case study would be perfect here.

Could you also give us a preview of what the advertising space on the newsletter looks like, as well as some data regarding the reach, audience and the effectiveness of such a placement?

Regarding the podcast episode, is there scope for us to decide on the contents of that together? Could we, for instance, time this with the launch of our new decentralized protocol, and have you interview our co-founder (Joey Zacherl) to talk about this?

I think this proposal is only potentially interesting for marketing purposes, since the investment into BED is unnecessary for KeeperDAO’s treasury, which is already diversified across across Ethereum, Bitcoin-pegged ERC-20 tokens (renBTC, wBTC) and stablecoins. To be frank, adding BED just adds more risk to our treasury. Which is fine, and can still be a win-win for both DAOs, if done well.

3 Likes

-The marketing includes a newsletter section stating how keeperdao has invested in the bed index, twitter campaign, spot on our crypto sapiens podcast which is what the dao runs along with other potential collaborations with our writers guild and marketing guild.
-After speaking with @lapras we believe that 1m is a good investment size and this is typically standard as to what we present to other daos.
-UMA Protocol invested 1m into bed index already and other daos are following suit as well such as the graph protocol in the next month or sooner.
Thank you for your feedback! Airbayer

1 Like

Hello Tommy,

Here is some campaign data for you listed below:
Substack: Subscribers: 6,081
Average total views Rollup: 4,300-4,600 Link click rate: 1-2% average
Medium articles: Average views: 300-600 30d average views: 122/day
Twitter: Followers: 14,900 Impressions: 5,000-13,000
Additional Stats can also be accessed here as well in the summarized document: it can be accessed through here the stats BED Campaign summary - Google Docs

Newsletter preview is included here:Bankless DAO Weekly Rollup #19 | September 10 - Bankless DAO

Podcast episode: Bankless DAO cannot determine who is available to go on the Bankless HQ podcast however the DAO can have you and your co-founder on our crypto sapiens podcast which is on spotify and twitter spaces!

In terms of additional I would disagree because you wont be swapping out your native tokens or stablecoins in fact you can swap your eth to reduce slippage costs and the risk is minimal because the governance risk is the same structure as the DPI Index along holding this index measures the performance of BTC, ETH, and DPI. I understand keeperdao already holds those assets but its not in an index and doesn’t rebalance monthly. Plus with bed index you tap into our one of a kind social capital to garner more users and more community members join discord to promote wider engagement in the community.

I really appreciate your feedback! Airbayer

2 Likes

vote against. dpi looks terrible vs eth and i would much rather hold eth long term than any alts, aside from a very select few. alts are good for trading and taking profit when they are euphoric but we probably wont be rebalancing the treasury on every pump right.

2 Likes

I Agree with @miner - DPI sounds nice on paper but got outperformed incredibly bad by ETH.
Expect this to continue in the future and would like to earn yield/Diversify into other possitions and not take a cracked egg just to have some “diversification”.

1 Like

I agree that I’d prefer not to hodl DPI in the treasury, but bankless exposure is not something that should be scoffed at. Why not purchase a small amount of BED in exchange said exposure.

Great marketing>Sub-optimal market exposure

I’d be comfortable with something like 300,000-500,000

I do not support this proposal. While I think BED is fine for amateur crypto folks, I don’t think this is something a project treasury should hold.