INDEX COOP, LIQUIDITY MINING; AN UNTAPPED GOLDMINE
By Caleb & Joshua Ogbonna
Liquidity mining is a new catchphrase of most crypto projects which has been sadly under the radar in the Nigerian crypto space. The profit-making venture is almost unheard of in the Nigerian cryptocurrency and blockchain community. It is inconceivable that the focus has been solely on the purchase and holding (an act many use the hashtag #hodl to refer to picking cryptocurrency tokens at lower prices with the hope to maximize profit) of coins, trans-trading of these coin pairs, and indices that are on several cryptocurrency platforms and exchanges.
With the avalanche of information and information products, the rate of penetration of cryptocurrency and crypto-related products in the Nigerian technology, information, and social space despite the extreme measures taken by regulatory agencies to reduce the impact of the new digital currency on the volatile economy, many are yet to dig deep into the potentials that cryptocurrency offers. The benefits of these products are undiscussed, and it is sad to see the potential danger and exposure to the undulating mood of often exuberant regulators who are often uninformed about the potentialities a virtual economy can cause.
Index Coop is a decentralized and autonomous asset management organization (DAO Asset Manager) governed, maintained, and upgraded by its native token (INDEX) holders. The products created by the Set Protocol, are borne from hard-wired V2 infrastructure. Index Coop comprises seasoned industry experts, which are responsible for the integration of products and protocols by deploying the best methodologies to enable “Coopers” can earn INDEX tokens by staking (Uniswap ETH/DPI LP tokens), earning leveraged yield in the ETH/DPI Pool by Alpha Homora, earning yield by providing liquidity to the ETH/DPI Pool by Moonswap amidst a plethora of investment-worthy activities and contribution to the Coop.
In the Index Coop, holders of the INDEX token can participate, propose, and vote on changes to the Cooperative’s smart contract, indices, treasury, and more. The aim of this is the community-driven ownership model and governance structure, promoting the long-term growth and sustainability of the organization. The responsibility for proposing, deliberating, and voting on proposals known as Index Improvement Proposals (IIP) rests on token holders. These IIPs may be used to add or withdraw traded or investable indices, create bounties incentives to promote the Index Cooperative, manage the community treasury, and evaluate existing indices performance, e.t.c.
The benefit of being a Coop member is iterative in that it is not limited to the pecuniary rewards or the various means of profiting from the Coop. The community promotes schemes like its flagship internship, a collaboration between members of working groups through group calls, participatory activities, and training programs for any skillset. As a well-diversified group, there is proper consideration for individuals working across different time zones on the globe. There exists an expressive community to accommodate everyone.
Investors across the Atlantic can’t sleep on the opportunity in the liquidity mining program.
Like other investment protocols in the blockchain community, the liquidity mining program has provided a steady average annual percentage yield (APY) of 20%. Index Coop from its debut (when it launched products like the De-Fi Pulse Index $DPI) tracks the performance of decentralized finance indices. The launching of the Meta Verse Index ($MVI) — a basket token which aggregates the performance of all coins and assets related to entertainment, sports, music, arts, and NFTs, as well as the Bankless BED ($BED), manages a set based on an index of crypto’s most investible assets like the BTC, ETH and the DPI in equal weights.). There is a consistent performance against the average industry products by Coop’s crypto indices. This program has provided clients with credible and access to profit-making and an ever-growing stake in the community.
The Liquidity mining program is a spin-off of yield farming. Conventional yield farming offers crypto users of a decentralized finance product the opportunity and platform to stake or earn profits from their crypto assets through protocols that create incentives for the liquidity providers (LP) on their crypto assets in a smart-contract-based liquidity pool. The incentives range from earned interests for lenders, a percentage of the transaction fees, or a governance token that provides cross-wallet swappable assets. For instance, if a client who has $DAI wants to get the $MVI as a token to keep as an asset, the liquidity provider who has the MVI provides it to the Uniswap protocol for the potential client who then when he swaps his DAI for MVI for a fee called gas fee. This gas fee, shared by the swap protocol and the liquidity providers makes for a dividend of providing liquidity.
From data collated from the index coop website, the most recent liquidity mining program of the Index Coop began August 10th, 2021, and ended September 19th, 2021 was for the $MVI: ETH swap which produced a remarkable pool of returns for liquidity providers on the Uniswap V2 protocol (a swap protocol that enables transactions between two decentralized ERC20 tokens). Recently, the Index Coop has enabled the Arbitrum Balancer Liquidity Mining Program where miners can access $500 BAL per week by providing liquidity to the following products, the NDX/WETH and the DEFI5/WBTC/WETH. These pools have a potential yield of 141% and 202%.
The Liquidity mining program serves as a buffer for Nigerians; to alleviate the impact of a volatile economy and hostile state policies towards cryptocurrency. As a double-edged mechanism, it is equally a tool for saving against the Naira (Nigeria’s local currency) and also a means of investing in a cryptocurrency asset that has shown prospects over the year-long investment cycle. For instance, the $BED, a few weeks ago debuted near $90, is currently approaching the $200 mark. If one decides to provide liquidity in a program that has to do with the $BED, he is saving his money in dollars and also investing in a crypto asset that is ready for a $500-$1000 mark in the next eight months; going by its galloping price move.
It is safe to say that young Nigerians can take advantage of the liquidity mining program and make good profits based on their belief and approach to the market. As opposed to stacking up coins of negligible value and tokens whose market prospects are merely speculative with the hope that they will moon, the Index Coop’s products have beaten the market’s average performance over time and are a good shield for the often-erratic market behavior.