Launched in October 2020 by Index Coop, DPI has grown to over $200M and is currently the most widely traded index product on ethereum. The main liquidity pool for DPI-ETH is on Uniswap V2 with ~$55M of capital deposited into the pool earning ~16.5% per annum in trading fee income.
The DPI-ETH pair is a low volatility pair making the LP token ideal collateral on Aave AMM. DPI-ETH is the 16th largest pool listed Uniswap V2 and is capable of supporting a $184.5K trade for 1% slippage. This is significantly deeper liquidity relative to a number of leading DeFi protocol tokens already listed on Aave AMM.
At the time of writing DPI comprises 20.88% AAVE tokens and the DPI-ETH LP token 10.44% AAVE. Adding DPI-ETH LP tokens as collateral would bring users into the Aave AMM ecosystem allowing capital, yield and value to accrue to Aave participants.
DPI-ETH Chainlink Oracle: Ethereum Price Feeds | Chainlink Documentation
Currently, Index Coop offers liquidity mining rewards for depositing the DPI-ETH LP token into a staking contract via the Index Coop website. Liquidity mining rewards are currently 12.4% at the time of writing in addition to ~16.5% trading fee income.
As DPI-ETH has no governance voting power and the emission schedule of the LP token is determined by users depositing into the Uniswap V2 liquidity pool. Currently, Aave AMM will be the first lending protocol to accept DPI-ETH LP token as collateral. There is no multisig controlling the trustless Uniswap V2 pool.
DPI-ETH LP token - Aave Risk Assessment
The Uniswap V2 DPI-ETH pool has a 7-day average trading volume of $10.9M, ~$55M of liquidity and the pool was seeded 6th October 2020, 262 days prior to 1st June 2021.
There are over 900 unique holders of 23,324 DPI-ETH LP units, of which ~700 unique holders have deposited ~94.4% of the circulating supply into Index Coop’s staking contract. Etherscan shows 36,637 transfers of the DPI-ETH LP token.
DPI the asset has an overall risk score of B and Uniswap V2 DPI-ETH LP has marginally better risk score of B+. Referring to AMM-Market documentation, this assessment is aligned with AAVE, UNI, MKR, SNX and YFI which all experienced improving risk scores on AMM relative to Aave V2.
Using equations cited below, the following volatility statistics have been calculated for the LP tokens USD value.
DPI-ETH LP 7 days volatility = 0.0712
DPI-ETH LP 30 days volatility = 0.0558
DPI-ETH LP 90 days volatility = 0.0644
DPI-ETH LP 180 days volatility = 0.0632
The risk parameters mentioned above are in line with other LP tokens like Uniswap and Maker. Aave documentation states the Liquidation Bonus is set at 15% for all LP tokens. The LTV & Liquidation Threshold parameters are derived from DPI’s risk assessment.
@MatthewGraham - I go by Fire on discord and I am a contributor at Index Coop.
I am glad to announce Index Coop has created a proposal power delegation address to get DPI listed on Aave V2.
Thank you in advance for your support :)