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Founded in December 2020, '''Indexed Finance''' is a DeFi project that uses weighted pools to replicate index funds as seen in traditional finance.<ref>https://docs.indexed.finance/</ref> Index pools are managed by the protocol's governance token NDX. Anyone in the Indexed community who owns at least 1 NDX can create a proposal. On October 14th 2021, Indexed was exploited for $16m from their indices DEFI5 and CC10.<ref>https://etherscan.io/address/0xba5ed1488be60ba2facc6b66c6d6f0befba22ebe</ref><ref>https://ndxfi.medium.com/indexed-attack-post-mortem-b006094f0bdc</ref>[[File:Indexed logo.png|thumb|463x463px|Indexed Finance logo]] | |||
Founded in December 2020, '''Indexed Finance''' is a DeFi project that uses weighted pools to replicate index funds as seen in traditional finance.<ref>https://docs.indexed.finance/</ref> Index pools are managed by the protocol's governance token NDX. Anyone in the Indexed community who owns at least 1 NDX can create a proposal. On October 14th 2021, Indexed was exploited for $16m from their indices DEFI5 and CC10.<ref>https://etherscan.io/address/0xba5ed1488be60ba2facc6b66c6d6f0befba22ebe</ref><ref>https://ndxfi.medium.com/indexed-attack-post-mortem-b006094f0bdc</ref> | |||
== History == | == History == | ||
The beta for Indexed launched on December 25th, 2020.<ref>https://ndxfi.medium.com/introducing-indexed-finance-ndx-5d91137bde29</ref> Staking for the NDX governance token began on December 28th.<ref>https://ndxfi.medium.com/how-to-mint-and-stake-index-pool-tokens-5c21a08706ce</ref> | The beta for Indexed launched on December 25th, 2020.<ref>https://ndxfi.medium.com/introducing-indexed-finance-ndx-5d91137bde29</ref> Staking for the NDX governance token began on December 28th.<ref>https://ndxfi.medium.com/how-to-mint-and-stake-index-pool-tokens-5c21a08706ce</ref> | ||
The DEFI5 (DEFI Top 5) and CC10 (Cryptocurrency Top 10) indices launched on January 17th, 2021.<ref>https://www.coingecko.com/en/coins/defi-top-5-index</ref><ref>https://www.coingecko.com/en/coins/cryptocurrency-top-10-index</ref> | The DEFI5 (DEFI Top 5) and CC10 (Cryptocurrency Top 10) indices launched on January 17th, 2021.<ref>https://www.coingecko.com/en/coins/defi-top-5-index</ref><ref>https://www.coingecko.com/en/coins/cryptocurrency-top-10-index</ref> | ||
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The first NDX community index launched on March 1st, DEGEN.<ref>https://ndxfi.medium.com/are-you-a-degen-7ce66b896d01</ref> If any of the protocols in this index surpassed $2b it would be automatically replaced with the largest market cap token on a list of pre-approved alternatives. At launch, the index contained: | The first NDX community index launched on March 1st, DEGEN.<ref>https://ndxfi.medium.com/are-you-a-degen-7ce66b896d01</ref> If any of the protocols in this index surpassed $2b it would be automatically replaced with the largest market cap token on a list of pre-approved alternatives. At launch, the index contained: | ||
* [[ | * [[THORChain]], ''15.6%'' ($RUNE) | ||
* Ren, ''14.58%'' ($REN) | * Ren, ''14.58%'' ($REN) | ||
* Reserve Right, ''10,7%'' ($RSR) | * Reserve Right, ''10,7%'' ($RSR) | ||
* [[Curve Finance|Curve]], ''10%'' ($CRV) | * [[Curve Finance|Curve]], ''10%'' ($CRV) | ||
* [[1INCH]], ''9.2%'' ($1NCH) | * [[1INCH]], ''9.2%'' ($1NCH) | ||
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On September 25th, NDX launched dividend-bearing NDX (dNDX) which would allow NDX holders to receive the revenue generated by the protocol.<ref>https://ndxfi.medium.com/ndx-is-now-a-productive-asset-fa375e3f8db0</ref> The revenue is generated from exit fees, 0.5%, when a user decides to leave one of the index pools. For every $100 generated in revenue, $40 would be sent to the NDX Treasury and $60 would be distributed to holders of nNDX.<ref>https://gov.indexed.finance/#/proposal/QmZuB6gXVgHazSXPmN58ZEnv8h3rRqbcZrCCBZheXsVVXw</ref> | On September 25th, NDX launched dividend-bearing NDX (dNDX) which would allow NDX holders to receive the revenue generated by the protocol.<ref>https://ndxfi.medium.com/ndx-is-now-a-productive-asset-fa375e3f8db0</ref> The revenue is generated from exit fees, 0.5%, when a user decides to leave one of the index pools. For every $100 generated in revenue, $40 would be sent to the NDX Treasury and $60 would be distributed to holders of nNDX.<ref>https://gov.indexed.finance/#/proposal/QmZuB6gXVgHazSXPmN58ZEnv8h3rRqbcZrCCBZheXsVVXw</ref> | ||
==== Exploit ==== | |||
October 14th 2021 was when the Indexed Finance [[Exploits|exploit]] occurred. An address funded by the [[mixing service]] [[Tornado Cash]] launched a flash loan exploit to impact the weights of assets in certain index pools.<ref>https://rekt.news/indexed-finance-rekt/</ref> Within a week of the exploit, the Indexed Finance team already had a suspect. After looking at previous messages, Doctor Day (a founder of Indexed) and the team believed they uncovered the identity of the exploiter.<ref>https://hackmd.io/fSTndeFZQPOPKYxlafaNIA</ref> | October 14th 2021 was when the Indexed Finance [[Exploits|exploit]] occurred. An address funded by the [[mixing service]] [[Tornado Cash]] launched a flash loan exploit to impact the weights of assets in certain index pools.<ref>https://rekt.news/indexed-finance-rekt/</ref> Within a week of the exploit, the Indexed Finance team already had a suspect. After looking at previous messages, Doctor Day (a founder of Indexed) and the team believed they uncovered the identity of the exploiter.<ref>https://hackmd.io/fSTndeFZQPOPKYxlafaNIA</ref> | ||
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== Index pool mechanics == | == Index pool mechanics == | ||
The index pools are all associated with '''index tokens'''. Not to be confused with Indexed's governance token NDX, the index tokens represent a fractional ownership of the assets in different index pools.<ref>https://docs.indexed.finance/introduction/faq/pool-faq</ref> For example, DEFI5 is the index token that represents the DEFI Top 5 index pool. The assets inside of index pools are weighted based on a variety of factors. Each pool has a current constituent list and then a secondary list that is essentially waiting to be put in the pool if an asset falls outside of a given pools parameters. The Indexed DAO doesn't own the underlying assets of any index pool as they are kept within Balancer pools. The ownership of the underlying assets is strictly for the users redeeming their index tokens for the underlying assets. | The index pools are all associated with '''index tokens'''. Not to be confused with Indexed's governance token NDX, the index tokens represent a fractional ownership of the assets in different index pools.<ref>https://docs.indexed.finance/introduction/faq/pool-faq</ref> For example, DEFI5 is the index token that represents the DEFI Top 5 index pool. The assets inside of index pools are weighted based on a variety of factors. Each pool has a current constituent list and then a secondary list that is essentially waiting to be put in the pool if an asset falls outside of a given pools parameters. The Indexed DAO doesn't own the underlying assets of any index pool as they are kept within Balancer pools. The ownership of the underlying assets is strictly for the users redeeming their index tokens for the underlying assets.[[File:Index-assets.png|thumb|617x617px|The Indexed Finance exploiter cashed out the indices for their underlying assets.]]Index pools maintain balance by incentivizing users to adjust the token balances and weights on their own. The weight adjustments create arbitrage opportunities for users and achieve a balancing effect on the pools. | ||
Index pools maintain balance by incentivizing users to adjust the token balances and weights on their own. The weight adjustments create arbitrage opportunities for users and achieve a balancing effect on the pools. | |||
== Exploit mechanics == | == Exploit mechanics == | ||
Since NDX is essentially a modification of Balancer, swaps effect the balances and weights of the tokens. | Since NDX is essentially a modification of Balancer, swaps effect the balances and weights of the tokens. | ||
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== References == | == References == | ||
<references /> | |||
[[Category:Protocols]] | |||
[[Category:Exploit]] | |||
[[Category:Indexes]] | |||