Difference between revisions of "Indexed Finance"

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.