IBCX: The First Rebalancing

Background

IBCX’s ultimate goal is to be widely adopted by investors and to forge a sustainable environment where the profits from IBCX flow into ION DAO.

To achieve these goals, solidifying IBCX’s position as the true Cosmos index token is required. In other words, we need to further foster the market’s demand for IBCX. Also, we believe that utilizing IBCX’s fee structure to incentivize both ION holders and ION DAO can provide a breakthrough to maximize the synergy between IBCX and ION DAO.

That said, we first need to undertake the necessary groundwork: updating the portfolio composition of IBCX. The current weights were decided at launch around 7 months ago, and it is currently difficult to say that they adequately represent the top-performer assets in the Cosmos ecosystem. There have to be appropriate readjustments to update the composition accordingly in order to increase the demand for the index token and ultimately enable ION DAO to roll out additional use cases of IBCX and stIBCX.

Thus, we propose executing IBCX’s first rebalancing based on the following schedule and portfolio:

  1. Upload on-chain proposal: [DATE, TBD]
  2. Start the first rebalancing: [DATE, TBD]
  3. Complete the rebalancing process within two weeks
  4. Complete updating the portfolio

IBCX’s performance since its launch

The following details are the collected fees from IBCX as of January 1st, 2024:

  1. IBCX Management Fee
  • AKT 11.211813
  • ATOM 5.111535
  • AXL 2.659118
  • EVMOS 28.896713756806497398
  • ION 0.001569
  • JUNO 25.242768
  • OSMO 67.866836
  • REGEN 17.993069
  • SCRT 17.359401
  • STARS 363.962668
  • STRD 1.003824
  • UMEE 231.293532
  1. stIBCX Management Fee
  • AKT 8.747485
  • stATOM 9.662269
  • AXL 6.118241
  • stEVMOS 76.585678144886707461
  • ION 0.004147
  • stJUNO 63.054441
  • stOSMO 141.061599
  • REGEN 38.783941
  • SCRT 44.833717
  • stSTARS 477.375845
  • STRD 1.922422
  • stUMEE 524.448176
  1. Burn Fee
  • IBCX 8.608855
  • stIBCX 4.102555

Please note that we’ll upload a separate Proposal to discuss and determine how ION DAO will use these fee proceeds.

In the last 3 months (Sep 12th, 2023 ~ Dec 12th 2023), IBCX price has risen 118.60%, making it the 4th highest performer when compared with the portfolio assets in the same period:

  1. JUNO 279.40%
  2. STRD 212.11%
  3. OSMO 167.87%
  4. IBCX 118.60%
  5. AXL 114.28%
  6. STARS 98.43%
  7. UMEE 97.63%
  8. AKT 85.03%
  9. EVMOS 76.54%
  10. SCRT 71.81%
  11. REGEN 64.73%
  12. ATOM 54.93%
  13. ION 20.39%

Contract migration: a prerequisite

A new smart contract is needed for the new portfolio. Here’s why:

  • The current contract cannot execute both the complete removal of the existing assets and the addition of new assets
  • It can only execute the reduction in the existing weights of the current underlying assets (ATOM, OSMO, AKT, SCRT, JUNO, STARS, EVMOS, ION, AXL, REGEN, STRD, UMEE)

The proposed rebalancing will add eight new assets (TIA, CRO, INJ, KUJI, FET, SOMM, QSR, MARS) and remove one existing asset (REGEN). Therefore, the migration to an upgraded smart contract that enables the addition and removal of the assets has to be completed first. More specifically, the new contract should be able to execute the following commands:

  1. “Remove”
  • A function that completely removes any asset (i.e., REGEN) from the existing IBCX and stIBCX portfolio
  • Enables transactions to swap REGEN for the other remaining assets in the IBCX and stIBCX portfolio with the goal of achieving the updated weights
  1. “Add”
  • A function that adds TIA, CRO, INJ, KUJI, FET, SOMM, QSR, MARS to the updated IBCX and stIBCX portfolio
  • Enables transactions to swap the remaining assets for the newly added assets with the goal of achieving the updated weights
  1. Mitigate the impact of bulk transactions
  • Prior to the initiation of the rebalancing, the swap routes (TradeInfo) for each required transaction should be defined to minimize the price impact of rebalancing transactions

If this proposal is passed, the contract migration will also be executed on Osmosis accordingly.

About the revamped rebalancing methodology

This methodology was mainly researched and drafted by Ian Unsworth (ex-Binance US / Messari.)

The previous post uploaded on the ION forum discussed the need for an improved mechanics of the IBCX rebalancing methodology and exploring opportunities for improvement to enhance alignment amongst the index’s constituents.

Below is a table highlighting the proposed changes to the methodology and the rationale.
(You can check the initial methodology here: $IBCX Methodology. Suggestion on Operation Methodology of… | by $IBCX, the Interchain Index Token | Medium)

Rationale of the new portfolio proposed

Data that we used for the new portfolio can be found here. Please note that the final weights were manually and slightly adjusted in order to fix the ION’s weight at around 2.5% in the portfolio.

  • Market cap 60%
  • Liquidity on Osmosis 25%
  • Trading volume on Osmosis 10%
  • IBC’d volume 5%

The first and the current IBCX portfolio, which was previously determined by the ION governance, is as below:

  • ATOM 39%
  • OSMO 30%
  • JUNO 11%
  • SCRT 6%
  • EVMOS 4%
  • STARS 3%
  • AKT 2%
  • AXL 1%
  • REGEN 1%
  • STRD 1%
  • UMEE 1%
  • ION 1%

We propose this new portfolio composition via the passing of this Proposal:

  • ATOM 16.43%
  • OSMO 14.757%
  • INJ 9.542%
  • TIA 8.708
  • CRO 8.19%
  • AXL 5.452%
  • AKT 5.418%
  • FET 4.468%
  • KUJI 4.116%
  • STRD 3.354%
  • SCRT 2.847%
  • JUNO 2.549%
  • STARS 2.534%
  • ION 2.484%
  • EVMOS 2.188%
  • QSR 2.071%
  • SOMM 2.059%
  • UMEE 1.543%
  • MARS 1.29%

Here is a summary of the changes:

  • Completely removed: REGEN
  • Newly added: INJ, TIA, CRO, FET, KUJI, QSR, SOMM, MARS
  • Weight increase: AKT, AXL, STRD, ION, UMEE
  • Weight decrease: ATOM, OSMO, JUNO, EVMOS, SCRT, STARS, REGEN

How does this update impact stIBCX?

88% of the current portfolio can be liquid staked via Stride.

  • stATOM 39%
  • stOSMO 30%
  • stJUNO 11%
  • SCRT 6%
  • stEVMOS 4%
  • stSTARS 3%
  • AKT 2%
  • AXL 1%
  • REGEN 1%
  • STRD 1%
  • stUMEE 1%
  • ION 1%

The proposed rebalancing will adjust this number to 51.602%, and the APY of stIBCX will also be adjusted accordingly.

  • stATOM 16.43%
  • stOSMO 14.757%
  • stINJ 9.542%
  • TIA 8.708%
  • CRO 8.19%
  • AXL 5.452%
  • AKT 5.418%
  • FET 4.468%
  • KUJI 4.116%
  • STRD 3.354%
  • SCRT 2.847%
  • stJUNO 2.549%
  • stSTARS 2.534%
  • ION 2.484%
  • stEVMOS 2.188%
  • QSR 2.071%
  • stSOMM 2.059%
  • stUMEE 1.543%
  • MARS 1.29%

Message Payload

[TBA]

Swap Routes

Pools: The list of the pools that could be used as routes for the rebalancing is on the 4th sheet of the Google Spreadsheet

Disclaimer

The IBCX’s rebalancing aims to readjust the portfolio by trading the underlying assets via the best routes that are available on the market. This means that depending on the results of the trading and market conditions, the actual portfolio weights post-rebalancing may not end up matching 100% of the updated weights suggested in this proposal.

Please also note that the Minting and Burning of IBCX will be temporarily suspended during the rebalancing period, which could take up to 14 days. Trading IBCX and stIBCX on the market will still be available on the respective pools.

4 Likes

Makes sense to ask for a new smart contract, capable of better management of token. Removing and adding tokens are necessary features. Totally agree here.

My question is about how these abilities will be applied.

Personally I am saddened to see Regen go.
In the previous critereon list there was this description

The project must be widely considered to be building an objectively beneficial, value-creating product. Projects on competitive trading, Ponzi characteristics, exist primarily for entertainment, or have a history of operation-related issues (ex., issues on CEX) will not be included

I loved that. And if anything, this is REGEN par excellence: beneficial, value creating.
If I read correctly, the new criteria focus more on liquidity and volume, and Regens lack thereof is the reason to boot it.
I get that we want the index token to capture the rising value of the ecosystem. But I want it to also capture its values.
The exuberance of a bull market is thrilling, and REGEN may not be as sexy as others. But I think that is given with an idealistic real world application token as REGEN.
Please do not let capitalistic reasons overtake the idealism, that makes the cosmos ecosystem so appealing to me.

PS. This is my first post here. Hope this is the right place to address this issue. Perhaps it s decided in previous gov. If so, my apologies :wink:

4 Likes

I agree with @jaap that making a new snart contract absolutely makes sense.

Is it in any way possible to make two IBCX indexes as this one looks more risky compared to first one and holds many tokens. Looks like a big change compared to first one and maybe too aggresive for more conservative newcomers(might show more in bear market).

If possible this one would be more aggresive version and the one with 40% Atom and other established tokens like Osmo, Akt…in portfolio could be the moderate version.

2 Likes

Really appreciate the proposed changes.

The current repartition with 46% Osmo and 20% Atom doesn’t really expose you to the smaller chains, which was the initial point of the index.

IBCX users will most likely be closer to “experienced Cosmos users” rather than complete newbies. Someone looking for IBCX probably already owned ATOM and OSMO in good proportion and is more likely looking for smaller chains to get expose without having to buy all of them.

Stronger and more stable chains are necessary but shouldn’t take that much space in an index.

2 Likes

Hi, @jaap :wave:

Glad to see your first comment on our forum post. Thank you :slight_smile:

Your point about REGEN does make sense in terms of its vision and potential. We believe they are still great!

However, the formula and the methodology we used is how we evaluate tokens’ value and potential at the same time.

As you can see in the proposal, market cap share is 60% to establish the weights.
REGEN’s market cap as of today is $9,177,304 and this is lower around two times than the market caps of ION and MARS, which are the lowest ones in the portfolio.

  • MARS: $19,189,776
  • ION: $16,568,545

IBC’d volume data (30d) as of today shows a huge gap as well:

  • REGEN: $536,600
  • MARS: $2,109,700

Given the methodology to establish portfolio weights, REGEN’s weight may go too low which means almost a dust.

Due to the above rationales, we decided to temporarily remove REGEN in the portfolio until the tokens’ performance in terms of methodology details gets on the track back. REGEN could be included in the lineup again in the future for sure.

2 Likes

Thank you so much @SasoLithops for always being active in any discussions and for the above feedback.

If possible this one would be more aggresive version and the one with 40% Atom and other established tokens like Osmo, Akt…in portfolio could be the moderate version.

→ For sure, in terms of technical feasibility.

We agree there are a lot of changes to the upcoming portfolio compared to the current version. However, we believe the newly proposed one adequately represents the ecosystem, as the other projects have grown in the ecosystem, and the weights are confirmed based on the formula, specific on-chain data, and the methodology. If we want to have a more moderate version of the index, we have several ideas.

  • Maintain the current approach of IBCX
  • Begin another index project besides IBCX, leveraging the existing contracts and establishing a new methodology, which is fit for the moderate version
    • Include stable token (previously proposed for IBCX by Avi) would be great for this moderate approach
  • Do ION DAO governance

Furthermore, we may launch various indexes for relatively small projects in the ecosystem or meme tokens, etc., using the stated ideas to cover the current suggestions and concerns!

1 Like

Thank you @Alex1 for visiting the post and sharing your thoughts :slightly_smiling_face:

As stated in the proposal, IBCX should and will target newcomers from outside of the ecosystem as well rather than only focusing on veteran Cosmonauts in order to expand the pie and ultimately benefit ION DAO members.

Thanks for the reply.
Regen missing is not a deciding factor. I love Regen, just as I love the ecosystem as a whole, and I feel IBCX is an awesome showcase of the whole.

But if you want IBCX to give users exposure to the smaller coins as well, this method allocates to the ones that are winners already, and filtering out the tiny projects full of potential with even more upside?
But I guess you want to get tokens that have proven to be around as well.
Anyway, keep up the good work!

2 Likes

token like IBCX needs periodic market adjustment

or it simply has near zero utility expectationally

it would be like the dow index, never adjusted. useless

Thanks for your hard work in this proposal, Agree

2 Likes

I’m in agreement that Regen shouldn’t be removed. Using their current market cap as a metric for the value Regen adds to IBCX seems very capitalistic. There are several ways to go about growing the value of that chain and if we could get a team of people using DAO DAO to coordinate an international operation it could realize it’s true potential.

Having all the chains/DAOs that are a part of the IBCX index employee people to do traditional labor could accomplish two things at once -

  1. Organically gain more exposure for the ecosystem
  2. Create more economic churn than just relying on electronic transactions

Posts I made on Cosmos forum…

What is the general consensus in investing in businesses other than online blockchain apps? I think there is a huge opportunity to build DAO businesses that are more in the manual labor / robotic and automation sectors with a management structure.

  • Construction
  • Lawn Care
  • Window Cleaning
  • Mobility
    …there are others.

There is obviously business development work and overhead associated, salaries for management team ect… with this strategy, but profit sharing and experimenting with this strategy would be an interesting social experiment. Part of the business development could include contacting business already established and invest in autonomous equipment with legal agreements on what the profit sharing structure would look like.

  • Farming

And the kinds of collabs that can be done with chains like Regen and other businesses in this sector.

Just some ideas, for what it’s worth.

Personally there are efforts I am and/or would like to make with the Regen product. Need to develop a compensation plan, some baseline performance metrics, revenue sharing agreement and bonus strategies - not just with regen through. This strategy would benefit all the IBCX chains if for nothing else than Cosmos branded employment outreach. For example - using the assets in the link below and doing a “surprise” hunt where different token gifts using paper wallets are randomly boxed in with the physical assets would be one that I would like to see come to fruition.

A link to the real assets.

2 Likes

Thank you for reply as always.

Awesome. To be honest all three ideas make sense to me. When time is right we can discuss this further within community. Soooo bullish :smile:

3 Likes

Hi!

Oh it will :smile: We talk about it here:

3 Likes

Reasonable, if not entirely past due.

Contentions.

Though I understand it would be convenient to do this all at once, I suggest making this into 2 proposals.

  1. The contract migration that allows for the execution of the new methods.
  2. The removal of REGEN.

I see no reason to bundle the two as one proposal. Any future asset removals or additions will invoke a standalone DAO proposal. This should be true for REGEN, as any that come after.

1 Like

Thank you for the feedback! It does make sense. We’re going to fulfill this process with separate proposals.

2 Likes

Updates on January 24th

1. Timeline

Background

IBCX’s ultimate goal is to be widely adopted by investors and to forge a sustainable environment where the profits from IBCX flow into ION DAO.

To achieve these goals, solidifying IBCX’s position as the true Cosmos index token is required. In other words, we need to further foster the market’s demand for IBCX. Also, we believe that utilizing IBCX’s fee structure to incentivize both ION holders and ION DAO can provide a breakthrough to maximize the synergy between IBCX and ION DAO.

That said, we first need to undertake the necessary groundwork: updating the portfolio composition of IBCX. The current weights were decided at launch around 7 months ago, and it is currently difficult to say that they adequately represent the top-performer assets in the Cosmos ecosystem. There have to be appropriate readjustments to update the composition accordingly in order to increase the demand for the index token and ultimately enable ION DAO to roll out additional use cases of IBCX and stIBCX.

Thus, we propose executing IBCX’s first rebalancing based on the following schedule and portfolio:

  1. Upload on-chain proposal: [DATE, TBD]
  2. Start the first rebalancing: [DATE, TBD]
  3. Complete the rebalancing process within two weeks
  4. Complete updating the portfolio

Background

IBCX’s ultimate goal is to be widely adopted by investors and to forge a sustainable environment where the profits from IBCX flow into ION DAO.

To achieve these goals, solidifying IBCX’s position as the true Cosmos index token is required. In other words, we need to further foster the market’s demand for IBCX. Also, we believe that utilizing IBCX’s fee structure to incentivize both ION holders and ION DAO can provide a breakthrough to maximize the synergy between IBCX and ION DAO.

That said, we first need to undertake the necessary groundwork: updating the portfolio composition of IBCX. The current weights were decided at launch around 7 months ago, and it is currently difficult to say that they adequately represent the top-performer assets in the Cosmos ecosystem. There have to be appropriate readjustments to update the composition accordingly in order to increase the demand for the index token and ultimately enable ION DAO to roll out additional use cases of IBCX and stIBCX.

Thus, we propose executing IBCX’s first rebalancing based on the following schedule and portfolio:

  1. ION DAO on-chain governance (Contract migration): January 24th, 2024
  2. Remove $REGEN: [DATE: TBD]
  3. Start the first rebalancing:
  4. Complete the rebalancing process within two weeks
  5. Complete updating the portfolio

2

If this proposal is passed, the contract migration will also be executed on Osmosis accordingly.

If this proposal is passed, the contract migration will be executed on Osmosis first.

Added

Message Payload - Contract migration

[{"wasm":{"migrate":{"contract_addr":"osmo14klwqgkmackvx2tqa0trtg69dmy0nrg4ntq4gjgw2za4734r5seqjqm4gm","new_code_id":458,"msg":"eyJmb3JjZSI6bnVsbH0="}}}]

  • airdrop: F9752F3ED33A7EE559E14AC96458FDCE8C47D737199796708115C50BC2701EF6 (459)
  • core: A08FABAAE8791C7AF4F5AEC1EDEB303E4D5B92A6F8256BDA49730B9762668499 (458)
  • periphery: BC6AE7CA3E156AA097F753B45F3885D27E49FBA61C932119DCCC2FAF36E8E9ED (459)

Only the ibcx_core contract will be migrated.

1 Like

Update on 26th January, 2024

Payload has been updated after code reviews

Before:
[{"wasm":{"migrate":{"contract_addr":"osmo14klwqgkmackvx2tqa0trtg69dmy0nrg4ntq4gjgw2za4734r5seqjqm4gm","new_code_id":458,"msg":"eyJmb3JjZSI6bnVsbH0="}}}]

After:
[{"wasm":{"migrate":{"contract_addr":"osmo14klwqgkmackvx2tqa0trtg69dmy0nrg4ntq4gjgw2za4734r5seqjqm4gm","new_code_id":458,"msg":"e30="}}}]

Updates on February 2nd, 2024

The current status

  1. Governance for the contract migration:
    • The DAO governance has reached the quorum
    • The migration will be proceeded right upon the passing and executing
  2. As the Stride team launched stTIA, stIBCX will include stTIA, not TIA
  • stATOM 16.43%
  • stOSMO 14.757%
  • stINJ 9.542%
  • TIA 8.708%
  • CRO 8.19%
  • AXL 5.452%
  • AKT 5.418%
  • FET 4.468%
  • KUJI 4.116%
  • STRD 3.354%
  • SCRT 2.847%
  • stJUNO 2.549%
  • stSTARS 2.534%
  • ION 2.484%
  • stEVMOS 2.188%
  • QSR 2.071%
  • stSOMM 2.059%
  • stUMEE 1.543%
  • MARS 1.29%

  • stATOM 16.43%
  • stOSMO 14.757%
  • stINJ 9.542%
  • stTIA 8.708%
  • CRO 8.19%
  • AXL 5.452%
  • AKT 5.418%
  • FET 4.468%
  • KUJI 4.116%
  • STRD 3.354%
  • SCRT 2.847%
  • stJUNO 2.549%
  • stSTARS 2.534%
  • ION 2.484%
  • stEVMOS 2.188%
  • QSR 2.071%
  • stSOMM 2.059%
  • stUMEE 1.543%
  • MARS 1.29%
2 Likes

Really don’t like to see regen not on the list.

1 Like