A new DeFi index token from data provider DeFi Pulse and Set Protocol has surged in popularity since its launch indicating a huge demand for user friendly DeFi products.

Decentralized finance can be a bit of a minefield to those unfamiliar with the landscape. Tokens and protocols appear on a daily basis and many disappear just as quickly. It is not easy to keep up with this rapidly shifting environment so data provider DeFi Pulse has launched an ERC-20 token which indexes the top ten tokens in the sector.

DeFi Pulse Index Performing Well

The DeFi Pulse Index, or DPI, has been compiled in partnership with Set Protocol which provides TokenSets to broaden exposure and create a balanced portfolio. The top ten included in the launched DPI consist of YFI, LEND, COMP, SNX, MKR, REN, KNC, LRC, BAL, and REP. Token prices and circulating supplies are taken from CoinGecko, and there are strict criteria for entry to the Index.

The DPI token can be traded on Uniswap for users to gain exposure to all of these assets without having to spend gas fees in buying them individually. For whales, large bags can be purchased through the Set Protocol.

Set Protocol co-founder and CEO, Felix Feng, observed that the Uniswap liquidity pool for DPI was performing very well in its initial hours trading.

Two awesome things I'm noticing about the DeFi Pulse Index ("DPI"):

1) 6 hours since launch of the DPI, the Uniswap pool has done $1.3M in volume and generated ~$4k in fees for a liquidity pool that is $600k in size. That's 2.6% a day in return in a pool. pic.twitter.com/LOizjRyCC8

— Felix {Setoshi} Feng (@felix2feng) September 15, 2020

At the time of writing, Uniswap.info was reporting that the liquidity for the DPI/ETH pool had climbed to just below $640k. This is higher than the total value locked in beleaguered lending protocol bZx, and even the TVL of prediction markets protocol, Augur.

Total volume for the first day, September 14, was around $1.3 million and the pool was paying out a daily return of 2.6% according to Feng. The DFP token itself is currently trading for $123 at the time of writing.

Behaves Like a DeFi ETF

Feng added that the ETFs (exchange-traded funds) are the most heavily traded instruments in the traditional financial industry;

“Even in its first few hours, the DeFi Pulse Index is already shaping [up] to play that role.”

The DPI is the first of its kind for DeFi tokens but several similar products exist for regular crypto assets. One such index is Crypto20, or C20, which was launched in 2017 to track the top twenty crypto assets in a tokenized fund that is rebalanced on a weekly basis.

About Author

Martin Young

Martin has been writing on cyber security and infotech for two decades. He has previous forex trading experience and has been covering the blockchain and crypto industry since 2017.