Yearn Finance (YFI), along with AAVE, SNX, and SUSHI are set to appear on a new DeFi index created on the Power Protocol.
After a detailed discussion with the community, developer Marc Zeller has submitted a governance proposal for the creation of the ASSY DeFi index on Power Pool Finance. The news was shared in a tweet on December 15.
Lately, Crypto Twitter has discussed a few controversially named DeFi indexes which could track the performance of blue chips. In order to organize the plan and make it more sensible, developer Marc Zeller has showcased his idea on the creation of ASSY. This unique index will calculate the performance of DeFi blue chips in a completely new way. Zeller specifically stated:
As all crypto assets are heavily correlated I don’t believe in “diversification” with indexes, that being said they’re a great tool for ppl looking for exposition into #DeFi.
To create such an index model. Zeller plans to create the ASSY DeFi index which only holds staked versions of the aforementioned blue chips. These tokens would include stkAAVE from AAVE, SNX, xSUSHI, and YFI. The first goal of this index would be to create passive income on top of sector exposure.
The developer also mentioned that if the Power Protocol community passes the governance proposal, they can accumulate CRV and Curve Finance exposure by adding it as the fifth protocol.
The primary use of this index will be to foster new synergies between the AAVE and CVP communities. Moreover, it would create a way for holding AAVE alongside other leading DeFi platforms while at the same time improving the Power Protocol itself.
How does ASSY DeFi Index work?
Marc Zeller published the governance proposal two days ago on the Power Protocol. There, he initiated a draft proposal and a vote for the ASSY index creation.
Per the author, the proposal is still a draft version and therefore subject to changes. As the main reasoning for ASSY’s creation, Zeller notes the continuous correlation between existing crypto assets.
On that account, investors are incentivized to purchase tokens from multiple projects in order to diversify their portfolios. Doing so, however, requires a lot of research and time. To solve the problem and enable diversification in the easiest way possible, ASSY offers a combination of rewards in an index primarily filled with blue-chip tokens.
The entire index hosts features for all of the four tokens: YFI, AAVE, SNX, SUSHI. They will also generate yield with the help of staking, which further increases the value of ASSY. Within the original proposal, the author has shared multiple examples of how each protocol could help the index.
So far, investors primarily use the Synthetix DeFi index called sDEFI. But since it is backed by numerous highly correlated DeFi assets, the index is highly volatile.
As a result, investors may have an even harder time holding ASSY compared to other indexes. The most important thing about ASSY is that users can invest in the index and at the same time earn profitable yield returns from time to time. Crypto indexes may not have the highest popularity in the market, but will ASSY soon change that?