How to Buy the DeFi Pulse Index by TokenSets

Transcript

[Music] hi everyone this is d5 dad and this is another bankless tutorial today i'm going to walk you through the new d5 pulse index for token sets so this is an index that allows you to gain exposure to the top 10 uh tokens that are defy related it's based on circulating supply times the token price and so it's just a weighted

average and so you can see here that the wi-fi token is the most heavily weighted versus the auger token which is uh closer to the bottom so the origin of this set is based on a problem of how is someone supposed to gain exposure to d5 without spending lots of gas and having to continually rebalance their portfolio so you can see this medium post which i'll link in the show notes token sets calls out the fact that there is no easy cheap and open way to acquire an open index of the top d5 tokens on ethereum this leads to stress for users when they are trying to make portfolio allocation decisions and it

can be difficult for them to ascertain which d5 projects are high quality and worthy of their investment so they came up with a methodology here it's very straightforward it does have some i think rigor to it i won't read through all of this but you can check it out it's pretty like obvious stuff like uh they're not using options or futures uh i think there's too much systemic risk in using those uh they're not using any synthetic tokens at this time and again it all goes back to really just looking at those top d5 related tokens looking at circulating supply and then multiplying that by the price to come up with a weighted average that

differentiates how much you have allocated in this set so you can see here that we have 25.81 uh wi-fi we have 17.56 lend 13 snx and and so on so uh all these tokens are included and the the takeaway here is if one wants exposure to the upside on defy and they don't want to have to actively manage the portfolio looking across all the different tokens and trying to pick the winners this is you know the same thing the same idea as holding an index of uh you know

the s p 500 or the dow jones so today i'm going to walk you through how to buy this index uh it is possible to do that with one of many different tokens uh which is really convenient but they're they're all the major stable coins plus ether and so we'll talk through that and then talk about some of the risks involved in holding this index before we get started with the d5 pulse index let's just talk about what set is and how it actually works so if you go to tokensets.com explore or just click on explore sets when you go to

tokensets.com there's a few different options here portfolios is new this is clearly going to work towards uh strategies or sets that use a basket of tokens so this is the first of the portfolio sets then next up you have social trading sets social trading refers to uh what was popularized by etoro quite a while ago uh what's referred to as copy trading um so social trading is where i'm holding a set and someone else is actively managing a strategy i mean it could be a strategy that uh is algorithmic it could be someone

who's using just ta but regardless of how that's managed all i'm trying to do is gain exposure to the same strategy and so i end up let's say buying one of these different token sets and that trader whatever moves they're making that will affect whether my whether the value that i deposited goes up or down if they're winning or gaining more than my money's growing and if they're ultimately if their strategy isn't working i'm going to be losing money the other sets the ones that really made token sets popular from the beginning are these robo sets

robo sets are different they have a hard-coded strategy that is being used more robotically which is why they're called robo sets so a good example of that is the eth 12-day ema crossover this is a strategy that uses the 12-day exponential moving average and the way it works is as with almost all sets we're basically moving back and forth between two different tokens we're essentially buying and selling uh one of the two different tokens and so if you look up above here if you watch my cursor moving here you'll see that there's a dotted line right here so if we go from

over here down below you can see that we currently would have 340 usdc which is a you know the major stablecoin usdc and then what happens is ether moved above the 12-day moving average or 12-day exponential moving average and then it rebalances into ether so you can see down below how it switched from usdc to ether and then if you look up above you can judge for yourself uh how this set has performed a really easy way to do that is if you you can look at it on a yearly time frame or maybe over the last month all of this is dependent on the type of

market we're in whether we're in a bullish bearish or ranging type of market and so you'll notice here that this set over the last month uh the 12-day ema crossover set it's down 8.26 percent but if i had simply held ether i would be down 13.68 so this set has outperformed ether by about 5 even though we're still down what's really powerful about sets is that all i have to do is buy that uh that set which is an erc20 token and now i'm letting the set protocol smart contracts do all the

work so it means i don't have to buy and sell and spend gas and i don't have to sit there and watch the charts if it's a strategy that i want to hold for however long it just makes my life easier that being said there's no guaranteed results from these and i would tell you that if you go to the token sets explorer and check out these different categories if you go here you can look at how sets have performed against bitcoin ether and the us dollar so those are three very different strategies uh it depends on whether my goal is to gain more us dollars or maybe i'm looking to accumulate more ether or maybe accumulate more bitcoin and

remember bitcoin in this case is referring to tokenized bitcoin like wrapped bitcoin and so i can go here and look at these different time frames i can arrange them and i can start to get a sense of which sets have performed better keep in mind also that as you look at since inception a lot of these sets have released over many many different months so this set here i think launched back in december but there's other sets that are over a year old now so since inception can be a little bit misleading i like to really just look at the three-month time frame to get a sense of how all these sets are performing against one another okay so here's how i buy the d5 pulse

index set you want to go to tokensets.com click on explore sets you'll notice i i've already connected my ethereum wallet but there should be a button up top here to connect your wallet up in the top right corner and they connect all sorts of different ethereum wallets but i tend to always use metamask once you're on the set explorer page there are multiple types of sets that we've already covered uh click on portfolios and you'll see the one and only choice unless you're watching this in the future when there will probably be lots and lots of these portfolio sets and then you want to click on the defy pulse index once you're on the d5 pulse index set page you'll notice some pretty

pertinent information that you'll probably want to bookmark to track in the future to see how the set's performing you can see the market cap which is total amount of money that's been deposited into the set the streaming fee is something to really make sure you're understanding it's 0.95 percent uh streaming fee which refers to uh this the streaming fee is an annualized fee on the total market cap of the set the set creator may accrue at any time for example a set is created with a two percent streaming fee after six months set creator may claim one percent of the total market cap of the status fees so it's basically however much i deposit uh in this case expect that uh

0.95 will come out as fees currently there are 432 set holders uh this will become more interesting as time moves forward just because this is so new so the max drawdown isn't going to be as large over the last day but obviously with how volatile crypto markets are this is an interesting number to look at just to see what's the maximum drawdown on any of the sets as a reminder if we look at the different tokens that are involved here one of the things that i do is just review these and think about do i want exposure to these because by holding this set or this d5 pulse index

set i have now exposure to the price movements of wi-fi lend snx the comp token the maker token lrc for loop ring the rend token for rent protocol knc for kyber network bell for balancer and rep for auger v2 now if we go back up to the top here you can see some other interesting information like what is the current allocation of that token i think this is really important because it's not like i have a hundred i have a hundred percent exposure now to wi-fi by holding this set but it is 25 so you know i'm happy with that but if i

don't want exposure to wi-fi or i think the set's overweighted towards one of these tokens like let's say wi-fi here that would be a reason i guess for me not to buy the index and then of course uh it actually shows me what is the token price for each of these individually and how much makes up each set so each set which is again it's an erc20 token is composed of 0.000 wi-fi and in this case it's composed of 33 lend and 3 snx so that's that's the end result of using this weighted average and the fact that i'm getting exposure to all 10 of these top quote unquote defy tokens so if i'm

ready to buy i'm going to just click buy and i can choose whether to pay in tether usdc die or ether in this case i'm going to go ahead and just pay with ether and i will go ahead and buy 0.1 eth of this set so i'm going to get about 0.3 of the d5 pulse index set and so i can hit preview buy this gives me a summary of all the details of what i'm buying the the few things that might confuse someone is just that network fee if you're not familiar with that that's referring to the the typical transaction

fees you paid in the ethereum network and and so uh this is not affected by the size of the position that i'm buying or like how much of the set it's basically just reflecting the network demand and how high gas prices are so right now gas prices are over 200 gwei today so this is going to be higher but it could be lower in the future if those gas prices are lower the premium here i like that they call this out they say that the difference between the uniswap market price and the net asset value of the set so if i were to go buy all of these different tokens which would cost a lot of gas a lot of time i think the gas alone would probably

make this whole endeavor kind of useless the fact that i'm using this set allows me to gain exposure quickly and efficiently but i am paying a 3.45 premium over what the uniswap market prices are before i uh submit the buy one thing to point out is i am saving a little bit on gas by using ether so if i use die usdc or tether i'm going to have to go through an approval transaction first so that's an extra transaction to set a spending limit but with ether i can just toss ether in and it's a single transaction so i do save a little bit of money on fees while gas prices are

really high so if we're ready to buy just submit buy and then we'll see a metamask transaction show up so you can see i'm doing a swap of 0.1 ether for this index the gas fee is currently about 14 so i've already checked the eth gas station and it's showing me at east gas station dot info that if i put through uh 230 gray it'll definitely go through in about five minutes so this looks good i'll leave i'll leave it at this price and then hit confirm one thing i really like about the token

sets experience is the fact that they give you these indications of when your transaction is processing and then you can just click here to actually see the transaction on ether scan all right i'm back and my transaction confirms so now i own 0.1 of the d5 pulse index and really the only other thing i would recommend is uh go to my account if you ever want to take a look at all the different sets that you own including the the dpi what i'll continue to do is monitor the performance of this over time so one of the things i really like on these set listing pages i would

actually bookmark this one just for the d5 pulse index you can take a look over a day a week a month and a year and and by the way the one year time frame is just whatever inception is as far back as that is if it's a year uh it'll go back one year but otherwise if it's let's say six months it'll just show you the six month time frame and then you can see uh it'll show you these dotted lines they're vertical dotted lines to indicate uh when there has been a rebalance so if one of the tokens here gets overweighted let's say that the wi-fi token continues to grow in market cap uh and it should be

more heavily weighted than it is then this set will be rebalanced and uh the weights will be adjusted i think the key takeaway here with the d5 pulse index is that i am saving time i would have to individually buy all these different tokens i'm saving money i'd have to spend gas to buy each of these tokens which would take lots and lots of gas and with gas prices over 250 grade today doing 10 of these different transactions or swaps on something like uniswap is going to definitely add up and i think lastly this empowers me to do something i previously couldn't do which is gain exposure to a basket of d5 related

tokens all right so let's briefly talk about the different risks involved in using the d5 pulse index uh first off there's smart contract risk so normally i would go to nexus mutual.io and i would buy smart contract cover which protects me from a smart contract bug but currently uh there's been a surge of interest in buying smart contract cover so there is no cover right now for set protocol but there should be more there in the future with more people staking nxm second risk i consider is admin risk i do believe the set protocol team still

has some uh centralized controls it's something just to be aware of but given the uh reputation of them having built this since 2017 and all the success that they've had i'm not very concerned about this another risk is the fact that most of these sets use a stable coin and here we go in this case we have an interest bearing stable coin usdc so this is compound usdc so there's risk that that stable coin could depeg there's also systemic risk that i need to be thinking about the fact that if compound were to have some sort of a failure that would then affect uh

compound usdc and hence it would affect the set that i'm holding that has uh exposure to compound usdc all right that's all i've got for you today i hope you find this helpful if you have any questions you can ask us for help in the bankless discord also feel free to comment on this youtube video and we'll try to get back to you and answer your questions there [Music] you