[RFC] Support for the Insrt Finance Infra Index

Dear Balancer community,

My name is Lauris and I am one of core contributors to Insrt Finance. We are presenting a proposal to the Balancer community. One of our initial products is built on top of Balance and we may use Balancer in the future in order to provide index or ETF-like positions for the Insrt Finance community.

Executive Summary

Insrt Finance is an EMV-compatible protocol that provides NFT-driven set-and-forget strategies. We are building a series of products that offer accessible NFT finance based positions. Our initial product, the NFT Infra Index (“Index”), is built using Balancer V2 investment pools. The product provides diversified exposure to leading NFT liquidity and finance infrastructure.

Users who mint an Index LP token (“Index Token”) using the Index will be able to deposit the Index Token into other Insrt Finance products in order to acquire exposures derived from NFT fractionalization and hypothecation.

The Insrt Finance team wishes to establish an official partnership with the Balancer community.

What is the NFT Infra Index?

The NFT Infra Index is an ERC-20 index built on Balancer V2. The NFT Infra Index allows users to expose themselves to a selection of top NFT finance and liquidity solutions, as well as other projects that the Insrt Finance team plans to partner with.

The methodology of the index is based on a smart beta approach, wherein subjective factors are introduced into each rebalancing period by the index strategist and the broader Insrt Finance community. The factors take into consideration the defensibility, scalability and utility of the project tokens that have been included within the Index.

Users can take up a position in the Index by a) providing all Index assets b) providing one asset out of the basket or c) providing a non-basket asset, such as USDC. Option B and Option C entry mechanisms require the payment of a swap fee. Entry into the index provides a user with the Index Token.

As depositing individual basket assets, external trading activity in the pool and Index weight adjustments as per methodology create imbalances in the pool, arbitrage traders are essential to rebalance the underlying portfolio with the basket of assets and to maintain the NAV / spot value peg, thus external traders will be able to profit off of arbitrage opportunities.

A UI demo for the NFT Infra Index can be found here. Insrt Finance

An explanation of the methodology can be found here.

What does the NFT Infra Index provide to the Balancer community?

The NFT Infra Index adds value to the Balancer community in three primary vectors.

  • Position: The Balancer community would have access to an index / ETF-like product that provides diversified exposure to top NFT-related projects
  • Composability: Users will be able to deposit / stake their LP tokens into other Insrt Finance products. This will allow holders of the LP token to draw yields from structured NFT finance set-and-forget strategies without owning or depositing their own ERC-721 PFPs
  • Yield: Arbitrage opportunities generated via rebalancing will stimulate external trading activity with the Index, therefore providing the Balancer community with not only diversified exposure to high-growth projects, but the swap fees provide a secondary return-generation mechanism

What is Insrt Finance?

Our mission at Insrt Finance is to provide accessible NFT alpha. We are building a strategy aggregator and a seamless liquidity access layer for NFT finance. We build on top of existing NFT finance infrastructure as a lego base layer to provide sophisticated strategies for NFT returns that are accessible to both jpeg holders and non-jpeg holders.

Similarly to what Yearn did for aggregation and Ribbon Finance for unlocking volatility underwriting, Insrt Finance makes it easy for users to provide liquidity to NFT finance primitives, while offering positions that are typically only accessible to whales and power users. First, we design the products ourselves. Later on, we will provide the architecture and community for users to create their own strategies and attract capital to them.

More information can be found here:

Who is building Insrt Finance?

Insrt Finance is a collaborative effort between experienced TradFi professionals, talented contracts engineers and degens. Our team of full-time, part-time contributors and advisors have worked at hedge funds, sell-side BB IB, and leading Fintech companies, as well as have previously built derivatives AMMs and have led marketing efforts for well-known protocols.

Specifically, the Infra Index is being built by the following contributors:

  • Lauris: Ex-researcher at the London School of Economics on securitization and structured finance
  • Punter: Software / financial engineering at a Series-B FinTech startup, NY hedge fund and ran a smart contracts consulting firm
  • SwaggyPepe: Ex-M&A with a previous a strategic finance role at an Index Ventures funded startup
  • Nick: Smart contracts engineer that has previously built sophisticated derivatives AMMs
  • BoomerBear: Ex sell-side IB with capital markets roles at leading FinTechs
  • C: Ex GS and DB sell-side IB, derivatives trading and regulatory arbitrage
  • Hentai Avenger: The handsomest anon on CT

Support from the Balancer community:

We are a very early stage team. We require support from Balancer in terms of:

  • Introducing the broader Balancer community to the NFT Infra Index product
  • Helping us promote organic content about the value proposition of the NFT Infra Index on Twitter
  • Whitelisting the pool on the Balancer dApp to stimulate external trading activity
  • Assisting the Insrt Finance team in building a network of contributors, friends and strategic partners
  • Maintaining a channel of open communication with the Balancer community as we continue developing our technology

Risks:

Considering that we have finalized the contracts for the Index and they are deployed on testnet, only the following prerequisites have to be fulfilled for the Infra Index to be a in a production-level state:

  • Front-end integration with our contracts
  • Deploying a fully functional product demo on testnet
  • Audit

We are planning to execute on the above within four to six weeks. Consequently, there is very little execution risk on part of the product.

The primary risk for the Balancer community is that our team will not reach Product-Market Fit with the Infra Index, which would significantly limit the aforementioned benefits that may arise from supporting the Insrt Finance team in launching the Infra Index.

7 Likes