Thursday was a big day for those in the SCIFI Finance world because it was the first AMA since the "big bang" launch on the 16th December, 2020. We now had nearly 2 months worth of returns, marketing and work flow, to have a lot of pointed questions about the future and what the development team envisioned. And while the AMA was excellent, informative and helped reinforce a lot of the strong fundamentals that lead to a wave of new investors and community participants, they also surprised us with the launch of a new Index, the Galactic Blue Index or $GBI.
When DeFi first took the digital world by storm in 2020, my mind was racing with possibilities. Drawing on experience from my time working at an investment fund (long before I packed my bags and boarded the plane to change my life), I had dreamed up ways to allow for great diversification and gameification of assets/tokens that would be truly appealing to both sophisticated and new investors. The SCIFI Finance team seem to have been on the same wave length with the creation of their new index. $GBI is the second index fund launched by the SPICE DAO. It gives investors exposure to the most trusted digital assets in the space and covers the most relevant sectors of the DeFi and crypto value stack.
In picking the basket, the Galactic Council chose to curate an index with the largest players in DeFi and explain their role within an entire ecosystem built around DeFi. The Index contains:
- $COMP - Banking / Lending
- $UNI - Exchange/Trading
- $LINK - Data
- $MKR - Payment / Money
- $WBTC - Gold / Storage of Value
- $WETH - Fuel
- $YFI - Asset Management
- $SPICE - DAO
The GBI token is a fully collateralized index token. This means that for each issued GBI token, a specific amount of tokens from the set of constituent tokens is included. The set of constituent tokens is predefined and can only change during rebalancing events. Each of the 7 "blue chip" tokens will an equal weight of the index, with SPICE being the only one that is fixed at 2.5% like in the SCIFI Index. By setting it this way, the Council has left the index open to the possibility of adding or changing constituents, which will likely be proposed and determined via DAO vote.
GBI tokens are solely created by depositing the constituent tokens into the smart contract. In exchange, the creator receives $GBI tokens. This process of converting underlying assets into GBI tokens is called “minting”. Converting back from GBI tokens to receive the underlying assets is called “redeeming”. This also presents an interesting opportunity for money to be made through Arbitrage, which would be the buying of GBI when the index is overvalued and redeeming for the underlying assets, OR the buying of the underlying and minting of the index to profit from an undervalued index. However, given the current gas fees demanded by the Ethereum network, you would have to be trading with a significant amount of capital for this to be profitable.
But the mass appeal of $GBI is what will make it a valuable asset. Outside of crypto enthusiasts and professional investors, the average person does not have the energy nor the capacity to manage a well diversified portfolio. The Galactic Blue Index will give investors who would like to have broad exposure to some of DeFi's leading tokens and technologies to buy a diversified basket that will accomplish that very aim. Index tokens like GBI will be a popular investment for the millions of investors that still stand on the sidelines over the next decade.
If you're interested in learning more about the GBI, SCIFI or SPICE, the best place to do some research is through the Website
Full Disclosure: I have been invested in and helped support the development team since inception. I'm not giving you financial advice, only introducing you to a new DeFi DAO/Index that I believe has massive potential.