# The contents of this document do not reflect the thoughts and opinions of MetaFactory. We did not finish writing this proposal and it was not approved by our community. We do not endorse any of the tokens mentioned nor the methodology described.

### [MF DAO proposal](https://gov.metafactory.ai/t/proposal-manage-the-nft-index-on-indexcoop-com/58)

---
---

---
IIP: <to be assigned>
title: Create NFT index ($NFTI)
author: [Kiba Gateaux](@Kiba), [MetaFactory DAO](https://twitter.com/TheMetaFactory)
discussions-to: gov.indexcoop.com/TBD
status: WIP
type: New Index Creation
created: 2020-10-12
requires: [0](https://gov.indexcoop.com/t/iip-0-context/63)
---

## Summary
MetaFactory DAO are experts in NFT x DeFi space and will manage an index ($NFTI) that tracks the entire NFT market.

## Abstract
$NFTI will be a meta index that tracks the entire NFT market by composing segment specific indices. Initialy it will contain single ERC20 tokens until Index Coop matures enough to manage multiple indices.

$NFTI is being proposed and managed by [MetaFactory](https://metafactory.ai), a DAO focused on NFT x DeFi x Community tokens and has numerous partnerships across all these niches.

Initial $NFTI index:
| Token | Index Allocation |
| -------- | -------- |
| MANA | 15% |
| SAND | 20% |
| RARI | 10% |
| GHST | 20% |
| WHALE | 17.5% |
| MEME | 17.5% |
| WBK? | 0% |

Fee Percentage: (Up to discussion by Index Coop members)
Fee Split: 60% MetaFactory DAO / 40% Index Coop ([explanation](#NFTI-Fee-Split))

## NFT index ($NFTI) proposal by MetaFactory
Yo Index Coop! This is an awesome idea and I’m happy to be involved in the future Black Rock Capital.

My name is Kiba, I'm making this proposal on behalf of MetaFactory. [MetaFactory](https://metafactory.ai) is a DAO community at the intersection of Fashion x NFTs x DeFi x Community tokens. You may have heard of us for things like the infamous YFI [hoodie](https://twitter.com/Daryllautk/status/1296849270612430848?s=20t), $MEME [tee](https://twitter.com/TheMetaFactory/status/1313657540006170625?s=20), and Blue Kirby's [hat](https://twitter.com/bluekirbyfi/status/1307717779366096898?s=20). You can learn more about MetaFactory's vision in our [digiphysical futures](https://medium.com/@themetafactory/metafactory-rearchitecting-culture-for-the-digital-metaverse-df2693b7ec3b) blog post.

Here is a list of our artist and DeFi partners to date at MetaFactory:

MetaFactory is very excited to be able to contribute to the Index Coop. Not only is the entire MetaFactory DAO behind this proposal, we have gained support from top NFT artists we work with and other community members including: X, Y, Z (*TK I’m banking on MF core team to rally the troops here, we just need people like Twisted or WhaleShark to tweet the proposal in support, that’s it*).

## Methodology
Before we breakdown the initial tokens and their allocations we would like to note that the NFT space is *very* early and there aren’t many ways to get a good proxy of the value of the space. As the MetaFactory DAO, NFT artists, and dapp deveopers evolve the ecosystem we expect the $NFTI index to be overhauled many times. MetaFactory is pledging to continously manage the $NFTI index as the ecosystem rapidly expands using our deep knowledge and networks in both NFT, DeFi, and Social Currency communities. We are most excited to see collateralized NFTs that represent land plots in CryptoVoxels and Sandbox, artist community tokens, more tokenized art collections like Whale DAO, and NFT market proxies like [Wrapped CryptoKitties](https://wrappedkitties.com/).

Initially we are only including tokens that already have good traction or strong communities because they have broader exposure to NFT market, less risk, and its somewhat easier to evaluate them, and thus the $NFTI index, because they have objective valuation models. Personal tokens for artist will not be included in this index but we are also interested in creating a second index that focuses on personal artist tokens and possibly including that index token inside this NFT index.

We chose allocations based on ... (MetaFactory community input on what allocations should be and why ).

When investing it is as important to make sure you bet big on the ones you are confident about on top of making sure you are selective the right tokens. It doesn't matter how high it moons if it's only 0.1% of your portfolio. Some of the allocations might seem out of place to an outsider, but as industry experts we are recommending the index allocate to who we believe will be most confident successful.

## $NFTI Index Allocation
MetaFactory is proposing an initial NFT index called $NFTI with the following tokens and allocations:

| Token | Index Allocation |
| -------- | -------- |
| MANA | 15% |
| SAND | 20% |
| RARI | 10% |
| GHST | 20% |
| WHALE | 17.5% |
| MEME | 17.5% |
| WBK? | 0% |

The index weight is by marketcap and will rebalance anytime a **single token comes 50% off parity**. For example if GHST has an allocation of 20% of the index, if the price increases and it becomes 30% of the index, the set will initiate rebalance. This high number is to prevent wasting gas and oracle fees constantly rebalancing during the constant price fluctuations in crypto. This will create a discrepency in real vs expected value of the index at times and an opportunity for traders to exit to underlying when index is overweighted and buy bick in after a rebalance if it takes place. I'm pretty sure doesn't affect the price of the index, create systemic risk, or put user funds at risk but I could be wrong. Our assumption is that the majority of users for Index Coop products are normies and not traders so this is not a signifcant risk if one is in fact present.

In the future we plan to create more NFT related indices that target subsections of the market. These will be composed into the $NFTI meta index for a broader exposure. Some examples include:
1. Platform tokens (e.g. GHST, SAND)
1. Personal artist tokens (e.g. COIN, MNFT)
1. Social/Community tokens (e.g. WHALE, MEME)
1. Governance tokens (e.g. RARI, ROBOT)
1. Wrapped NFT tokens (e.g. WCK)

## Implementation
Indices are a new feature of Set v2 so we don't know exactly how they work yet. If there is anything inherently flawed in our index allocation or rebalancing proposal we hope Set Protocol team will give immediate feedback so we can correct it.

Price Feeds: CbainLink does not currently have price feeds for these tokens. If $NFTI proposal is passed, we will create another proposal to use Treasury funds to setup price oracles for each of these tokens.

Rebalancing: We are requesting feedback from the Set team on how exactly to accomplish this behaviour. Ideally we can wait for index to be over threshold for > 1 week before rebalancing. We can also just do a rebalance check once per week and not monitor prices constantly.

## $NFTI Fee Split
With our extensive NFT community, MetaFactory could potentially offer exclusive deals to $NFTI index holders. Examples could be early access to products like the YFI hoodie on our platform, distributions of artist tokens that launch on our platform, and many other bonus rewards just for holding the $NFTI token.

Given the extensive research, expertise, and bonus rewards MetaFactory is offering to Index Coop and $NFTI holders detailed above, we propose a 60/40 split on fees with MetaFactory receiving the larger portion.

All rewards, management fees, etc. from $NFTI will be sent to the MetaFactory DAO treasury account (*TK get treasury address from MF core team*). I (Kiba) get no personal compensation if this proposal is passed.

---

We are open to feedback on adding/removing tokens or changing their allocations.

If you’re interested in learning more about MetaFactory come join us on our [discord](https://discord.gg/6KV9Qqr) 😘

Bleep Bloop,
Robots Out
🤖 🤖 🤖

## Copyright
Copyright and related rights waived via [CC0](https://creativecommons.org/publicdomain/zero/1.0/).