Avalanche Social Index
The self-managed portfolio that tracks the most popular tokens on Avalanche
Kassandra took the challenge to build a fully decentralized, non-custodial, permissionless investment strategy that would automagically invest in the most solid and engaged communities.
This concept was previously named Heimdall Social Index, but was rebranded at the moment that Kassandra choose Avalanche as its welcoming home.
The Avalanche Social Index is an ARC20 token that represents a fraction in an ever-changing and dynamic portfolio, that with the help of the social data company Heimdall constantly allocates money towards the most outstanding communities on the Avalanche ecosystem.
It’s simple: acquire the Avalanche Social Index, get instant exposure to what its hot on Avalanche, and stake it for greater rewards.
Motivation
Having so many DeFi products out there begs the question of why some projects are successful and others just fade into oblivion or survive in sameness? We do not have an answer to this question but there are aspects that explain the rises and many falls of DeFi protocols; some are very close in structure, arising from a fork of a common protocol, some are altogether different, some are safer than others but got hacked while other may have several security problems but nobody cares to hack them. It is a strange world, the DeFi jungle.
But there is this thing that every successful project shares in common: a strong and engaged community.
People, builders, believers. Building a decentralized project is more about creating a community that people may realize, the communities around crypto projects are what drive them forwards.
From this investment thesis, we’ve created the Social Index: investing by communities.
So how do we measure community strength?
It’s hard. But happily, our friends at Heimdall just made the perfect tool that fits our needs. The Social Index is a co-creation between Kassandra and Heimdall and will be using a stream of social data to feed the on-chain strategy.
To calculate community social strength, instead of relying on simply counting social interactions, the Social Index will look to who are active the community members and their networks of social impact.
Heimdall uses data from Twitter and algorithms inspired by Google’s search engine, used to rank websites on searches, to measure how socially engaged a user really is. In that way, communities gain much more social strength when highly socially engaged users interact with them, than with newly created accounts interactions. In fact, newly created accounts have extremely low social scores, as they have never received any social engagement.
Learn more about how Heimdall measures community strength below.
How will it work?
Here enters the Kassandra DAO. Kassandra is the protocol that links financial products with the decentralized management of DeFi and with the social data provided by Heimdall. The protocol makes it possible to develop several financial products with different strategies and value propositions. In our current case, it will bring to light our pool of tokens based on the Avalanche Ecosystem.
Our goal: offer exposure to the hottest cryptos in Avalanche DeFi ecosystem.
Our plan: real-time social data that feeds an algorithm managing a pool with dynamical weights.
So we have everything set. Heimdall will give us the precious social data and Kassandra the necessary mechanisms to manage our pool and strategy. Avalanche will be our platform and trusted partner, and last but not least our future community will provide us the juicy TVL for our liftoff.
The Strategy and the Pool
Believe it or not, the strategy is quite simple. We put more money (give more weight) on cryptos of growing popularity. However, and just to be safe, we must at first define a whitelist, because we just can’t randomly choose any of the thousands of tokens out there. Recall that we follow a theme, DeFi in Avalanche, so with this in mind here is our whitelist for the first pool:
AVAX, JOE, PNG, QI, XAVA, CRA
There we have it! A 6token pool that will have an ever-changing allocation (every 24h) derived from the social score.
New tokens should be added with community interest and governance approval.
Notice that we are investing in competing protocols: joe and png. Trader Joe and Pangolin are ever competing for users as a way of increasing the TVL and liquidity, and as one might guess, APR and community engagement is their weapons and even MEMES. That is the power of community and hype. Whoever wins the fight, we will be following close by as our strategy adapts our pool, and the investor will know that it is putting more money on the winners. It’s like changing the bet on a horse racing in real-time, with no bookies or the mob.
Since we are building a DAO, those who hold the governance token can vote to change the whitelist or to create a whole new pool. If changes to the whitelist are made they have to conform to the investment theme, however, the creation of a new pool can have a whole different theme. Our aim is the most complete decentralization of our protocol.
But how do I get all this?
Together with the pool there is the index token $AHYPE and it is all very simple. Do you want to invest like a common liquidity pool? Just deposit AVAX or JOE or any of the tokens in the whitelist to mint $AHYPE and get some reward fees, just like a usual pool. If you prefer you can get it in other places such as DeFi swaps or eventually exchanges. The price of $AHYPE is derived from the pool’s TVL:
Just like a share.
And of course, supply and demand. The value of $AHYPE can be at a premium or discount if the market decides so.
And why invest socially?
It is an honest and worthy question. Why don’t we use the market cap to set the weights? Simply because the market cap does not reflect the actual engagement and the size of a community. In the long run, the community is what matters. For a proof of concept, it is worth checking out the backtesting section of our prototype product.
Unfortunately, the Avalanche system is pretty recent so there is not enough data to perform a long backtest using the current whitelist.
But we’re working on providing a whole new medium article backtesting things as much as we can, and proving the point of investing by communities.
It’s not about swing trading, investing only when things get very known, and selling when it crashes. This is not what this strategy will do. We’ll follow communities, while there are worthful and impactful people engaging with the projects, then there will be our money. It doesn’t matter how much the price raised or dropped, what matters is who is building it.
Time to beat the market
If being exposed to the most active and dynamical crypto projects gets your attention and you are afraid of missing out on good investment opportunities, the strategy explained in this article and its accompanying financial product solve both of these problems. It is simple, by acquiring the token $AHYPE you will be investing in the hottest crypto projects.
Stay close, the $AHYPE token will be available in the following month at https://kassandra.finance/
Learn more about Kassandra:
- Website: https://kassandra.finance/
- Twitter: https://twitter.com/dao_kassandra
- Github: https://github.com/KassandraFinance
- Medium: https://kassandrafoundation.medium.com/
And get to know Heimdall:
- Website: https://heimdall.land/
- Twitter: https:/heimdall.land/HeimdallLand
