The Index Creation Process

This article provides a first look into the PhutureDAO index creation process demonstrating the protocols intuitive user experience and functionality.

The designs showcased in this article are preliminary and are subject to material changes before launch.

1. Sector Selection

The initial step in building an index is selecting the theme that will define the assets within that index. The Phuture platform provides the user with a curated set of choices to make this decision easier. Selecting a sector will provide access to the affiliated tokens. This list will be updated as new categories emerge to ensure it remains comprehensive.

Alternatively, a user can choose ‘continue to all assets’ which will allow them to select from the entire asset base held within the Phuture platform.

2. Weighting Methodology

Next, the protocol will ask the user to define how the index should be weighted. At this stage, the protocol offers weighting by market capitalisation or by price. At launch, the options will be extended to include both off-chain and on-chain variables. Any assets that the user chooses in the next section, will have its weight automatically adjusted based on the predefined methodology.

In addition, a user can choose ‘Define weights manually’ and apportion weights to each asset as they desire.

3. Asset Selection

At this stage, the user is ready to decide which assets will be included in the index. If a particular sector and predefined weighting method have previously been selected, then the option to track the top 3, 5 or 10 tokens will be available. For example, if a user selects decentralised finance and weights it by market capitalisation, then the option to track either the top 3, 5 or 10 assets will become accessible. If tracking the top 10 is chosen, the protocol will automatically sort and weight the top 10 decentralised finance assets by market capitalisation.

Alternatively, if the user decides not to track a particular subsection of assets they are free to select from the assets available on the platform. In cases where a sector is chosen the user will only see assets available for that sector. However, any asset can be added via the search function.

4. Define Weights

This section’s primary function is to allow users to manually define the weights of each asset in their index. However, it also provides optionality on attributes that will dictate how the index will behave after it has been created.

Allocating weights will be unlocked by default for users that select to weight their index manually. For users who opted for a predefined weighting method, this functionality will be locked. It can be unlocked, but this will revert the index to a basic fixed weight non-tracking index.

The reweighting option enables an index weighted by a predefined method to refresh its target weights for each constituent asset given a predetermined timeout period. This facilitates dynamic target weights that react to price changes in the underlying assets.

With tracking enabled an index can update its constituent assets based on the criteria implemented in section 3.

The reweighting and tracking features are pivotal to ensuring indices remain representative over the long term, as new assets emerge and markets change.

5. Index Finalisation

At this stage, the index’s desired properties have been selected and this screen offers the last opportunity to review each attribute before it is finalised. In order to instantiate an index the creator must make an investment into it. Investable assets consist of any asset that has established a liquidity pool on the Phuture protocol. After the creator makes the initial investment, the index will go live on the Phuture protocol permitting anyone to discover and invest into it.

Conclusion

The Phuture platform has been designed to conflate an intuitive UI/UX with a set of tools that bring power and depth to the overall functionality. This is crucial to the protocol’s long term success and aids its ability to attract a broader investing audience. Making it accessible and simple to use for all.

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Decentralised protocol built for the creation and investment of passive index strategies.

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