DeFi Nest (nDEFI)

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DeFi Nest (nDEFI)
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The Polly DeFi nest is divided into key DeFi sectors, which are given a weighting reflecting their maturity and share of the overall market. Within those sectors, each project is weighted on the TVL divided by Fully Diluted Valuation (FDV).
To generate revenue a DeFi project needs value deposited into their contracts. This makes Total Value Locked (TVL) a key metric for evaluating a project’s ability to generate revenue. Projects with a high TVL have also so far proven to gain more traction in the market through the network effects the existing capital provides - capital attracts more capital. A good example of this is with Yearn Finance. Yearn was able to generate massive amounts of revenue as a result of the large amount of capital they attracted. This gave them the resources to further develop and innovate their products in a positive feedback loop. Yearn’s success has led to many projects such as Alchemix and Abracadabra using their products and liquidity as a base layer to build on.
nDEFI is composed of the most mature sectors in the DeFi ecosystem, providing coverage of the key building blocks for the future of finance. With nDEFI you’ll have exposure to infrastructure, lending markets, decentralized exchanges, synthetics, and yield aggregators. The unique weighting formula allows nDEFI to invest in projects gaining traction earlier and with a greater weighting than market cap weighted competitors.
The Polly Finance community will provide the crypto industry’s first automated value investing, decentralized investment strategy.
As always we invite our community to exercise caution if they decide to use the product, the strategy is unproven and results may vary.
Project Inclusion Criteria
For a project to be included in the Polly Defi nest, it must fit the below criteria in order to reduce the risk of the nest and fit the desires of the community.
Project characteristics:
Be a DeFi project available on the Ethereum blockchain.
Listed on DefiLlama
Have at least 7.5% of the total supply in circulation and have a predictable token emission over the next 5 years.
The protocols will be selected by TVL based on DeFiLlama’s website.
The protocol must be running for 3 months before qualifying to be included in the nest
In the event of a safety incident, the team must have addressed the problem responsibly and promptly, providing users of the protocol a reliable solution and document a detailed, transparent breakdown of the incident.
Be Ethereum focused
Must be sufficiently decentralized
Yield Strategy
It is possible for the underlying tokens to follow strategies that will earn yield, maximizing value for nest holders, who benefit from this productivity without having to perform any actions themselves. These strategies can be changed over time to take advantage of new opportunities or to maximize the yield earned. Strategies already available include lending and staking, with more advanced strategies planned to be developed in the future.
To begin with we will make use of the strategies that already existed in the PieDao code and that are available on Polygon - AAVE and Cream lending pools.
The next stage will likely be to develop a Kashi strategy, which will allow us to create our own lending markets for tokens that wouldn’t otherwise have yield options on Polygon as well as furthering our relationship with Sushi.
Nest Maintenance
The nest is maintained quarterly in two phases
Determination Phase
The determination phase takes place during the final 2 weeks of the quarter. During this phase the changes needed for the next reconstitution are determined.
The TVL and FDV of each project are recorded, including new projects that qualify for the nest and meet the criteria.
Proposed changes will be published on the governance forum for 1 week then a governance vote will run for the community to approve changes.
Reconstitution Phase
In the two weeks following a successful vote, the nest components will be adjusted as per the instructions published during the final 2 weeks of the quarter.
Emergency Maintenance
The multisig holders are authorized by the community to re-balance nests outside of the usual schedule during moments that they collectively deem to be critical emergencies. This clause will allow for quick re-balancing in the event of a protocol or nests being in danger of failing. An example of when this would be utilized would be if a stable coin begins losing its peg/ becoming insolvent, or a protocol suffers an exploit that is not dealt with sufficiently.
These scenarios may be time sensitive and require immediate resolution. Thus the team may decide to act without warning and explain their actions in a governance forum post afterwards, or if there is deemed to be time, an emergency governance vote will be posted.
This is intended as a safety mechanism only, to prevent loss of funds for our users and as such would be a power exclusively exercised under extreme circumstances.
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Stables Nest (nSTBL)
Last modified 1mo ago
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Contents
Project Inclusion Criteria
Yield Strategy
Nest Maintenance