The index is maintained on a quarterly basis (in January, April, July, and October) in two phases: Determination Phase The Determination Phase takes place during the third week of the month. It is the phase when the changes needed for the next reconstitution are determined. Additions and deletions: The tokens being added and deleted from&hellip;&nbsp;Read More &raquo;Ongoing Index Maintenance

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The index value is the spot value of the DeFi Pulse Index and is calculated with the Laspeyres formula which measures price changes against a fixed quantity weight, the weightfactor. Weightfactor (wf): fixed quantity of tokens determined at the most recent Determination Phase from circulating supply and prices that ensure the index is market cap&hellip;&nbsp;Read More &raquo;Index Calculation

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As part of the token inclusion assessment, Scalara considers a wide range of characteristics of the token, the project and the protocol. These criteria can be placed in four groups: Token Descriptive Characteristics Token Supply Characteristics Project Traction Characteristics Protocol User Safety Characteristics

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The DeFi Pulse Index is a digital asset index designed to track the performance of some of the largest protocols in the Decentralized Finance (DeFi) space. DeFi is a blockchain-based implementation of traditional financial services that does not rely on central intermediaries and instead uses smart contracts on blockchains.

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<p>The DeFi Pulse Index methodology underlies the leading index token in the DeFi space that holds over 50% of all assets tracking onchain basket indices.</p>


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<p>The DeFi Pulse Index offers broad and diversified exposure to the DeFi ecosystem built on Ethereum. Its index constituents offer financial services ranging from permissionless banking, decentralized exchanges, derivative platforms to asset management protocols.</p>


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<p>The <strong>DeFi Pulse Index</strong> is a digital asset index designed to track the performance of some of the largest protocols in the Decentralized Finance (DeFi) space.</p>



<p>Over the last three months, since the last rebalancing, the DeFi Pulse Index gained <strong>+45%</strong>, beating Ethereum’s 30%, with all index constituents up.</p>


<div class="wp-block-image">
<figure class="aligncenter size-full"><img decoding="async" src="data:image/gif;base64,R0lGODlhAQABAIAAAAAAAP///yH5BAEAAAAALAAAAAABAAEAAAIBRAA7" data-src="https://matthewd210.sg-host.com/wp-content/uploads/2024/02/image.png" alt="" class="wp-image-1242 lazyload"/><noscript><img decoding="async" width="389" height="449" src="https://matthewd210.sg-host.com/wp-content/uploads/2024/02/image.png" alt="" class="wp-image-1242 lazyload" srcset="https://matthewd210.sg-host.com/wp-content/uploads/2024/02/image.png 389w, https://matthewd210.sg-host.com/wp-content/uploads/2024/02/image-260x300.png 260w" sizes="(max-width: 389px) 100vw, 389px" /></noscript><figcaption class="wp-element-caption">Data from Coingecko. January 31, 2024.</figcaption></figure></div>


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<p>Year to date, in 2024, the DeFi Pulse Index the index moved sideways with leading performers Maker (+27%) and Lido (+10%).</p>


<div class="wp-block-image">
<figure class="aligncenter size-full"><img decoding="async" src="data:image/gif;base64,R0lGODlhAQABAIAAAAAAAP///yH5BAEAAAAALAAAAAABAAEAAAIBRAA7" data-src="https://matthewd210.sg-host.com/wp-content/uploads/2024/02/image-1.png" alt="" class="wp-image-1243 lazyload"/><noscript><img decoding="async" width="693" height="424" src="https://matthewd210.sg-host.com/wp-content/uploads/2024/02/image-1.png" alt="" class="wp-image-1243 lazyload" srcset="https://matthewd210.sg-host.com/wp-content/uploads/2024/02/image-1.png 693w, https://matthewd210.sg-host.com/wp-content/uploads/2024/02/image-1-300x184.png 300w" sizes="(max-width: 693px) 100vw, 693px" /></noscript><figcaption class="wp-element-caption">Data from Coingecko. January 31, 2024.</figcaption></figure></div>


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<h2 class="wp-block-heading">DeFi Pulse Index rebalance weights</h2>


<div class="wp-block-image">
<figure class="aligncenter size-full is-resized"><img decoding="async" src="data:image/gif;base64,R0lGODlhAQABAIAAAAAAAP///yH5BAEAAAAALAAAAAABAAEAAAIBRAA7" data-src="https://matthewd210.sg-host.com/wp-content/uploads/2024/02/image-2.png" alt="" class="wp-image-1244 lazyload" style="width:685px;height:auto"/><noscript><img decoding="async" width="685" height="256" src="https://matthewd210.sg-host.com/wp-content/uploads/2024/02/image-2.png" alt="" class="wp-image-1244 lazyload" style="width:685px;height:auto" srcset="https://matthewd210.sg-host.com/wp-content/uploads/2024/02/image-2.png 685w, https://matthewd210.sg-host.com/wp-content/uploads/2024/02/image-2-300x112.png 300w" sizes="(max-width: 685px) 100vw, 685px" /></noscript></figure></div>


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<h2 class="wp-block-heading">Rebalance summary</h2>



<p>The above index weightfactors and weights were calculated using prices and circulating supplies as of January 26, 2024.</p>



<p>At the January 2024 index rebalance, <strong>no constituents were added or removed</strong>. The weight of Balancer (BAL) increased due to a larger change in circulating supply. The Uniswap (UNI) allocation increased as its uncapped weight continues to be larger than the 25% threshold (and is hence moved halfway to its target to reduce turnover). All other weights decrease accordingly. Since the capped weight is distributed proportionally among all other constituents, Lido (LDO) ends up with the largest index allocation.</p>



<p>The total one-way turnover of the rebalancing is 2.2%.</p>



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<p><em>Scalara is dedicated to creating and maintaining indices for a decentralized world.</em></p>


January 2024 Rebalance DeFi Pulse


<p>We present a short performance review of the DeFi Pulse Index, the leading benchmark of Ethereum DeFi protocols. Overall 2023 was a strong year for the DeFi sector. The <strong>DeFi Pulse Index gained 82%</strong>, beating the TradFi sector&#8217;s meager 12% (as measured by the Financial Select Sector SPDR ETF).</p>


<div class="wp-block-image">
<figure class="aligncenter size-full"><img decoding="async" src="data:image/gif;base64,R0lGODlhAQABAIAAAAAAAP///yH5BAEAAAAALAAAAAABAAEAAAIBRAA7" data-src="https://matthewd210.sg-host.com/wp-content/uploads/2024/01/image-1.png" alt="" class="wp-image-1239 lazyload"/><noscript><img decoding="async" width="480" height="285" src="https://matthewd210.sg-host.com/wp-content/uploads/2024/01/image-1.png" alt="" class="wp-image-1239 lazyload" srcset="https://matthewd210.sg-host.com/wp-content/uploads/2024/01/image-1.png 480w, https://matthewd210.sg-host.com/wp-content/uploads/2024/01/image-1-300x178.png 300w" sizes="(max-width: 480px) 100vw, 480px" /></noscript><figcaption class="wp-element-caption">DeFi Pulse Index in USD. 2023. Data source: Coingecko.</figcaption></figure></div>


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<p>After several component changes, most importantly the addition of the liquid staking sector, the index finished the year with 9 constituent (<a href="https://indexcoop.com/products/defi-pulse-index" target="_blank" rel="noreferrer noopener">current allocation</a>).</p>


<div class="wp-block-image">
<figure class="aligncenter size-full"><img decoding="async" src="data:image/gif;base64,R0lGODlhAQABAIAAAAAAAP///yH5BAEAAAAALAAAAAABAAEAAAIBRAA7" data-src="https://matthewd210.sg-host.com/wp-content/uploads/2024/01/image.png" alt="" class="wp-image-1238 lazyload"/><noscript><img decoding="async" width="680" height="383" src="https://matthewd210.sg-host.com/wp-content/uploads/2024/01/image.png" alt="" class="wp-image-1238 lazyload" srcset="https://matthewd210.sg-host.com/wp-content/uploads/2024/01/image.png 680w, https://matthewd210.sg-host.com/wp-content/uploads/2024/01/image-300x169.png 300w" sizes="(max-width: 680px) 100vw, 680px" /></noscript><figcaption class="wp-element-caption">DeFi Pulse Index constituents.</figcaption></figure></div>


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<p>The index top performers in 2023 were:</p>



<ul>
<li>Maker: +206%</li>



<li>Synthetix: +167%</li>



<li>Aave: +112%</li>
</ul>



<p>On the other hand, the laggards were:</p>



<ul>
<li>Loopring: +6% (until its removal in October)</li>



<li>Balancer: -18%</li>



<li>Rocket Pool: -35% (since index addition in May)</li>
</ul>



<p>Out of the current components Maker was the greatest diversifier with an average correlation of 0.3 to the other index members. Overall DPI constituents had an average pairwise correlation of 0.5. As a result DPI&#8217;s 2023 volatility of 60% was significantly lower than the average constituent volatility of 85%.</p>



<p>The DeFi Pulse Index is available as a single token by the <a href="https://indexcoop.com/products/defi-pulse-index" target="_blank" rel="noreferrer noopener">Index Coop</a>.</p>



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<p><em>Scalara is dedicated to creating and maintaining indices for a decentralized world.</em></p>


DeFi Pulse Index 2023 Performance Review


<p>The <strong>DeFi Pulse Index</strong> is a digital asset index designed to track the performance of some of the largest protocols in the Decentralized Finance (DeFi) space.<br>Over the last three months, since the last rebalancing, the DeFi Pulse Index lost <strong>15%</strong>.</p>


<div class="wp-block-image">
<figure class="aligncenter size-full"><img decoding="async" src="data:image/gif;base64,R0lGODlhAQABAIAAAAAAAP///yH5BAEAAAAALAAAAAABAAEAAAIBRAA7" data-src="https://matthewd210.sg-host.com/wp-content/uploads/2023/11/image.png" alt="" class="wp-image-1233 lazyload"/><noscript><img decoding="async" width="392" height="443" src="https://matthewd210.sg-host.com/wp-content/uploads/2023/11/image.png" alt="" class="wp-image-1233 lazyload" srcset="https://matthewd210.sg-host.com/wp-content/uploads/2023/11/image.png 392w, https://matthewd210.sg-host.com/wp-content/uploads/2023/11/image-265x300.png 265w" sizes="(max-width: 392px) 100vw, 392px" /></noscript><figcaption class="wp-element-caption">Data from Coingecko. October 31, 2023.</figcaption></figure></div>


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<p>Year to date through October, the DeFi Pulse Index returned +23% led by Maker (+167%), Lido (+91%) and Synthetix (+60%).</p>


<div class="wp-block-image">
<figure class="aligncenter size-full"><img decoding="async" src="data:image/gif;base64,R0lGODlhAQABAIAAAAAAAP///yH5BAEAAAAALAAAAAABAAEAAAIBRAA7" data-src="https://matthewd210.sg-host.com/wp-content/uploads/2023/11/image-1.png" alt="" class="wp-image-1234 lazyload"/><noscript><img decoding="async" width="800" height="450" src="https://matthewd210.sg-host.com/wp-content/uploads/2023/11/image-1.png" alt="" class="wp-image-1234 lazyload" srcset="https://matthewd210.sg-host.com/wp-content/uploads/2023/11/image-1.png 800w, https://matthewd210.sg-host.com/wp-content/uploads/2023/11/image-1-300x169.png 300w, https://matthewd210.sg-host.com/wp-content/uploads/2023/11/image-1-768x432.png 768w" sizes="(max-width: 800px) 100vw, 800px" /></noscript><figcaption class="wp-element-caption">Data from Coingecko. October 31, 2023.</figcaption></figure></div>


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<h2 class="wp-block-heading">DeFi Pulse Index rebalance weights</h2>


<div class="wp-block-image">
<figure class="aligncenter size-large"><img decoding="async" src="data:image/gif;base64,R0lGODlhAQABAIAAAAAAAP///yH5BAEAAAAALAAAAAABAAEAAAIBRAA7" data-src="https://matthewd210.sg-host.com/wp-content/uploads/2023/11/image-2-1024x413.png" alt="" class="wp-image-1235 lazyload"/><noscript><img decoding="async" width="1024" height="413" src="https://matthewd210.sg-host.com/wp-content/uploads/2023/11/image-2-1024x413.png" alt="" class="wp-image-1235 lazyload" srcset="https://matthewd210.sg-host.com/wp-content/uploads/2023/11/image-2-1024x413.png 1024w, https://matthewd210.sg-host.com/wp-content/uploads/2023/11/image-2-300x121.png 300w, https://matthewd210.sg-host.com/wp-content/uploads/2023/11/image-2-768x309.png 768w, https://matthewd210.sg-host.com/wp-content/uploads/2023/11/image-2.png 1072w" sizes="(max-width: 1024px) 100vw, 1024px" /></noscript></figure></div>


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<h2 class="wp-block-heading">Rebalance summary</h2>



<p>The above index weightfactors and weights were calculated using prices and circulating supplies as of October 12, 2023.</p>



<p>At the October 2023 index rebalance, previously started index changes were concluded: <strong>The phasing-in of Lido (LDO) and Rocket Pool (RPL) that was started in April </strong>and the <strong>removal of Loopring</strong> (LRC) due to <strong>decreased usage of its DeFi service </strong>were finished. In both cases low liquidity was the main reason to apply this stepwise approach. Therefore, the DeFi Pulse Index is now composed of 9 constituents.</p>



<p>As a result of the continued addition of LDO and RPL all other constituent weights decrease (except UNI due to its continued 25% capping). The total one-way turnover of the rebalancing was 8.2%.</p>



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<p><em>Scalara is dedicated to creating and maintaining indices for a decentralized world.</em></p>


October 2023 Rebalance DeFi Pulse Index


<p><strong>Scalara</strong> announces the results of the <strong>July 2023 rebalance</strong> of the <a href="https://www.scalara.xyz/indices/dpi" target="_blank" rel="noreferrer noopener">DeFi Pulse Index</a>.</p>



<p>The <strong>DeFi Pulse Index</strong> is a digital asset index designed to track the performance of some of the largest protocols in the Decentralized Finance (DeFi) space.</p>



<p>Over the last three months, since the last rebalancing, the DeFi Pulse Index gained <strong>10%</strong>.</p>


<div class="wp-block-image">
<figure class="aligncenter size-full"><img decoding="async" src="data:image/gif;base64,R0lGODlhAQABAIAAAAAAAP///yH5BAEAAAAALAAAAAABAAEAAAIBRAA7" data-src="https://matthewd210.sg-host.com/wp-content/uploads/2023/08/image.png" alt="" class="wp-image-1225 lazyload"/><noscript><img decoding="async" width="387" height="442" src="https://matthewd210.sg-host.com/wp-content/uploads/2023/08/image.png" alt="" class="wp-image-1225 lazyload" srcset="https://matthewd210.sg-host.com/wp-content/uploads/2023/08/image.png 387w, https://matthewd210.sg-host.com/wp-content/uploads/2023/08/image-263x300.png 263w" sizes="(max-width: 387px) 100vw, 387px" /></noscript><figcaption class="wp-element-caption">Data from Coingecko. July 31, 2023.</figcaption></figure></div>


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<p>Year to date through July, the DeFi Pulse Index returned +46% led by Maker (+139%), Compound (+131%) and Lido (+96%).</p>


<div class="wp-block-image">
<figure class="aligncenter size-full"><img decoding="async" src="data:image/gif;base64,R0lGODlhAQABAIAAAAAAAP///yH5BAEAAAAALAAAAAABAAEAAAIBRAA7" data-src="http://matthewd210.sg-host.com/wp-content/uploads/2023/08/newplot.png" alt="" class="wp-image-1226 lazyload"/><noscript><img decoding="async" width="800" height="450" src="http://matthewd210.sg-host.com/wp-content/uploads/2023/08/newplot.png" alt="" class="wp-image-1226 lazyload" srcset="https://matthewd210.sg-host.com/wp-content/uploads/2023/08/newplot.png 800w, https://matthewd210.sg-host.com/wp-content/uploads/2023/08/newplot-300x169.png 300w, https://matthewd210.sg-host.com/wp-content/uploads/2023/08/newplot-768x432.png 768w" sizes="(max-width: 800px) 100vw, 800px" /></noscript><figcaption class="wp-element-caption">Data from Coingecko. July 31, 2023.</figcaption></figure></div>


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<h2 class="wp-block-heading">DeFi Pulse Index rebalance weights</h2>


<div class="wp-block-image">
<figure class="aligncenter size-full"><img decoding="async" src="data:image/gif;base64,R0lGODlhAQABAIAAAAAAAP///yH5BAEAAAAALAAAAAABAAEAAAIBRAA7" data-src="https://matthewd210.sg-host.com/wp-content/uploads/2023/08/image-1.png" alt="" class="wp-image-1228 lazyload"/><noscript><img decoding="async" width="785" height="317" src="https://matthewd210.sg-host.com/wp-content/uploads/2023/08/image-1.png" alt="" class="wp-image-1228 lazyload" srcset="https://matthewd210.sg-host.com/wp-content/uploads/2023/08/image-1.png 785w, https://matthewd210.sg-host.com/wp-content/uploads/2023/08/image-1-300x121.png 300w, https://matthewd210.sg-host.com/wp-content/uploads/2023/08/image-1-768x310.png 768w" sizes="(max-width: 785px) 100vw, 785px" /></noscript></figure></div>


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<h2 class="wp-block-heading">Rebalance summary</h2>



<p>The above index weightfactors and weights were calculated using prices and circulating supplies of all 12 constituents as of July 27, 2023.</p>



<p>At the July 2023 index rebalance, <strong>the phasing in of Lido&#8217;s LDO and Rocket Pool&#8217;s RPL that was <a href="https://www.scalara.xyz/blog/april-2023-rebalance-defi-pulse-index">started in April</a> was continued.</strong> Two-thirds of the circulating supply are considered during determination of new weightfactors.<br>In addition, the removal of Loopring due to <strong>decreased relevance of its DeFi service </strong>was started. At this rebalancing only half of the weight is removed.<br>In both cases low liquidity on decentralized exchanges is reason to apply this stepwise approach. It aims to mitigate the market impact of these index changes.<br>Therefore, the DeFi Pulse Index is still composed of 10 constituents.</p>



<p>As a result of the continued addition of LDO and RPL all other constituent weights decrease (except UNI due to its continued 25% capping). The total one-way turnover of the rebalancing is 8.9%</p>



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<p><em>Scalara is dedicated to creating and maintaining indices for a decentralized world.</em></p>


July 2023 Rebalance DeFi Pulse Index


<p><strong>Scalara</strong> announces the results of the <strong>April 2023 rebalance</strong> of the <a href="https://www.scalara.xyz/indices/dpi" target="_blank" rel="noreferrer noopener">DeFi Pulse Index</a>.</p>



<p>The <strong>DeFi Pulse Index</strong> is a digital asset index designed to track the performance of some of the largest protocols in the Decentralized Finance (DeFi) space.</p>



<p>Since its January rebalance three months ago, the DeFi Pulse Index is down <strong>6%</strong>.</p>


<div class="wp-block-image">
<figure class="aligncenter size-full"><img decoding="async" src="data:image/gif;base64,R0lGODlhAQABAIAAAAAAAP///yH5BAEAAAAALAAAAAABAAEAAAIBRAA7" data-src="https://matthewd210.sg-host.com/wp-content/uploads/2023/05/image.png" alt="" class="wp-image-1213 lazyload"/><noscript><img decoding="async" width="484" height="544" src="https://matthewd210.sg-host.com/wp-content/uploads/2023/05/image.png" alt="" class="wp-image-1213 lazyload" srcset="https://matthewd210.sg-host.com/wp-content/uploads/2023/05/image.png 484w, https://matthewd210.sg-host.com/wp-content/uploads/2023/05/image-267x300.png 267w" sizes="(max-width: 484px) 100vw, 484px" /></noscript><figcaption class="wp-element-caption">Data from Coingecko. April 30, 2023.</figcaption></figure></div>


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<p>Year to date through end of April, the DeFi Pulse Index returned +32% led by Loopring (+85%), Synthetix (+70%) and Yearn (+61%).</p>


<div class="wp-block-image">
<figure class="aligncenter size-full is-resized"><img decoding="async" src="data:image/gif;base64,R0lGODlhAQABAIAAAAAAAP///yH5BAEAAAAALAAAAAABAAEAAAIBRAA7" data-src="https://matthewd210.sg-host.com/wp-content/uploads/2023/05/newplot.png" alt="" class="wp-image-1214 lazyload" width="692" height="389"/><noscript><img decoding="async" src="https://matthewd210.sg-host.com/wp-content/uploads/2023/05/newplot.png" alt="" class="wp-image-1214 lazyload" width="692" height="389" srcset="https://matthewd210.sg-host.com/wp-content/uploads/2023/05/newplot.png 800w, https://matthewd210.sg-host.com/wp-content/uploads/2023/05/newplot-300x169.png 300w, https://matthewd210.sg-host.com/wp-content/uploads/2023/05/newplot-768x432.png 768w" sizes="(max-width: 692px) 100vw, 692px" /></noscript><figcaption class="wp-element-caption">Data from Coingecko. April 30, 2023.</figcaption></figure></div>


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<h2 class="wp-block-heading">DeFi Pulse Index rebalance weights</h2>


<div class="wp-block-image">
<figure class="aligncenter size-full"><img decoding="async" src="data:image/gif;base64,R0lGODlhAQABAIAAAAAAAP///yH5BAEAAAAALAAAAAABAAEAAAIBRAA7" data-src="https://matthewd210.sg-host.com/wp-content/uploads/2023/05/image-1.png" alt="" class="wp-image-1217 lazyload"/><noscript><img decoding="async" width="777" height="337" src="https://matthewd210.sg-host.com/wp-content/uploads/2023/05/image-1.png" alt="" class="wp-image-1217 lazyload" srcset="https://matthewd210.sg-host.com/wp-content/uploads/2023/05/image-1.png 777w, https://matthewd210.sg-host.com/wp-content/uploads/2023/05/image-1-300x130.png 300w, https://matthewd210.sg-host.com/wp-content/uploads/2023/05/image-1-768x333.png 768w" sizes="(max-width: 777px) 100vw, 777px" /></noscript></figure></div>


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<h2 class="wp-block-heading">Rebalance summary</h2>



<p>The above index weightfactors and weights were calculated using prices and circulating supplies of all 11 tokens as of April 27, 2023.</p>



<p>At the April 2023 index rebalance, <strong>one token was removed from </strong>and <strong>two new tokens were added to</strong> the DeFi Pulse Index, resulting in now 10 index constituents.<br>SUSHI was removed due to the project’s <strong>decreased usage</strong>: Both from a total value locked (TVL) and trading volume perspective it has been trailing other decentralized exchanges (DEXes). DEXes are a segment that continues to be represented in the DeFi Pulse Index by Uniswap and Balancer. At the same time SUSHI was also the smallest constituent of the index by market cap weight.</p>



<h3 class="wp-block-heading"><strong>A new segment</strong></h3>



<p>The two largest weight changes in the index were the <strong>additions of <a href="https://lido.fi/" target="_blank" rel="noreferrer noopener">Lido</a> (LDO) and <a href="https://rocketpool.net/">Rocket Pool</a> (RPL)</strong>. Both projects offer <strong>liquid staking solutions</strong> that allow users to benefit from the rewards of participating in the proof-of-stake consensus mechanism of the Ethereum blockchain (i.e. Ethereum&#8217;s staking yield) while at the same time remaining liquid by issuing tradable receipts. In mid-April the <a href="https://blog.ethereum.org/2023/03/28/shapella-mainnet-announcement">Shapella upgrade</a> finally enabled stakers to redeem their staked ETH. </p>



<p>Lido and Rocket Pool are the two largest liquid staking protocols with currently $12 billion and $1.5 billion staked respectively. LDO is the <strong>governance token</strong> of the Lido DAO that gives holders the right to vote in governance decisions. RPL is the governance token of the Rocket Pool protocol and can also be used as an <strong>insurance</strong> deposit in the protocol.</p>



<p>In order to reduce the market impact of the index change, both additions are <strong>phased-in</strong>. Therefore, at this rebalance both tokens are only weighted using one third of their market capitalization. As a result of the addition all other constituent weights decrease (except for UNI due to its continued 25% capping). The total one-way turnover of the rebalancing is 15.1%</p>



<h3 class="wp-block-heading"><strong>Diversification</strong></h3>



<p>The DeFi Pulse Index covers several distinct segments of the DeFi ecosystem.</p>



<p>// Learn more: <a href="https://www.scalara.xyz/blog/from-tradfi-to-defi" target="_blank" rel="noreferrer noopener">From TradFi to DeFi</a></p>



<p>With the addition of Lido and Rocket Pool a <strong>third significant segment</strong> is added to the index in addition to exchanging and lending assets. </p>



<ul>
<li>Decentralized Exchanges: 36.4%</li>



<li>Lending &amp; Borrowing: 31.5%</li>



<li>Liquid Staking: 15.0%</li>



<li>Derivatives: 12.6%</li>



<li>Asset Management: 4.5%</li>
</ul>



<p>Furthermore, liquid staking is a financial service that does not have an immediate analogue in the traditional financial world. In the decentralized world, though, <strong>validating transactions is the basis of all network activity</strong>.</p>



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<p><em>Scalara is dedicated to creating and maintaining indices for a decentralized world.</em></p>


April 2023 Rebalance DeFi Pulse Index


<p><strong>Scalara</strong> announces the results of the <strong>January 2023 rebalance</strong> of the DeFi Pulse Index.</p>



<p>The <strong>DeFi Pulse Index</strong> is a digital asset index designed to track the performance of some of the largest protocols in the Decentralized Finance (DeFi) space. Over the last three months, since the last rebalancing, the DeFi Pulse Index returned <strong>92%</strong>.</p>


<div class="wp-block-image">
<figure class="aligncenter size-full"><img decoding="async" src="data:image/gif;base64,R0lGODlhAQABAIAAAAAAAP///yH5BAEAAAAALAAAAAABAAEAAAIBRAA7" data-src="https://matthewd210.sg-host.com/wp-content/uploads/2023/02/image.png" alt="" class="wp-image-1207 lazyload"/><noscript><img decoding="async" width="521" height="579" src="https://matthewd210.sg-host.com/wp-content/uploads/2023/02/image.png" alt="" class="wp-image-1207 lazyload" srcset="https://matthewd210.sg-host.com/wp-content/uploads/2023/02/image.png 521w, https://matthewd210.sg-host.com/wp-content/uploads/2023/02/image-270x300.png 270w" sizes="(max-width: 521px) 100vw, 521px" /></noscript><figcaption class="wp-element-caption">Data from Coingecko. January 31, 2023.</figcaption></figure></div>


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<p>In <strong>2023</strong> alone, the DeFi Pulse Index returned +50% led by Synthetix (+94%), Loopring (+93%) and Compound (+68%).</p>



<p class="has-text-align-center"><img decoding="async" class="lazyload" src="data:image/gif;base64,R0lGODlhAQABAIAAAAAAAP///yH5BAEAAAAALAAAAAABAAEAAAIBRAA7" data-src="https://lh5.googleusercontent.com/Kr723xKKM1OiIqUuF_-PygG6f51dcqEPVhpKO20Rxl7fw9EAclPi0t6kwxKKk5uhe6krD5t9_KyrZv4j-H1uT8B2kfUi4iRgUTBI8yviHDAgpg9uIQXTCceXVTW9AJgWV2yprOQ26uSaBoTjyOSjrDE" width="624" height="371"><noscript><img decoding="async" class="lazyload" src="https://lh5.googleusercontent.com/Kr723xKKM1OiIqUuF_-PygG6f51dcqEPVhpKO20Rxl7fw9EAclPi0t6kwxKKk5uhe6krD5t9_KyrZv4j-H1uT8B2kfUi4iRgUTBI8yviHDAgpg9uIQXTCceXVTW9AJgWV2yprOQ26uSaBoTjyOSjrDE" width="624" height="371"></noscript></p>



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<h2 class="wp-block-heading">DeFi Pulse Index rebalance weights</h2>



<p class="has-text-align-center"><img decoding="async" class="lazyload" width="624" height="256" src="data:image/gif;base64,R0lGODlhAQABAIAAAAAAAP///yH5BAEAAAAALAAAAAABAAEAAAIBRAA7" data-src="https://lh4.googleusercontent.com/baOtZ_uphllF3-BHfK1vncU2wMY0oC3RCRrd29iuLKg0oFYtpNr5AjGENZW_OpGDXx40DT7fh15Ttgd2AakWH6E-2htkestaASvC-d-r5lNTXIbuSLpoALdsTZceKME_RE2hFuGMsiGP2b4LkLDbwaQ"><noscript><img decoding="async" class="lazyload" width="624" height="256" src="https://lh4.googleusercontent.com/baOtZ_uphllF3-BHfK1vncU2wMY0oC3RCRrd29iuLKg0oFYtpNr5AjGENZW_OpGDXx40DT7fh15Ttgd2AakWH6E-2htkestaASvC-d-r5lNTXIbuSLpoALdsTZceKME_RE2hFuGMsiGP2b4LkLDbwaQ"></noscript></p>



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<h2 class="wp-block-heading">Rebalance summary</h2>



<p>The above index weightfactors and weights were calculated using prices and circulating supplies of all constituents as of January 26, 2023.</p>



<p>At the January 2023 index rebalance, <strong>one token was removed</strong> from the DeFi Pulse Index, resulting in 9 index constituents. REN was removed due to the projects’ continued <strong>decreased usage</strong>. At 1.55% as of determination time, REN was also the smallest token by weight in the index.</p>



<p>The two largest weight changes in the index were the capping of UNI and the weight increase of SNX. UNI’s 55% allocation under market cap weighting once again would have breached the allocation limit of 25% for any single constituent. The <a href="https://www.scalara.xyz/blog/methodology-change-defi-pulse-index-introduction-of-flexible-capping">Flexible Capping</a> rule moved its weight half the way from the current index weight to the 25% target to reduce turnover. The added weight in SNX was due to its increased circulating supply.<br>The total one-way turnover of the rebalancing is 3.7%.</p>



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<p><em>Scalara is dedicated to creating and maintaining indices for a decentralized world.</em></p>


January 2023 Rebalance DeFi Pulse Index


<p>Finding anything positive in last year&#8217;s performance is a challenging task. We still give it a try.</p>



<p>2022 was a bad year for <s>DeFi</s> <s>digital assets</s> <s>risk assets</s> almost all asset classes. Record high <strong>inflation</strong> added further headwind to real returns. The <strong>DeFi Pulse Index</strong>, <a href="https://www.scalara.xyz/"><strong>Scalara&#8217;s</strong></a> benchmark for the DeFi sector was no exception. The index fell 80% in dollar terms, compared to a 68% drop in the price of ETH.</p>



<p>The index ended the year with 10 constituents. It started the year with 17 index components but over the course of the year tokens <a href="https://www.scalara.xyz/blog/methodology-change-defi-pulse-index-introduction-of-minimum-weight-requirement"><strong>with a negligible weight were removed</strong></a> or <a href="https://www.scalara.xyz/blog/defi-pulse-index-update-rgt-tribe-merger"><strong>merged</strong></a> or were <a href="https://www.scalara.xyz/blog/defi-pulse-index-update-extraordinary-removal-of-tribe"><strong>delisted</strong></a>.</p>



<p>The best and worst performers of 2022 based on the current constituents are show in the table below. To paint a slightly more rosy picture, returns are based on asset prices denominated in ETH:</p>


<div class="wp-block-image">
<figure class="aligncenter size-full"><img decoding="async" src="data:image/gif;base64,R0lGODlhAQABAIAAAAAAAP///yH5BAEAAAAALAAAAAABAAEAAAIBRAA7" data-src="https://matthewd210.sg-host.com/wp-content/uploads/2023/01/image.png" alt="" class="wp-image-1196 lazyload"/><noscript><img decoding="async" width="494" height="434" src="https://matthewd210.sg-host.com/wp-content/uploads/2023/01/image.png" alt="" class="wp-image-1196 lazyload" srcset="https://matthewd210.sg-host.com/wp-content/uploads/2023/01/image.png 494w, https://matthewd210.sg-host.com/wp-content/uploads/2023/01/image-300x264.png 300w" sizes="(max-width: 494px) 100vw, 494px" /></noscript><figcaption class="wp-element-caption">Returns in ETH. Data source: Coingecko.</figcaption></figure></div>


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<p>The overall annual return does not look good. But how did the index perform <strong>throughout the year</strong>?<br>Surprisingly, within 2022 there were several longer periods of strong positive performance, both in USD and ETH terms. From mid-June to mid-August the DeFi Pulse Index <strong>rallied 107%</strong> slightly outperforming ETH. These gains were lost by end of the year though.</p>


<div class="wp-block-image">
<figure class="aligncenter size-full"><img decoding="async" src="data:image/gif;base64,R0lGODlhAQABAIAAAAAAAP///yH5BAEAAAAALAAAAAABAAEAAAIBRAA7" data-src="https://matthewd210.sg-host.com/wp-content/uploads/2023/01/image002.png" alt="" class="wp-image-1198 lazyload"/><noscript><img decoding="async" width="481" height="285" src="https://matthewd210.sg-host.com/wp-content/uploads/2023/01/image002.png" alt="" class="wp-image-1198 lazyload" srcset="https://matthewd210.sg-host.com/wp-content/uploads/2023/01/image002.png 481w, https://matthewd210.sg-host.com/wp-content/uploads/2023/01/image002-300x178.png 300w" sizes="(max-width: 481px) 100vw, 481px" /></noscript><figcaption class="wp-element-caption">DeFi Pulse Index in USD. 2022. Data source: Coingecko.</figcaption></figure></div>


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<p>When <strong>measuring the DeFi Pulse Index in ETH</strong> there have been times of positive absolute performance as well. From mid-May to mid-July the index <strong>increased by 81% in ETH</strong>.</p>


<div class="wp-block-image">
<figure class="aligncenter size-full"><img decoding="async" src="data:image/gif;base64,R0lGODlhAQABAIAAAAAAAP///yH5BAEAAAAALAAAAAABAAEAAAIBRAA7" data-src="https://matthewd210.sg-host.com/wp-content/uploads/2023/01/image004.png" alt="" class="wp-image-1199 lazyload"/><noscript><img decoding="async" width="481" height="284" src="https://matthewd210.sg-host.com/wp-content/uploads/2023/01/image004.png" alt="" class="wp-image-1199 lazyload" srcset="https://matthewd210.sg-host.com/wp-content/uploads/2023/01/image004.png 481w, https://matthewd210.sg-host.com/wp-content/uploads/2023/01/image004-300x177.png 300w" sizes="(max-width: 481px) 100vw, 481px" /></noscript><figcaption class="wp-element-caption">DeFi Pulse Index in ETH. 2022. Data source: Coingecko.</figcaption></figure></div>


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<p>Lastly, we take a look at correlations as they are the drivers of <a href="https://www.scalara.xyz/blog/why-invest-in-an-index"><strong>diversification</strong></a>. The more uncorrelated two assets are, the greater is the reduction in risk when combining these two assets. The average pairwise correlation based on daily returns in 2022 was 0.67. This is somewhat higher than the average pairwise correlations seen in the S&amp;P 500 that is typically in the order of 0.3 to 0.5.</p>


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<figure class="aligncenter size-full"><img decoding="async" src="data:image/gif;base64,R0lGODlhAQABAIAAAAAAAP///yH5BAEAAAAALAAAAAABAAEAAAIBRAA7" data-src="https://matthewd210.sg-host.com/wp-content/uploads/2023/01/image-1.png" alt="" class="wp-image-1204 lazyload"/><noscript><img decoding="async" width="519" height="296" src="https://matthewd210.sg-host.com/wp-content/uploads/2023/01/image-1.png" alt="" class="wp-image-1204 lazyload" srcset="https://matthewd210.sg-host.com/wp-content/uploads/2023/01/image-1.png 519w, https://matthewd210.sg-host.com/wp-content/uploads/2023/01/image-1-300x171.png 300w" sizes="(max-width: 519px) 100vw, 519px" /></noscript><figcaption class="wp-element-caption">DeFi Pulse Index pairwise correlations. 2022. Data source: Coingecko.</figcaption></figure></div>


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<p>Happy New Year!</p>



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<p><em>Scalara is dedicated to creating and maintaining indices for a decentralized world.</em></p>


DeFi Pulse Index 2022 in Review


<p><strong>Scalara</strong> announces the results of the <strong>October 2022 rebalance</strong> of the DeFi Pulse Index.</p>



<p>The <strong>DeFi Pulse Index</strong> is a digital asset index designed to track the performance of some of the largest protocols in the Decentralized Finance (DeFi) space. Over the last three months the DeFi Pulse Index returned <strong>-20%</strong>.</p>


<div class="wp-block-image">
<figure class="aligncenter size-full"><img decoding="async" src="data:image/gif;base64,R0lGODlhAQABAIAAAAAAAP///yH5BAEAAAAALAAAAAABAAEAAAIBRAA7" data-src="https://matthewd210.sg-host.com/wp-content/uploads/2022/10/image.png" alt="" class="wp-image-1192 lazyload"/><noscript><img decoding="async" width="453" height="503" src="https://matthewd210.sg-host.com/wp-content/uploads/2022/10/image.png" alt="" class="wp-image-1192 lazyload" srcset="https://matthewd210.sg-host.com/wp-content/uploads/2022/10/image.png 453w, https://matthewd210.sg-host.com/wp-content/uploads/2022/10/image-270x300.png 270w" sizes="(max-width: 453px) 100vw, 453px" /></noscript><figcaption>Coingecko data.</figcaption></figure></div>


<p>On a shorter time scale, just in October, the DeFi Pulse Index returned +8% led by Sushi (+53%), Balancer (+26%) and Maker (+23%).</p>



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<h2 class="wp-block-heading">DeFi Pulse Index rebalance weights</h2>



<p class="has-text-align-center"><img decoding="async" class="lazyload" src="data:image/gif;base64,R0lGODlhAQABAIAAAAAAAP///yH5BAEAAAAALAAAAAABAAEAAAIBRAA7" data-src="https://lh6.googleusercontent.com/ZjBOJ4N_wykqoJlowa7KtYJTkVDzE8c7Sb5c6-tDVLxGPiRI0Uve-_8isceyG6FAHFm2970BOfUaiEQUtBYk2H5UmRenpmt7OpB_HzjB24E7S8igu-UE2H4Z_7DfXBKBPacYZzS1UP-BVgAhoClS2mn63TV5QLlAe2freiY0VtqSYcfnBN_J-py2MA" width="624" height="293"><noscript><img decoding="async" class="lazyload" src="https://lh6.googleusercontent.com/ZjBOJ4N_wykqoJlowa7KtYJTkVDzE8c7Sb5c6-tDVLxGPiRI0Uve-_8isceyG6FAHFm2970BOfUaiEQUtBYk2H5UmRenpmt7OpB_HzjB24E7S8igu-UE2H4Z_7DfXBKBPacYZzS1UP-BVgAhoClS2mn63TV5QLlAe2freiY0VtqSYcfnBN_J-py2MA" width="624" height="293"></noscript></p>



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<h2 class="wp-block-heading">Rebalance summary</h2>



<p>The above index weightfactors and weights were calculated using prices and circulating supplies of all 12 assets as of October 25, 2022.</p>



<p>At the October 2022 index rebalance, <strong>two tokens are removed</strong> from the DeFi Pulse Index while no new tokens are added, resulting in 10 index constituents. Both KNC and BADGER are removed due to their respective projects’ continued <strong>decreased usage</strong>. Coincidentally they are also the two smallest tokens by weight in the index (combined approximately 2%).</p>



<p>For <strong>most constituents</strong> of the DeFi Pulse Index, the index <strong>weight increased marginally </strong>this quarter to make up for the two removals and the capping of UNI. UNI’s 53% allocation under market cap weighting once again would have breached the allocation limit of 25% for any single constituent without any capping. The <a href="https://www.scalara.xyz/blog/methodology-change-defi-pulse-index-introduction-of-flexible-capping">Flexible Capping</a> rule moved its weight half the way from the current index weight to the 25% target to reduce turnover.<br>The total one-way turnover of the rebalancing is 4.5%.</p>



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<p><em>Scalara is dedicated to creating and maintaining indices for a decentralized world.</em></p>


October 2022 Rebalance DeFi Pulse Index


<p><strong>Index providers have rules for every possible capital markets event to accurately represent the underlying economic reality. But how would a TradFi basket index handle a fork?</strong></p>



<p>A group of developers and miners plan to fork the Ethereum blockchain after <a href="https://www.defipulse.com/blog/ethereum-merge-supply-dynamics-primer"><strong>the Merge</strong></a>. This new chain would continue to run a <a href="https://en.wikipedia.org/wiki/Proof_of_work"><strong>proof of work</strong></a> (PoW) algorithm as part of its consensus mechanism. Such a fork will create a new chain on which users will have an amount of &#8220;PoW ETH&#8221; matching their balance on the Proof of Stake (PoS) chain.</p>



<p>The distribution of tokens through the fork closely resembles the TradFi corporate action of a <strong>spin-off</strong>.</p>



<p>According to MSCI&#8217;s <strong><a href="https://www.msci.com/index-methodology" target="_blank" rel="noreferrer noopener">Corporate Events Methodology</a></strong>, <em>a spin-off is the free distribution of shares in a wholly-owned company to the parent company’s existing shareholders.</em></p>



<p>What happens next in the index? Usually an index methodology would not allow the holding of the newly added asset and <strong>remove it</strong> as soon as possible. In order to remove an asset from an index a price is required though. Effectively, the index<strong> “sells” the asset and reinvests the proceeds in the remaining assets</strong> proportionally. Therefore, most index providers&#8217; rules would remove the spin-off company immediately if there is a price available on the effective date (“ex date”) of the spin-off. Otherwise, the index will hold the spin-off until the security starts trading.</p>



<h2 class="wp-block-heading">Index adjustments</h2>



<p>Since any index composition change has to be <strong>self-financing</strong> in total return indices, i.e. money is neither generated nor lost across the removal, the <strong>index divisor is adjusted</strong> (lowered) when the asset is removed:</p>


<p>\[Divisor^{post} = {\sum_{i}p_{i} \cdot s_{i} \over \sum_{i}{p_{i} \cdot s_{i}} + \text{spin-off value}} \cdot Divisor^{pre}\]</p>



<p>Divisor adjustments implicitly distribute the proceeds proportionally across the index.</p>



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<p><em>Scalara is dedicated to creating and maintaining indices for a decentralized world.</em></p>


The index provider’s view on forks


<p><strong>Scalara will end maintenance and publication of the Passive Omnichain Net Yield (PONY) Index.</strong></p>



<p>Note: Scalara does not control any token implementations of its indices. The token contract tracking the index and any bridged versions are created in a completely permissionless fashion. If you have any related questions, please <a href="https://share.hsforms.com/1mLThvHcvTLiD6gWhvgWUIwd1av5">reach out</a>.</p>



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<p><a href="https://www.scalara.xyz/"><em>Scalara</em></a><em>, a subsidiary of </em><a href="https://defipulse.com/"><em>DeFi Pulse</em></a><em>, creates and maintains indices for a decentralized world.</em></p>


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January 2024 Rebalance DeFi Pulse

DeFi Pulse Index 2023 Performance Review

October 2023 Rebalance DeFi Pulse Index