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DeFi: Will the next rally see the rise of this DeFi-ETP?

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The explosive growth of DeFi assets was for all to witness back in Summer 2020, and the narrative is picking traction yet again. Back in 2020, Yearn Finance or YFI was leading the rally but now other assets are picking up popularity points as well.

However, the trend might be shifting towards a collective exposure to DeFi rather than hodling one asset, as displayed by the surging growth of DPI.

What is DPI and What does it matter?

DeFi Pulse Index or DPI is the flagship product of the Index Coop protocol. The objective of DPI was to emulate the functionality of Exchange Traded Products of ETPs, as it is a market cap-weight index holding popular DeFi tokens under its belt.

On some structural level, DPI mirrors what S&P 500 and Dow Jones are; as they too have incorporated exposure to popular stocks under one index.

In terms of traction, DeFi Pulse Index isn’t looking out of place either.


Source: Our Network

According to Our Network report, the market cap of DPI has continued to rise as its market cap was recorded to be at over $115 million towards the start of February 2021. While it is isn’t a huge number, the growth percentage is massive, considering the market cap was only $31 million in December 2020.

Additionally, the general retention of DPI has relatively improved since last year, which means that DPI holders are now buying with the intent to gain all-around exposure to DPI, rather than yield farming on a particular DeFi token.

The report added,

“Liquidity remains a strength of DPI. DPI-ETH liquidity on Uniswap is at an all-time high, and 24-hour trade volume now routinely surpasses $6MM.”

Does DeFi Pulse Index carry long-term credentials?

In an ever-changing DeFi landscape, it is difficult to predict the long-term future of any DeFi-index but there are a couple of things that need to be considered.

The current holdings under DPI include:

  • Uniswap
  • AAVE
  • Yearn Finance
  • Synthetix Network Token
  • Maker
  • Compound
  • REN
  • Loopring
  • Kyber Network
  • Balancer
  • Augur

The inclusion of these DeFi tokens indicates that the objective is more about creating an ETP-like financial product that will allow constructive exposure to DeFi on a less-volatile scale.

The concept of Yield Farming worked when it had to but the larger space might be moving in a different direction at the moment. Hence, DPI is currently placing itself under the realm of ‘high potential’ but nothing is entirely certain until it survives long-term difficulties.


Biraajmaan covers market trends of major cryptocurrencies. As a graduate in engineering, his interests lie in Blockchain technology. With over a year as a journalist, his articles focus on US and UK markets.
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