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Methodology

Our full methodology for the CAI index.

Utility, Supply, Liquidity, Security requirements

Token inclusion criteria

Any token included in our index must meet all the criteria below:
  • The project’s token should have been listed on CoinGecko with pricing data at least 6 months prior to the date of inclusion in the index.
  • The token should have a Chainlink price feed.
  • The project should have a token that is native to Avalanche. This excludes wrapped variants, where the underlying tokens are locked on an alt-L1.
  • The project should be a going concern, with a dedicated team actively building, supporting and maintaining the project.
  • No rebasing or deflationary tokens.
  • The project must be widely considered to be building a useful protocol or product. Projects that have ponzi characteristics at the core of their offering will not be considered.
  • Synthetic tokens which derive their value from external price feeds are not permissible.
  • The project’s token must not have the ability to pause token transfers.
  • The project’s protocol or product must have significant usage.

Token supply requirements

  • The project's token must have a circulating supply greater than 30% of the max supply. In cases where a token does not have a max supply, the minting mechanics would need to be assessed.
  • The token must not have locking, minting or other patterns that would significantly disadvantage passive holders.

Liquidity requirements

  • The token must be listed on a supported exchange.
  • The token should have in aggregate at least $2M of on-chain liquidity across Trader Joe and Pangolin.
  • The token must have shown consistent DeFi liquidity on Avalanche.

Security requirements

  • The project must have been audited by smart contract security professionals with the audit report(s) publicly available. Alternatively, the protocol must have been operating long enough to create a consensus about its safety in the decentralised finance community.

Defining asset weights

  • Assets are weighted according to their circulating market capitalisation as calculated on Coingecko.
  • The maximum weight any one token can have is 50%. All excess weight is proportionally redistributed to all uncapped tokens.
  • Any asset with a weight below 0.5% will be removed from the index.

Suitability of yield bearing vaults

Idle assets can be a large opportunity cost. CAI minimises this by depositing a portion of each asset into yield bearing vaults on Yield Yak.
  • Each asset will support exactly one Yield Yak vault, unless one does not exist for that asset.
  • 20% of each asset's reserve will be deposited into its respective Yield Yak vault.
The yield bearing vaults that CAI will utilise must adhere to several key standards:
  • Returns are not impacted by impermanent loss.
  • The underlying protocol through which yield is generated must pass our security assessment. These include security audits, time in the market and significant usage, amongst others.
  • Where leverage is used, it must be deemed low risk through the lending and borrowing of the same asset.
  • Funds held by the vault must always be redeemable without lockups.
  • Not impose any deposit fees.