Zima Red ep 79: Dark Forest

The Future Of Asset Management: Index Co-Op

Primer: Dark Forest Capital is a full-time methodologist for the Metaverse Index over at Index Coop. He shares his humble beginnings as a "guy off the street" to becoming a full-time contributor in the DAO and the plans he has for the future.


  • Read an article about Bitcoin in 2011 but did not take any action

  • Whenever Bitcoin comes out in the news, he will be reminded of that article

  • When 2017 came, he finally entered the crypto market 3 weeks before the top

  • Watched his portfolio bleed out for the next couple of years

  • Was previously a mechanical engineer

  • Looking to become an airline pilot but COVID derailed his plans

  • Left his job and entered crypto. Rode the DeFi Summer wave

  • Joined the Index Coop forum when it launched in October 2020

  • Began contributing. Put up the post for the Metaverse Index. Went from a guy off the street in October to being a full time DAO contributor and their product methodologist

The Article He Read On Bitcoin

  • The article he read was on mining

  • It basically said that people can leave their computer running and earn money

Why Did He Enter In 2017?

  • Entered because of the price action

  • Drafted a spreadsheet to record his exits

Index Coop

  • Index Coop was started by Set Protocol and DeFiPulse

  • They formed a DAO, which is Index Coop, around the idea of growing the DeFiPulse Index

  • DeFiPulse Index: A basket of DeFi-related tokens that are all wrapped up into this one index token

  • Need a group of people to grow the Index, integrate it, maintain it, and improve it. This is where Index Coop comes in

Set Protocol

  • Been around since 2017/2018

  • Started by Felix and Alex. Both are smart contract engineers

  • Underlying thesis is to build contracts to create tokens that are collateralized by a number of tokens, much like an Exchange Traded Fund (ETF)

  • ETFs are passive instruments that are used to participate in the upside of the market without having to pick winners

  • Shortly after launching Index Coop, Set Protocol launched the asset manager suite, a front-end that allows anybody to create and maintain their own index


  • DeFiPulse has been described as the Bloomberg terminal for crypto

  • Has a lot of data around DeFi

A Full-Time DAO Member

  • Being a full-time DAO member is both stressful and exciting

  • Index Coop is very different from other DeFi DAOs. Other DeFi DAOs are more like protocols that have been deployed on Ethereum. For Index Coop, they are more like a business on the blockchain

  • Currently building their own engineering team to reduce the burden on Set Protocol

  • Some examples of day-to-day tasks:

    • How do we decide on the methodologists?

    • What product should we launch next?

  • Not much coding is involved. More focused on growth and products

"It takes like a certain kind of person to become a full-time contributor because I spoke to a lot of people who joined Index Coop. And a common theme is that they will be like I'm not really sure what to do or that you kind of see that they're waiting to be told what needs doing. Whereas this form of organization is more like spotting an opportunity and applying your skills to it, and demonstrating that you've made something better." - Dark Forest Capital

His Role As A Methodologist

  • Methodologist for the Metaverse Index

  • Before that, he was involved in governance discussions and DAO management

  • After the Metaverse Index idea started to gain traction, he moved over to become a full-time methodologist for it

  • Verto and himself are currently looking after the Metaverse Index

Metaverse Index (MVI)

  • Index that gives people financial exposure to the Metaverse trend

  • Will have 17 tokens in it after the rebalance they are doing this month

  • MVI also represents the trend that people are increasingly living their lives online

Decision Making

  • Their competitors do a vote to decide what tokens to include in their indexes

  • For them, they designed their methodology to be as passive as possible

  • Set the criteria for it:

    • Have a certain label on CoinGecko (e.g. NFTs, AR, VR, entertainment, music)

    • Over 30 million market cap

    • + other things that they look at

  • Designed to objectify the filtering process

  • Performed better than their competitors as people feel safer, knowing that they can look into the methodology and the product is credibly neutral

DeFiPulse Index

  • Their flagship product. Was the brainchild of DeFiPulse

  • With the growth of DeFi, it is hard to know which protocols are going to be good

  • It is a market-weighted index that buys the largest market cap DeFi tokens

Bankless Index

  • Bankless DAO approached them a few months back

  • Consists of Bitcoin, Ethereum, and DeFi

  • Adding Ryan and David's names to it gives it credibility

  • A really good beginner product to hold

Weaknesses Of Indexes

  • Indexes are rebalanced through DEX liquidity

  • Had to account for DEX liquidity in their methodology. Had to make sure that they do not overexpose themselves to tokens that they can't actually buy due to a lack of liquidity

  • Verto was the one who came up with this method of weighing towards liquidity

  • Their weakness: Very difficult to scale a product when trying to capture an early market such as theirs

Compensation For Work Done

  • Paid in INDEX tokens for their work

  • Thinks being paid in INDEX is better than USDC because INDEX is like an equity share of a start-up

"One thing I think is really cool is that everyone is, in this like new economy, everyone is kind of getting equity." - Andrew Steinwold


  • A newsletter and podcast created by Verto and himself

  • Wanted people to understand a bit more about MVI as well as to talk about the exciting stuff that's going on in the space

  • Not enough content on the Metaverse and saw the opportunity to help people understand

  • Put out research pieces on the tokens within MVI - value accrual, tokenomics, what they are doing with their treasury, etc.

His Grand Thesis

  • His view is based on Strauss and Howe's Fourth Turning

  • For the past 80 years, there is a certain way of how things are done with regards to money

  • People have been taking money, monetary systems, government, fiscal policies, and central banks for granted

"And that value, that social consensus arising from random groups of people who are forming around these ideas. I think that over the next decade, that's all just gonna totally explode, like people are starting to realize the emperor has no clothes, they're starting to realize that it's up to them to decide what has value." - Dark Forest Capital

  • People start to realize what money is after falling down the rabbit hole of crypto

Government And Crypto

  • Does not think that crypto will be used to overthrow the current system

  • Governments are after their tax money. Crypto actually makes tax collecting easier so the government should stop being afraid

  • Only group that would be threatened by crypto is TradFi since their salaries are dependent on the existing system

Thoughts On Future Of Work

  • Wrote a piece on it because of a discussion he had with Verto

  • Verto initially thought that value arises from social consensus. Small love potions (SLPs) have value because people required them to breed Axies in Axie Infinity

  • Difference between traditional work and this new form of work:

    • Payment does not come from a central authority

    • Shift from hourly remuneration to output-based remuneration

  • DAO contributors are technically paying themselves as they are part of the community

Thoughts On Play-To-Earn

  • Thinks that it is fantastic

  • Axie Infinity is just the canary in the coal mine

  • It will shake up the labour market and governments will start to take notice of it

  • Consequently, important jobs will have to be properly compensated in order to incentivize people to take them up

Sustainability Of Play-To-Earn Games

  • Every game in history will reach a peak in player count at some point and then decline from that point onwards

  • Questions whether are we trying to fight the inevitability of a game eventually dying out

What Sector Is He Most Excited About

  • NFT Gaming sector

  • Very excited about Illuvium. The team has put in a tremendous amount of effort into making a blockbuster, triple-A quality game

  • Hopes to see more top quality games like Illuvium appearing over the next few years

Thoughts On The Metaverse

  • To him, the Metaverse is an overlay of alternative reality on real life

  • We are getting closer to enter a whole, different physical reality

"I think the metaverse is this emergent phenomenon where we'll use technology to basically break down the laws of physics and enter into totally different realities." - Dark Forest Capital

Grand 5-10 Year Vision

  • Want to get into a position where he can give other people the same opportunities he had

  • Would really like to have a massive Axie guild or be a play-to-earn educator helping people understand that they have options and other opportunities in life

Favourite Video Game

  • MX Reflex. Spent more hours playing it than riding his motorbike in real life

  • Favourite mainstream game is Red Dead Redemption 2

Single Favourite NFT

Most Controversial Thought On NFTs

  • Generative art NFTs are getting to be a bit like ICO scams

  • Market is too frothy and people are going to get wrecked

If You Could Improve One Thing In The Space

  • Improving transparency around NFT projects

  • It would really help him as the methodologist of MVI

NFT Ecosystem In 3 Years

  • Crypto is taking off and regulation is starting to use wording that is unfriendly to crypto

  • Time to knuckle down, educate more people, and change the narrative

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