GBI Rebalancing Frequency

Hello Earthlings,
I really like what you are doing with SCIFI, SPICE and particularly GBI.
I personally, and a few friends, invested in both the governance and index token (should have done this earlier).

But I also dived into the detailed specs, and generated a strange interest in ETFs.

Looking at GBI the core value of a blue-chip indix a bit like NASDAQ ETFs I would recommend to make this even more efficient (talking about $$$), and propose to change the rebalancing frequency from currently monthly to quarterly.
This would

  • reduce costs
  • increase return
  • provide forward looking planning and forecasting.

Some inputs from EvilCorp on this: Equity index rebalances

Resistance is futile.

We are BORG

5 Likes

Interesting. This would have some effects that need to be considered.

  1. This is crypto currency and not stocks. Crypto is a lot more volatile and a monthly rebalance helps keep gains and protects from up and downs, especially when people make more frequent trades and roll over profits causing a coin that gained over a month to lose all the gains the next month. Maybe we could do this on the larger index like GBI but not for Sci-fi?

  2. A quarterly rebalance would keep Spice from getting rebalanced into and could take away price support that is currently needed. Maybe when it gets stable that could be handled differently.

These are just considerations.

Hey @Aviator102 . Thanks for your thoughts on this.

  1. I absolutely agree, this should only be done on the larger indices like GBI, where the constituents do not change on a monthly basis, and do not need to be changed.
    For SCIFI and other active small cap indices it would not make sense, we would loose the grasp of the market and revenue potential. BUT: On the GBI side we would save costs and likely get a better return, make the product a bit more efficient.
  2. Speaking for GBI only. Currently as I see this, there is a more of a threat of sell-pressure from the rebalancing. But SPICE support has to be build in and maintained.

BEAM ME UP

Hey Borg,
I appreciate the response. I think your idea has a lot of merit. For the GBI we don’t have to rebalance on a monthly basis since it involves moving money around but not adding or subtracting new coins like Sci-fi. I would be interested in seeing how much the fees cost compared to how much money is being rebalanced in a given month and if we just saved the fees for 2 months if that would keep a considerable amount of money in the index. Good thoughts.

2 Likes

Exactly my thoughts…

I can get behind it : D.

Same here, i think it makes total sense. Thanks for the suggestion Borgy :slight_smile:

I think we can push this into the communities and get some more eyeballs on it, then do a DAO vote on it. :rocket:

1 Like

I was thinking, I wonder if we should have a variable rebalancing option. As in, if BTC go back to ATH and then jumps 25% more above its ATH in 1 month, maybe we have the option of rebalancing it based on a DAO vote or based on the teams decision and then a DAO vote. I’m not sure what type of formula there would be but in these large cap coins the bull market isn’t over and the market is cyclical… This would help preserve profit from massive spikes on large cap coins and hopefully bring more stability to the index.