SPICE DAO: The Community-Owned Blackrock for Decentralised Finance

SPICE DAO is the decentralised hub for investment funds: Community owned. Relentlessly innovative. Designed to create value. This piece will give you a rundown of why we exist, what we do and why you should care.

Crypto is getting popular. And busy. And noisy.

Crypto is back, booming and here to stay. This calls a plethora of new investors and projects to the table, which brings some challenges:

  1. The cost for transactions in the Ethereum network is huge. Like it or not, it’s still the home of DeFi.
  2. There is a lot of noise, especially for investors that have not ventured down the many rabbit holes the space holds.

Access, Access, Access.

We are believers in the potential of funds to unlock accessibility for the mainstream investor. Looking at the traditional financial markets, one of the central (and few) innovations were ETFs: Funds that are accessible via your mom and pop broker, tradable on secondary markets and with no minimum investment requirement. Over the past decade, ETFs skyrocketed and coupled with the surge of retail gateways like Robinhood, the interest in capital markets among new investors took to new heights.

We believe the same will be true for crypto and see the trend unfolding as we speak. There is more to the story than just easy investment into diversified strategies though. Using blockchain infrastructure opens a host of interesting and valuable opportunities, which we want to dive into.

Why care about investment funds?

  1. Outsource strategy: Piecing together how a project fits into a market segment and identifying its growth potential can be a daunting task. The heavy influx of new projects makes it all the more difficult, even for battle hardened DeFi enthusiasts. Funds are a great way to follow a certain defined strategy or bank on the expertise of others.
  2. Outsource execution: Devising a strategy is one thing. Executing it is another. Depending on the strategy it may require constant monitoring, complex calculations, and knowledge of decentralised secondary markets. An investment fund pools this effort and does this centrally for all its investors.
  3. Reduce transaction fees: While in textbook terms, both of the above may be considered transaction costs, there is the hard cash element of transaction costs. In crypto — and specifically on Ethereum — these can be hefty. By investing into a single asset that represents, say 10 others, we can reduce our transaction costs by a factor of 10.

Investment Funds + Decentralisation = SPICE DAO

The SPICE DAO is an investment fund provider that leverages the benefits of decentralisation to create a community driven hub for on-chain investment funds. This opens a host of new opportunities for interaction and product development.

So how exactly does SPICE DAO leverage decentralisation?

  1. Community ownership: The SPICE DAO issued a governance token called $SPICE. The holders of this token form the SPICE DAO and can govern the project and certain aspects thereof. The DAO may decide to launch a new index token, or change the methodology of an existing one, propose use of marketing budget, or any other topic for that matter.
    Join Discord to take part in the DAO conversation.
    Proposals and voting take place on Snapshot.
  2. Decentralising market making: By enabling interaction with the funds’ smart contracts, anyone can mint new index tokens by locking the underlying assets into the smart contract. Conversely, anyone can redeem the index token for its underlying constituents. This can act as a means to decentralise market making and correct any tracking error between the value of the underlying assets and the index token price.
    Learn how decentralised market making works.
    → Learn how to mint and redeem index tokens (
    $SCIFI | $GBI)
  3. Transparency: It is in the nature of on-chain products, that any and all transactions can be tracked, providing a perfect audit trail both for the $SPICE as well as the index products. This creates alignment of incentives and accountability between the community and the admins and gives full transparency of token movements, rebalancing transactions and more.
    View $SPICE on Etherscan
    View $SCIFI on Etherscan
    View $GBI on Etherscan

The SPICE Tokenomics

Token distribution

A total initial sum of 42M SPICE was minted, of which 8% were offered in the public sale. All 2.3M non-sold tokens were burned immediately after the sale end. The remaining tokens are allocated across different stakeholders, including Mission Control, liquidity providers, index hodlers, marketing budget. The biggest portion of tokens is kept in the project treasury. Proposals on how to leverage the treasury may be submitted and discussed by the DAO.

Token Release Schedule

To create transparency on SPICE’s circulating supply, we publish a release schedule for anyone to track:

Token Utility

Besides enabling DAO governance through the submission and voting on proposals, the SPICE token enables true community ownership. It acts as a substitute for management fees and integrates SPICE index products with the SPICE DAO.

Each physical index contains a fixed allocation of $SPICE, driving value for the DAO as AUM grow

By including SPICE as a constituent in SPICE DAO’s physically-backed funds, with a fixed percentage, investors into the funds benefit from the growth of the fund provider. As the assets under management (AUM) grow, the demand for SPICE by the funds grows too, creating a positive growth loop, instead of raising fees that eat away at investors’ returns of the funds.

‘Don’t pay the fund provider, be the fund provider.’

This short video explains the logic with a simple example:

How demand for $SPICE is built into its funds by design.

SPICE DAO’s first products

SPICE DAO aims to provide a range of products to meet various investment needs for different risk profiles. The initial products co ver two ends of the spectrum: One actively curated, small cap, high growth potential fund and one large cap, blue-chip fund tracking the performance of the biggest projects.

Further index products are already in the making and the DAO will be more and more involved to source and promote the best fund concepts.

$SCIFI

$SCIFI is SPICE DAO’s first index product. $SCIFI is an actively curated, 100% physically backed fund representing small to mid cap tokens with high growth potential. The constituents for SCIFI are weighted according to their market cap and rebalanced on a monthly schedule through a hybrid process involving the team (Mission Control) and the SPICE DAO.

Every month, Mission Control draws on the knowledge and signals in its network to select two tokens that may be removed as well as eight tokens that may be added. This total list of ten tokens is presented to the DAO for voting. The 2 tokens that get the most votes will be added to the basket.

Contract address: 0xfdc4a3fc36df16a78edcaf1b837d3acaaedb2cb4

$GBI

The Galactic Blue Index, or $GBI is SPICE DAO’s second index product. $GBI is a passive strategy index that represents “blue chip” projects from 7 of the cryptosphere’s most relevant verticals. GBI is an equally weighted, market cap driven fund, also rebalanced on a monthly schedule. As the strategy is fixed, there will not be monthly DAO interaction, however, the DAO may propose to change the methodology and include other assets.

The GBI’s constitutes are selected to represent the crypto / DeFi value stack. Each asset represents a different function within the ecosystem, where for instance Wrapped BTC represents Gold (store of value), UNI represents trading (the biggest Dex), $COMP represents Banking (lending) and so on.

Contract address: 0xcb67be5c54eab9462967ee3c03c35bfffeb801cd

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SCIFI Finance

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