Index Coop Integration

Integration with Index Coop

Index Coop is a protocol for decentralized crypto indices: DPI (DeFi Pulse Index), MVI (Metaverse Index), ETH2X-FLI (2x leveraged ETH). Under the hood — Set Protocol V2, managing asset baskets with automatic rebalancing. Integration with Index Coop is needed in two scenarios: use ready-made index tokens as a component of a DeFi product, or create your own index through their infrastructure.

What We Integrate and How

Using Index Tokens as Collateral or LP Asset

DPI and other Index tokens are ERC-20, backed by Set Protocol holding a real basket of assets. DPI price = sum of component prices weighted proportionally. For lending protocol integration this means: need composite oracle calculating DPI price via component prices.

Index Coop provides ISetToken interface for getting current components and positions:

interface ISetToken is IERC20 {
    function getComponents() external view returns (address[] memory);
    function getDefaultPositionRealUnit(address component) external view returns (int256);
}

Set Token price = Σ(component_price * position_real_unit). Must calculate on-chain for use in lending or derivatives. Chainlink has no direct DPI feeds — need custom oracle adapter implementation.

Mint and Redemption via Set Protocol

Direct DPI minting happens via BasicIssuanceModule:

IBasicIssuanceModule(issuanceModule).issue(
    ISetToken(DPI_ADDRESS),
    quantity,         // number of DPI tokens
    to               // recipient
);

Before calling, approve all basket components on issuanceModule. Get exact component amounts for N tokens:

(address[] memory components, uint256[] memory amounts) = 
    IBasicIssuanceModule(issuanceModule).getRequiredComponentUnitsForIssue(
        ISetToken(DPI_ADDRESS), 
        quantity
    );

Redemption — reverse operation via redeem(). User burns DPI, receives all components proportionally.

ExchangeIssuance for Single-Token Entry

Most users find it inconvenient to collect all basket components before minting. ExchangeIssuance allows entry via single token (ETH, USDC):

IExchangeIssuanceV2(exchangeIssuance).issueExactSetFromToken(
    ISetToken(DPI_ADDRESS),
    IERC20(USDC),
    setAmount,
    maxInputAmount,
    componentSwapData  // swap routes for each component
);

Under the hood, the contract swaps via DEX aggregator (1inch or Uniswap) for each component. componentSwapData is encoded calldata for each swap. Generated via Index Coop API or custom routing engine.

Integration Architecture

Typical integration for a DeFi product:

YourProtocol.sol
├── IndexCoopAdapter.sol    — wrapper over Set Protocol interfaces
├── IndexPriceOracle.sol    — composite oracle for SetToken price
└── RebalanceObserver.sol   — monitoring rebalances

RebalanceObserver is needed if your protocol holds positions in Index tokens — basket composition changes on rebalance (quarterly for DPI). After rebalance, weights and components change, composite oracle needs recalibration.

Typical Integration Issues

Slippage on mass redemption: if many users exit your product simultaneously via DPI redemption, it creates selling pressure on all components. When integrating in lending, account for component liquidity when calculating LTV.

Rebalances as flash point: on rebalance day, DPI trading volume rises, price may temporarily deviate. If your oracle uses spot price — it's a risk. Better to use 30-60 minute TWAP for IndexPriceOracle.

Stack and Tools

Set Protocol interfaces from @setprotocol/set-protocol-v2 npm package. Tests — Foundry fork on Ethereum mainnet. The Graph subgraph Index Coop for historical rebalance data.

Frontend: wagmi hooks for ERC-20 approve flow (components before issue), Index Coop API integration for current componentSwapData.

Timeline Estimates

Integration of ready-made Index tokens into existing protocol (oracle + collateral support) — 2-3 days. Developing new index via Set Protocol with custom rebalance module — 1-2 weeks.