Learn how to create and manage Sets via TokenSets.com
Step into on-chain asset management
One of the beautiful features of TokenSets is the ability to become an on-chain asset manager via a short 5 step creation wizard and two transactions. This frictionless design is what opens the protocol to all participants that want to manage money, whether you are an institution wanting to offer high AUM prospect structured projects to customers, a project treasury wanting to ensure longevity and risk management in a transparent way or even a small group of friends that want to pool their capital and trade together in a completely trustless manner.
Visual learner? Here is a community guide that goes through the various ways to buy and sell Sets on TokenSets.com. Some of the flows mentioned in this video may be out of date, so please make sure to confirm with the documentation presented here.
Crypto Kai Community Guide
There are five steps associated with creating a Set: token selection, Set metadata, permissioning, publishing, and connecting seen below. In this guide, we will go through each step in detail.
Set Creation Wizard Overview
The first step in the process is selecting your starting assets for your Set and their respective allocation. So what assets can you include in your Set? Well here are a few rules to ascertain whether a token is eligible or not, please follow these guidelines:
- ERC-20 Token.
- Not a token that enforces a transfer fee. This is whereupon transaction, a portion of the sent amount of tokens is redirected to another wallet.
- Must have liquidity against WETH on a DEX such as Uniswap or Sushi.
It's worth noting that the vast majority of tokens are eligible to be included within a Set, however, If you are ever unsure about a particular token, please get in touch with the team on Discord and we will be happy to confirm eligibility.
You can search assets you would like to include using the provided search box. In the example below, we have included WBTC (Wrapped Bitcoin), WETH (Wrapped ETH) & DPI (DeFi Pulse Index). Once you have the assets you want to include you can then configure the starting allocation of each token using the UI sliders, utilising the lock icons to fix an allocation in place whilst altering others. The max amount of tokens you can include within the starting allocation is 20, though once a Set is deployed you are free to trade the capital freely via the Set contract as if you were trading your personal wallet.
Step 1. Token Selection
The next step on your journey will be personalizing your Set with the following information:
The Set name should be a memorable way for traders to identify and relate to your product. One strong example of Set naming can be found by looking at the DeFi Pulse Index (DPI). The name gives the Investor information on who the creator of the index is (DeFi Pulse), the ecosystem that the index covers (DeFi), and finally, what type of product DPI is (an Index). Try thinking about the message you convey with your Set name as it will be at the forefront of Investors' eyes.
The Set symbol is a very important aspect of Set creation, this is the ticker that will follow your Set across the ecosystem, whether it be trading on a DEX or looking at your portfolio on Zerion - the Set symbol is how Investors can identify your product from the rest, just like you would with other ERC-20 tokens.
The starting price of your Set is an arbitrary number denominated in USD that your Set will start at. The Performance of your Set will then be measured in comparison to this baseline figure. For example, if your Set starts at $100 and the assets within your Set (WBTC, WETH & DPI in this case) grow in USD value by 20%, your Set will be valued at $120. Inversely, if your underlying assets lose 20% in USD value, then your Set will be valued at $80.
A common question asked is, does the starting price matter? Not really. The starting price dictates the quantity of each underlying collateral asset required to issue 1 of your Set token, but it does not impact how investors interact with your Set.
Here are some written examples of how this looks in practice.
Step 2. Set Metadata
Instead of a singular address, our Sets are managed by smart contracts called Manager Contracts. This enables our Sets to have a wider degree of customizability when it comes to managing the Set. Some of these benefits include:
- 1.The Set to be controlled by a multisig.
- 2.Splitting where fees go among multiple addresses.
- 3.A whitelist of tradable assets.
- 4.Configuring a Methodologist role.
- 5.Configuring an Operator role.
Many of the larger on-chain asset managers we have on our protocol today choose to split up roles in regard to the management of the Set. The two of note here are the Methodologist and the Operations Analyst.
Typically, the Methodologist is a data provider that the on-chain asset manager [AM] uses to create the target allocation for their Set. For example, in the case of DPI, the Methodologist is Scalara and the AM is Index Coop. Scalara defines a methodology for the management of the Set, aggregates the data for the methodology, and presents the target weights for the index to Index Coop. Index Coop then takes those weights as an input and rebalances the Set to track the methodology. For this service, Scalara gets a portion of the fees generated by DPI. The fee split and the address that Scalara's portion of the fees gets sent to are all configurable through the Manager Contract.
Sometimes AMs will have specific people on their team that are in charge of the operations of a Set. We call those people Operators. Operators have the ability to:
- 1.Trade the assets within the Set.
- 2.Deposit the assets into other protocols like Compound or Yearn.
- 3.Claim any token rewards for their Set.
In order to provide guard rails on the ability to trade assets within the Set, AMs may elect to create a whitelist of assets the operator can trade in and out of.
AMs have the option to set up Operators, along with the asset whitelist, during the Set creation flow, but this can always be added or changed later.
We're almost done! The next step associated with creating your own Set is publishing. Here you can confirm the details such as the Set name, symbol, allocations, fees, permissions, and start price.
After agreeing on the Terms of Service, click the Publish button to preview and confirm the Ethereum transaction on your wallet of choice (e.g. MetaMask). The operation to deploy a Set is gas-intensive and may take a few minutes, though you can monitor and verify the progress of your transaction on Etherscan for peace of mind.
For the final step, you need to connect the Set we deployed with the protocol. To do this, select the button "Connect to Set Protocol" and approve the transaction in your wallet.
Congratulations if you have made it this far, once deployed and connected, your Set is on-chain and you are ready to start your asset management journey in the DeFi landscape. We will cover these specifics of Manager operations on Sets in the next guide, Set Management.