I have been chatting with Max and Ivan (both of Reserve team) as part of the user-feedback, and just finished writing feedback to Ivan and realized I prefer it to be seen on the forum as well.
As a former head of research at a fund myself, one of the main blockers for me personally to move large parts of my wealth into CMC20 or LCAP is the unpredictablability of adding new tokens. The whole point is that an index should include new rising stars, and give investors that last bit of rising exposure (most happened ofc when it went from position #50-100 to #20), you don’t want to also lose out on the #20 to #12 momentum.
The SP500 does not need individual companies or external infra to integrate a new company in their index. That should be the North star of Reserve as well imo.
Taking into account that we are mostly dealing with L1 tokens in the top 20, that is complicated. I suggested to Max that the holy grail of a top 20 index might one day be launched on top of something like ThorChain or Maya Protocol, as they can tap into native liquidity.
In the meantime, an alternative way of making Reserve the main actor here, not relying on 3rd parties and therefore having less delays, is a completely different way of looking at it.
CMC20 is comprised of low liquidity wrapped tokens. You basically own IOUs that are centrally owned by centralized bridges that could censor you bridging if they wanted to. You are not owning the native top 20 assets anyway from an investor’s perspective.
Therefore as an investor that is aiming to have exposure to the crypto market, in a predictable stable manner, an oiled machine, so to say, another way presents itself.
Use synths. Simply track prices of the top 20. Ideally synths created within Reserve, by Reserve. Kicking out all 3rd parties. But could also be done through 1 partner where Reserve could permissionlessly create synths on that platform. No more endless BD and liquidity issues. Simply track the top 20 as per CMC. Could even start to include privacy coins like Monero again probably.
Other ways to make it a more oiled machine could be to partner so deeply with a bridge, that you directly bridge tokens yourself, totally bypassing the token’s Foundation. But as CMC20 usually holds less than 1% of a new token, liquidity to seed would likely be an issue.