Polylastic Index Methodology
The Polylastic Index protocol is designed to measure the performance of the largest cryptocurrencies in relation to their predetermined categories.
The Polylastic Index is operated and administered by the Polylastic team. In addition to the admin-operated Polylastic Index, a Polylastic Community Index, governed and decided by a DAO, is also available POLX holders. The Indexes can be accessed on the Polylastic portal.
Our principles include:
- Liquidity — Constituents of the index are chosen for liquidity and data reliability. Cryptocurrencies must have volume thresholds of a predetermined daily value volume.
- Diversification — Every constituent of the index must not exceed 20% or fall below 1% of the market capitalization of the Index.
SELECTION OF CONSTITUENTS
The Polylastic Index systematically determines a cryptocurrency’s eligibility in the index based on the following:
- Trades in MATIC.
- Cryptocurrency must meet the above principles for quarterly rebalances.
- Index is limited to at least ten of the largest eligible cryptocurrencies by market capitalization.
The top ten cryptocurrencies that are selected are measured based on their market capitalization. The application of this logic is required for the selection of the constituents of the index.
All constituents are weighted by their free-float market capitalization based on the circulating supply. Subsequently, weight caps are applied to the constituents to promote diversification.
The maximum weight for any constituent is 20% (cap) of the index’s float-adjusted market capitalization. 1% is the minimum floor of any constituent of the index. If a constituent exceeds the cap, the weight will be reduced to the cap and the excess weight shall be redistributed across all other constituents in proportion to their weight. This process is repeated until none of the constituents have weights exceeding the cap or fall short of the floor.
RECONSTITUTION AND REBALANCE LOGIC
The Polylastic Index is reconstituted and weights rebalanced quarterly. Index weights and constituents are calculated and announced a week prior to the end of, and implemented on, the first index business day of the next quarter. The number of constituents in the index cannot exceed X. New constituents will not be permitted to be added and or existing constituents removed from the index intra-quarter.