# DFract whitepaper overview

{% hint style="warning" %}
**Update, Nov 2nd 2023 : DFract Beta Version is being discontinued.** \
No new deposits are accepted. \
Withdrawals of $USDC.axl will be available by the end of November 2023.\
\
Read all the details: <https://medium.com/lum-network/sunsetting-the-dfract-protocol-beta-version-a2277bce07fb>
{% endhint %}

**DFract is the first** [**Interchain**](https://cosmos.network/) **yield earning index.**\
The Interchain is the Internet of Blockchains. \
It's the set of all the IBC-connected blockchains.

This whitepaper covers the concepts and inner workings of the DFract Protocol. It is divided in seven sections:

* Welcome
* The fundamentals
* DFract tokenomics     <mark style="background-color:purple;">**coming soon**</mark>&#x20;
* The web app
* The roadmap      <mark style="background-color:purple;">**coming soon**</mark>&#x20;
* Extra content
* Get involved

**Note: DFract is currently under public Beta version, so the contents in the whitepaper could be changed in the future.**

{% hint style="info" %}
This **whitepaper describes the V1 version the DFract Protocol**, the full version that is envisioned down the road.\
\
**For now, DFract is in a Beta version** and will go through many steps before reaching its ultimate version.

In this Beta version, the DFract Protocol will **not implement any mechanism to swap back** $DFR against any other token. Hence $DFR holders won’t be able to claim back the assets they have provided originally on the application. Moreover, DFract users will only be able to buy $DFR with $USDC directly on the Protocol built on top of the Lum Network.\
\
To read more about **the current version, you can head to the&#x20;*****Roadmap*** section.
{% endhint %}


# A project by Lum Network

Lum Network’s vision is to foster the adoption of blockchain by converting existing organizations and users worldwide. The first use case on-chain is rewarding reviews, which is precisely an area that matters for existing businesses and their consumers, where blockchain solutions are better than traditional centralized options. In this endeavor, a special attention was put on the user experience and an easy integration of the Lum Network decentralized technology.

As DFract aims to make crypto investment as accessible and simple as possible, there is a strong alignment with Lum Network’s vision. It is also a way to create a DeFi product that benefits the great Cosmos community that helped the Lum Network team over the last years. Even though further synergies can be explored in the future, the focus for the time being is on the rollout of the features described in this whitepaper. The community’s interests are at the center of this initiative.\
\
Lum means light. Using decentralized technologies to shed light on the value created by mainstream users is at the heart of Lum Network’s vision. The name DFract comes from the diffraction of light, which is a physical phenomenon that splits a single beam of light into many color components. In the same spirit, DFract is composed of many tokens that are encapsulated into a single token.

<figure><img src="https://1911163099-files.gitbook.io/~/files/v0/b/gitbook-x-prod.appspot.com/o/spaces%2FqioArMhtLrEN9utt2wBT%2Fuploads%2F99vIOhNWtHEXYnySP4Pc%2FFrame%2040%20(1).png?alt=media&amp;token=a03a92ff-11c3-4303-83a1-9a01bf356b6b" alt=""><figcaption></figcaption></figure>


# Disclaimers

{% hint style="warning" %}
**Update, Nov 2nd 2023 : DFract Beta Version is being discontinued.** \
No new deposits are accepted. \
Withdrawals of $USDC.axl will be available by the end of November 2023.\
\
Read all the details: <https://medium.com/lum-network/sunsetting-the-dfract-protocol-beta-version-a2277bce07fb>
{% endhint %}

## 🚧 DFract Beta version 🚧

[**❗**](https://apps.timwhitlock.info/emoji/tables/unicode#emoji-modal)**This whitepaper describes the V1 version the DFract Protocol**, the full version that is envisioned down the road.

**For now, DFract is in a Beta version**, and will go through many steps before reaching its ultimate version.

In this Beta version, the DFract Protocol will **not implement any mechanism to swap back** $DFR against any other token. Hence $DFR holders won’t be able to claim back the assets they have provided originally on the application. Moreover, DFract users will only be able to buy $DFR with $USDC directly on the Protocol built on top of the Lum Network.

If you want to read more about the **current version, you can head to the&#x20;*****Roadmap*****&#x20;section.**

## **Services**

The website lum.network, including all of its subdomains, is provided as an informational resource. Lum.network provides resources about the fundamentals of the Lum Network, which is a fully decentralized, community governed blockchain protocol, and provides information about the wider Lum Network ecosystem, governance, community, and various interfaces and integrations to the Lum Network. This includes other protocols such as DFract. All information provided in connection with your access and use of the Site and the Services is for informational purposes only. You should not take, or refrain from taking, any action based on any information contained on the Site or any other information that is made available at any time, including blog posts, data, articles, links to third-party content, discord content, news feeds, tutorials, tweets, and videos. The Services provide, or third parties may provide, links to other sites, applications, or resources. You acknowledge and agree that lum.network is not responsible for the availability of such external sites, applications or resources, and do not endorse and are not responsible or liable for any content, advertising, products, or other materials on or available from such sites or resources. You further acknowledge and agree that we will not be responsible or liable, directly or indirectly, for any damage or loss caused or alleged to be caused by or in connection with use of or reliance on any such content, goods, or services available on or through any such site or resource. Because the Site provides information about the Lum Network Protocol, these terms also provide some information about the use of the Protocol. This information is not intended to be comprehensive or address all aspects of the Protocol. There is additional documentation on the Site about the functioning of the Protocol or its ecosystem or community.

## No Financial Advice

Lum Network is not your broker, intermediary, agent, or advisor and has no fiduciary relationship or obligation to you in connection with any decisions or activities affected by you using Lum Network Services. No communication or information provided to you by Lum Network is intended as, or shall be considered or construed as, investment advice, financial advice, trading advice, or any other sort of advice. Unless otherwise specified, protocol actions are executed automatically, based on the parameters of the order instructions and in accordance with operational execution procedures, and you are solely responsible for determining whether any investment, investment strategy or related transaction is appropriate for you according to your personal investment objectives, financial circumstances and risk tolerance, and you shall be solely responsible for any loss or liability therefrom. You should consult legal or tax professionals regarding your specific situation. Lum Network does not recommend that any digital asset should be bought, earned, sold, or held by you. Before making the decision to buy, sell or hold any digital asset, you should conduct your own due diligence and consult your financial advisors prior to making any investment decision. Lum Network will not be held responsible for the decisions you make to buy, sell, or hold digital assets based on the information provided by Lum Network.


# What is DFract?

## DFract Protocol

**The DFract Protocol is a yield earning index** for the Interchain - a collection of sovereign blockchain networks communicating through the Inter-Blockchain Communication (IBC) protocol. It is built as a native part of Lum Network, a layer-1 blockchain protocol based on the Cosmos SDK.

From a more technical perspective, DFract is a **Protocol Owned Liquidity** (POL). It means that all the assets provided by the users belong to the Protocol and the holders of the Protocol’s $DFR tokens. This is very different from many experiments in DeFi that were ultimately doomed by the debt they created. Moreover, decentralized governance enables fair participation for every stakeholder.

{% hint style="info" %}
**DFract is a community governed, debtless Protocol.**
{% endhint %}

In traditional finance (TradFi), indexes are used extensively to simplify the exposure to multiple assets. In a similar way, DFract encompasses the value of multiple assets, but more importantly, also generates staking rewards. Providing a DeFi solution that is comparable to a traditional index is important to make crypto more accessible to the next billion users.

## $DFR token

$DFR is the Protocol’s native crypto-asset. Under the hood, the index is a weighted basket of assets such as [$ATOM](https://cosmos.network/learn/faq/what-is-the-atom), [$OSMO](https://osmosis.zone/), [$JUNO](https://www.junonetwork.io/) etc… from the Interchain.

The DFract Protocol aims to turn the $DFR token into a unit of value for Cosmos projects. This token is a convenient way, with a low entry barrier, for its users to gain broader exposure to the appchains built with the Interchain StackCosmos. On top of the broad exposure, staking $DFR also gives users access to the rewards generated by the Protocol.

What users get:&#x20;

* A simple experience&#x20;
* The knowledge of a community for an optimized return&#x20;
* A large amount of time saved on research, delegations and transaction processing&#x20;
* A token that yields a return in a passive way&#x20;
* A token that remains liquid on the secondary market with a value [backed by its underlying assets](/the-fundamentals/how-dfract-works#backing-price)

## The DeFi Cosmos index in a multichain world

The multichain paradigm provides many benefits in terms of scale and sovereignty at the expense of simplicity and composability. The growing complexity is a hurdle to crypto mass adoption that DFract wants to solve within the Interchain.

The thesis for building this product is three-fold:&#x20;

* Tremendous **value** can be captured on the Cosmos-SDK based network of appchains over the next decade
* Elegant and simple **user experience** for any kind of user is a key success factor for crypto adoption
* **Community-centric** projects will be more successful in the long run

By connecting the dots, DFract was born to solve the current pain point experienced by a non-crypto user, or by a sophisticated crypto user looking for simplicity, that would like to be exposed to -- and support -- the Interchain growth while being rewarded for it.\
At the same time, the Protocol aims to have a positive impact for the community (the builders, the investors, the media professionals) that has been pushing the ecosystem so far.

<figure><img src="https://1911163099-files.gitbook.io/~/files/v0/b/gitbook-x-prod.appspot.com/o/spaces%2FqioArMhtLrEN9utt2wBT%2Fuploads%2FtJCE8yCioKK6kcbxBTZU%2Fthepointofentryinthe%20Interchain.gif?alt=media&amp;token=93fc6ae6-7dd0-47e5-a570-4acb4f7be9dd" alt=""><figcaption></figcaption></figure>


# How DFract works

## Lexicon

* **Treasury** : all the underlying assets owned by the DFract Protocol (e.g. $ATOM, $OSMO …)
* **Protocol Owned Liquidity (POL)** : a DeFi protocol that owns its own liquidity, as opposed to a debt-based protocol. It enables a mechanism that backs the price and the liquidity of the native token - in our case, the $DFR
* **Backing price** : the theoretical price floor for $DFR, calculated by dividing the treasury value by the $DFR circulating supply
* **Bonding** : mechanism where users sell an asset (e.g. $USDC, $ATOM…) to buy $DFR tokens. $DFR tokens remain liquid on the secondary market, however it is important to note that unlike the bonding on other DeFi products, there is no swap back to your original asset.&#x20;
* **Staking** : staking $DFR grants users a share of the rewards that the Protocol generates by delegating its treasury (the underlying assets) to validators

## The bonding mechanism

The DFract Protocol is a Protocol Owned Liquidity (POL). \
It means that the treasury belongs to the Protocol and the holders of the Protocol’s tokens. The role of the POL is to grow and rebalance the treasury so that every stakeholder can benefit from it.\
A “bonding” mechanism will be used. This means that the Protocol will mint $DFR tokens for depositors, who in exchange will provide other assets from the Interchain (e.g. $ATOM).

<figure><img src="https://1911163099-files.gitbook.io/~/files/v0/b/gitbook-x-prod.appspot.com/o/spaces%2FqioArMhtLrEN9utt2wBT%2Fuploads%2FYqZDVV4m2hvpB5MrzSZq%2FCosmoverse_2022_Lum_Network_-5_jade.gif?alt=media&amp;token=614b266d-a2c6-4230-a347-25f21815013b" alt=""><figcaption></figcaption></figure>

When users receive $DFR through the Protocol by depositing their tokens, it allows the Protocol to accumulate liquidity to secure longevity and price stability for everyone involved. The more deposits are received, the deeper the liquidity pools on the secondary market (e.g: decentralized exchanges) can be.&#x20;

This deposit mechanism allows users to bond specific tokens : the ones that have been whitelisted by the Protocol in return for $DFR. The Interchain tokens grow the treasury through the staking rewards generated by running validation nodes, maintaining a sustainable APY and rewarding $DFR stakers (will be explained in the [*Tokenomics*](broken://pages/-Lo4jjs-Li-83Sby41fk) section).

## Use of the treasury and value creation

With the tokens received from the bonding process, the Protocol will organically generate yield by:

1. Delegating its treasury
2. Operating validator nodes

(1) Delegating the tokens of the treasury will give $DFR holders a share of the value created by the protocols from infrastructure opportunities. Moreover, by delegating its treasury, the DFract Protocol will participate in securing the networks it invests in, thus benefiting the DFract community and the underlying asset’s native network itself. \
In a nutshell, stakers of $DFR should outperform a holding strategy as their capital will be compounded and accrue value.&#x20;

*Note that 100% of the tokens owned by the Protocol will be put to work by frequently and automatically compounding staking rewards as they come.*

(2) Operating its own validator nodes will enable the Protocol to maximize the staking rewards (no commission paid) and therefore maximize the value of $DFR for every holder. \
As DFract is a decentralized protocol governed by its community, the operational management of the infrastructure for the validator nodes shall eventually be conducted by persons and/or companies elected by the $DFR holders.

<figure><img src="https://1911163099-files.gitbook.io/~/files/v0/b/gitbook-x-prod.appspot.com/o/spaces%2FqioArMhtLrEN9utt2wBT%2Fuploads%2FGan7y9xby5ludBxwBY9Q%2FCosmoverse_2022_Lum_Network_-6_jade_GOOD_FINAL.gif?alt=media&amp;token=d5ff5f94-43d5-485a-9c8b-fa947c792132" alt=""><figcaption></figcaption></figure>

## How DFract works from the user’s point of view

From the user's point of view, the Protocol will be composed of two distinct parts, the bonding and the staking:

**The bonding**

1. Users deposit their tokens of the Interchain to the Protocol.&#x20;
2. Users get $DFR tokens of the Protocol.&#x20;
3. The Protocol becomes the owner of the liquidity called treasury.

**The staking**

In order to receive the staking rewards created by the treasury, the users will be able to stake their $DFR in the Protocol.

There will be no possibility for the users to "redeem" the bonded tokens because they become the exclusive property of the Protocol. Users can exchange the native token of the Protocol on a decentralized exchange (DEX) such as Osmosis to exit their positions at a price set by the market. It is important to note that the $DFR remains liquid on the secondary market.

The backing price of the $DFR will be defended by an inverse bonding mechanism (see the Backing price and Inverse Bonding Mechanism section hereafter).

## Backing price and Inverse Bonding Mechanism

❗In this section, all the numbers are made up for illustration purposes

### **Backing price**

The DFract Protocol will hold valuable tokens in its treasury. It can be said that the Protocol is “backed” by its underlying assets (the treasury). This creates a theoretical price floor for $DFR that is also called the *backing price*.

​With the given convention:

* $$Q\_1, Q\_2, ..., Q\_n$$ : *n* quantities of tokens owned by the DFract Protocol
* $$MP\_1, MP\_2, ..., MP\_n$$: *n* Market Prices for the corresponding tokens
* $$CS\_{DFract}$$​: $DFR Circulating Supply
* $$BP\_{DFract}$$ : $DFR Backing Price

The *backing price* can be expressed as follows:

$$
BP\_{DFract} = \frac{Q\_1*MP\_1 + Q\_2*MP\_2+ ... + Q\_n\*MP\_n}{CS\_{DFract}}
$$

{% hint style="info" %}
**Example 1**

Let's assume that DFract encompasses only 3 tokens:

* $$Q\_1$$​ is 100 ATOM, \
  $$Q\_2$$​ is 200 OSMO,\
  $$Q\_3$$ is   50 JUNO
* $$MP\_1$$​ is ATOM Market Price at 10 $USD, \
  $$MP\_2$$ is OSMO Market Price at  1 $USD,\
  $$MP\_3$$​ is JUNO  Market Price at  3 $USD
* $$CS\_{DFract} = 1000$$

The backing price can be calculated :&#x20;

$$BP\_{DFract} = \frac{100*10 + 200*1 + 50\*3}{1000}$$

$$BP\_{DFract} = 1.35 \hspace{3pt}$USD$$
{% endhint %}

The *market price* for the $DFR token is expected to be above the *backing price*, as it captures the value of the underlying assets, plus the value of the rewards that will be generated, plus other intangible assets (branding, UX…). However, in practice it is possible to have sell pressure that drives down the *market price* below the *backing price*. \
*Note that DFract is a debtless Protocol. In this situation the Protocol would have more value in its treasury, than the $DFR circulating supply at market price.*

### Inverse Bonding Mechanism

In a situation where the *market price* drops below the *backing price*, the general idea would be to activate $DFR swapbacks. In other words, the Protocol would be buying with a discount tokens that are worth a tangible and verifiable value (the sum of the underlying assets’ value divided by the circulating supply of $DFR). Beyond the obvious opportunity for the Protocol, this is intended to boost investors confidence in case of adversarial market conditions.

The swapbacks would then be stopped at or above the *backing price.*

{% hint style="info" %}
**Example 2**

Let’s take these 2 hypothetical assumptions:&#x20;

* The treasury owns 100 millions $USD worth of digital assets&#x20;
* There is 20 millions $DFR in circulation

Therefore, still in this example, the following can be stated:

* The minimum market capitalization of the Protocol should be 100 millions $USD
* The *backing price* of one $DFR is $5 (the result of 100 M $USD / 20 M $DFR)
* If the *market price* of one $DFR falls below $5, the Protocol will activate the inverse bonding mechanism
  {% endhint %}

In a Protocol Owned Liquidity (POL) such as DFract these swapbacks are triggered by the activation of the inverse bonding mechanism. It consists in allowing the Protocol to buy directly from $DFR holders at a price that is between the *market price* and the *backing price*. The transaction price is called Inverse bonding price and if inverse bonding is activated, it can be mathematically compared:

$$
Market\hspace{3pt} price < Inverse\hspace{3pt}bonding\hspace{3pt}price < Backing\hspace{3pt}price
$$

***Important note : The Protocol itself is not price aware. The community can activate the inverse bonding via a governance proposal. This section describes the technical process behind this community driven decision. Moreover the inverse bonding mechanism is not a static “direct redeem” mechanism.***

The inverse bonding's ultimate goal is to remove sell pressure from the market. \
The inverse bonding mechanism is designed to increase the backing per $DFR by reducing the amount of $DFR in circulation. At the same time, the treasury will acquire $DFR for an amount that is below the known *backing price*. So in theory if the Protocol were to be liquidated instantly, it would still profit from the price gap.

<figure><img src="https://1911163099-files.gitbook.io/~/files/v0/b/gitbook-x-prod.appspot.com/o/spaces%2FqioArMhtLrEN9utt2wBT%2Fuploads%2FllPgWiV8PNARCVyuM8Ub%2Fimage.png?alt=media&amp;token=dfa6f22b-e094-4bbe-a260-5c35cda0abe6" alt=""><figcaption></figcaption></figure>

The $DFR tokens acquired by the Protocol in an inverse bonding event are burnt. Profits generated by the price gap are kept in the treasury.

The inverse bonding premium is used to calculate the price at which the Protocol will swapback $DFR. The inverse bonding premium is a parameter that can be adjusted by the community through a governance proposal. When inverse bonding is activated, the inverse bonding price is calculated with this formula:

$$
Inverse\hspace{3pt}bonding\hspace{3pt}price = Market\hspace{3pt}price \* (1+Inverse\hspace{3pt}bonding\hspace{3pt}premium)
$$

The inverse bonding price would never exceed the backing price, because at this point it would be a net drain on the treasury.

{% hint style="info" %}
**Example 3**

Let’s focus only on the pricing part in this example with these 3 hypothetical assumptions :

* $DFR *market price* drops suddenly at $100&#x20;
* $DFR *backing price* is at $120
* The Inverse bonding premium is set at 5%

The inverse bonding mechanism is activated.

Therefore you will be able to sell your DFR at $105 ($100 \* (1+5%)) to the treasury, instead of $100 to the market, thus removing the selling pressure from the market.
{% endhint %}

{% hint style="info" %}
**Example 4**

Let’s look at the whole mechanism with these 3 hypothetical assumptions:&#x20;

* $DFR *market price* drops suddenly at $3&#x20;
* $DFR *backing price* is at $5&#x20;
* The Inverse bonding premium is set at 33%

The inverse bonding mechanism is activated.&#x20;

Therefore you will be able to sell your $DFR at $4 to the treasury ($3 \* (1+33%)), instead of $3 to the market, thus removing the selling pressure from the market.

For the treasury this is net gain because : it buys an asset that represents $5 of value (backing price) for $4 (inverse bond price). The Protocol just made a 1$ profit ($5 - 4$ = $1)

This mechanism therefore increases the backing price of each $DFR thanks to:

1. The token burning : the $DFR token that has just been bought by the Protocol will be burned in order to reduce the supply and increase the backing per token.&#x20;
2. The profit sharing : the 1$ profit generated by the operation will be put back into the treasury for the benefit of everyone that holds $DFR
   {% endhint %}


# Requirements

{% hint style="warning" %}
**Update, Nov 2nd 2023 : DFract Beta Version is being discontinued.** \
No new deposits are accepted. \
Withdrawals of $USDC.axl will be available by the end of November 2023.\
\
Read all the details: <https://medium.com/lum-network/sunsetting-the-dfract-protocol-beta-version-a2277bce07fb>
{% endhint %}

* Chrome browser&#x20;
* Interchain Wallet&#x20;
  * Keplr is recommended: <https://www.keplr.app/>
* Have at least one asset from an IBC connected appchain or $USDC on your wallet

Go to [dfract.fi](https://dfract.fi/)


# DFract Beta version

{% hint style="warning" %}
**Update, Nov 2nd 2023 : DFract Beta Version is being discontinued.** \
No new deposits are accepted. \
Withdrawals of $USDC.axl will be available by the end of November 2023.\
\
Read all the details: <https://medium.com/lum-network/sunsetting-the-dfract-protocol-beta-version-a2277bce07fb>
{% endhint %}

❗The information shared in this sections shows the design decisions that were made to make DFract available as early as possibly.&#x20;

The roadmap shows milestones to achieve the full-featured DFract explained in the previous parts of the whitepaper. The version explained in this whitepaper is the ultimate version that is planned to be achieved by the end of 2023.

Before reaching this stage, DFract will go through several steps. The first of which is the currently available version : the Beta version. While the end result remains the same, the Beta version differs quite a bit from the full-fledged version.

**In its Beta version, you will only be able to buy $DFR with $USDC directly on the protocol built on the Lum Network. During this length of time, holders won’t be able to claim back their share of the treasury.**\
\
Why? Because while in Beta, the Protocol will use this time to compound weekly the staking rewards it made to accrue value.&#x20;

## **Staking in Beta version**

The staking feature does not exist in the Beta version. It won’t be necessary for DFract holders to stake their tokens to accrue yield.&#x20;

The $DFR token will follow the long-term value variation of its underlying basket of assets. Over time, these assets will grow via the staking rewards. Therefore, holding $DFR will expose you to the dollar value growth of the basket.

## Validator&#x20;

During this launch phase, DFract is partnering with a renowned professional validator that has already proven itself in the past, and who is also present in the Lum Network validator set.

In the Beta version, projects of the Interchain on which **Imperator** operates its own validation node will be selected. You can check their website following this link : <https://imperator.co/>

<figure><img src="https://1911163099-files.gitbook.io/~/files/v0/b/gitbook-x-prod.appspot.com/o/spaces%2FqioArMhtLrEN9utt2wBT%2Fuploads%2FbFm0d7cgv9RHEkNj7Qv7%2Fimperator.co.png?alt=media&amp;token=87934395-4eb9-452d-871f-132879102f52" alt=""><figcaption><p>Imperator, our partner for Validation Nodes</p></figcaption></figure>

## Stalling case - treasury carry off

As stated previously in this document:&#x20;

* DFract is an autonomous, community governed Protocol&#x20;
* Issued $DFR tokens cannot be redeemed from the Protocol against its treasury - except, to some extent, in the event of an activation of the inverse bonding mechanism

Due to those two aspects of the DFract project, and in the event $DFR holders would decide the project not worth continuing and would prefer to get their share of the treasury, the community must agree to enable the “community-initiated project carry off”.

Since this project carry off activation process requires discussions from the DFract community, the general process to activate it shall be debated and follow those base rules:&#x20;

* More than 2/3 $DFR holders agree to activate it through a governance proposal on the Lum Network&#x20;
* The Protocol code of the carry off activation must be implemented in accordance to the activation proposal and the resulting community discussions&#x20;
* Subsequent proposal(s) might be required in order to either debate and/or validate the activation&#x20;
* The project carry off activation shall be available only during the Beta version in the event the project remains stalling for too long or does not find its product market fit

**It is important to note that the “project carry off” is intended to boost confidence for early participants in the project by providing a rational and safe exit from it.** This feature is a conceptual and intellectual agreement about how to stop the project as a community. It is not part of the code of the protocol itself, until its activation has been voted for and the details of its activation have been discussed by the community.


# Interchain education onboarding

Discover a guide built by the Lum Network, composed of resources to learn more about the Interchain. You can find inside:

* A library of +25 reads to learn more about the Interchain
* A list of +120 Cosmonauts to follow on Twitter
* A list of 13 newsletters and influencers to follow
* 4 great tools to navigate inside the Interchain&#x20;

Link to the platform: [abcosmonaut.notion.site](https://abcosmonaut.notion.site/)


# About indexes

Traditional Finance (TradFi) has created over the last decades many strategies that are each best suited for different types of profiles : institutions, corporations, individual investors …

Stock picking and index investing are two opposite strategies. The first consists in choosing some stocks that are more promising (based on research) and can beat the market. The second focuses on diversifying the investment into a group of different assets. Most retail investors are better off with the second strategy.

> *Academic studies and empirical evidence suggest that it is difficult to successfully pick stocks to outperform the markets over time. There is also evidence to suggest that passive investing in index funds can beat the majority of active managers.*\
> \
> [Indexed Investing: A Prosaic Way to Beat the Average Investor by William F. Sharpe](http://web.stanford.edu/~wfsharpe/art/talks/indexed_investing.htm)


# Tech stack

DFract leverages the technology developed by the Lum Network, that is itself based on the Interchain Stack :&#x20;

* Cosmos SDK&#x20;

> Cosmos SDK is the world’s most popular framework for building application-specific blockchains.\
> <https://docs.cosmos.network/main/>

* Inter-Blockchain Communication (IBC) protocol&#x20;

> IBC is a protocol that allows blockchains to talk to each other.\
> <https://ibc.cosmos.network/main/>

* Proof of Stake

> Proof-of-Stake, the consensus method that Cosmos is built on, is a different blockchain consensus model that is infinitely more energy-efficient than Proof-of-Work.\
> <https://blog.cosmos.network/why-blockchains-need-cosmos-proof-of-stake-for-a-sustainable-environment-878b3edd2e85>

<br>


# Contribute

{% hint style="warning" %}
**Update, Nov 2nd 2023 : DFract Beta Version is being discontinued.** <br>

If you share the vision where blockchain will reach mass adoption, check the projects built on the Lum Network and reach out to contribute!
{% endhint %}

DFract is creating a global, community-owned, decentralized, rewards generating Cosmos index. The goal is to increase accessibility to the Cosmos-SDK based projects for any user, no matter their crypto-savviness.

While decentralized structures are best suited for achieving this vision in the long run, some structure is needed to kickstart the project, align on common goals, have an effective decision-making process, create accountability and ensure successful execution.

**Join us!**

If you would like to contribute in this journey, [join us on Discord](https://discord.gg/Y2mcWevh)