What if you wanted to create a token who’s value is defined by the combined value of 1 bitcoin, 10 ethereum and 5 chainlink into a single token? What if you wanted to create them repeatedly, and allow other people to as well? What if you wanted to do it in under a minute? Meet Covenants (Unifi) and Eth Item (Arte).
Covenants, an Ethereum DFO (decentralized flexible organization), allows you to easily interact with a series of on-chain decentralized functions using it’s dapp (https://covenants.eth.link/#/bazaar/dapp) to create your own index token. These tokens are tokens with advanced properties and abilities granted to them through Eth Item, a decentralized platform also built on DFOHub, that allows you to combine ERC20s, ERC721s and ERC1155s into a single standard.
When people think Eth Item they usually think NFT (Non-fungible token) which implies that the token is 1 of 1 and cannot be broken down into parts (such as 0.0001 of a token), but what makes Eth Item unique is that each item minted has a non-fungible variant and an original ERC20 version. By using Eth Item to create a DeFi index token we are also creating an NFT.
Take a look at this token named Defi Selection minted by Cameron “BUIDL Baker” Blaise that combines the value of a fixed sum of several popular DeFi tokens,
This token he minted can now be traded or swapped by anyone. If you were to hold this token you would be exposed to the tokens contributed to it’s creation (in this case UniFi, DPI, Uni, 1inch, CRV, ect..) by their listed proportional value.
This means that you could hold 1 DeFi Selection in a wallet that has no other tokens and you would actually be holding the 11 tokens that are in Defi Selection token’s index, even though it looks like you are holding 1 token. And since these tokens are Eth Items they are also fungible, so they can be broken down less than 1.0 and retain their value proportionate to the tokens that make up it’s index. If you sent 0.5 of the 1.0 DeFi Selection token you own then the owner of that half of the token would own the value of 50% of the assets used (contributed) to mint it with. It’s tradable.
If you do not wish to purchase an existing index token or cannot find any for sale you can mint your own through the Covenants dapp by sacrificing the listed assets.
When you mint a new token through Covenants you’re actually creating an Eth Item, we can view the DeFi Selection (in screenshot above) Eth Item from ethitem’s explorer (https://ethitem.com/?interoperable=0xc63CAAc1ad9954AD3bC8247Ab33fF233b0DD0FcD).
So how to create your own DeFi Index token in under a minute using Eth Item + Covenants dApp (a DFO):
Step 1.) Simply head over to the Covenants Bazar (https://covenants.eth.link/#/bazaar/dapp) and click the “Create” button in the top right corner as shown in the screenshot below
Step 2.) Fill in the form with the characteristics of your token (It’s name, symbol (abbreviation), and description). Additionally you can upload an image which will be used to represent this new token.
Step 3.) Enter the address of the token(s) that you want to use for this new indexed token, for example if you want Bitcoin to be a part of your index you could copy and paste the Wrapped Bitcoin smart contract address and click “Load”, you will be asked to input how much Bitcoin should make up your new token. Repeat this step if you want to use more than one token in your index.
Step 4.) Make sure you are using a web3 supporting browser and click deploy. That is it! have just created your own DeFi index token thanks to the magic of Covenants, Eth Item & DFOhub (buidl).
In the very near future anyone will be able to farm the new token you have created through Eth Item. But that’s a secret for another article.
Ethereum, decentralized finance and all that is buidled are powerful tools, please use responsibly.
