As decentralized finance (DeFi) continues to evolve, understanding the performance of leading projects becomes increasingly important for investors and analysts. With hundreds of protocols emerging across various sectors—lending, exchanges, derivatives—it is crucial to have a structured way to measure overall market trends and health. A curated, data-driven approach allows participants to assess which projects are gaining traction and maintaining long-term viability. By aggregating relevant data and applying a weighted methodology based on circulating market value, the DeFi Pulse Index offers a reliable benchmark for evaluating the state and progress of the DeFi ecosystem.

What is DeFi Pulse Index (DPI)?

The DeFi Pulse Index (DPI) was launched in September 2020 as a digital asset designed to provide broad exposure to the decentralized finance (DeFi) sector. It was created through the collaboration of Scott Lewis, founder of DeFi Pulse, and Felix Feng, founder of Index Coop. Their goal was to offer investors a simple, transparent way to track the performance of major DeFi projects through a single, capitalization-weighted index. The DPI token quickly became one of the most recognized crypto instruments for passive exposure to the evolving DeFi landscape.

The product’s release closely followed the formation of Index Coop, a decentralized autonomous organization (DAO) launched by Set Labs on October 6, 2020. Index Coop was established to create the most robust and accessible on-chain investment indices, and DPI served as its first flagship offering. The index was carefully curated to include leading Ethereum-based DeFi tokens demonstrating substantial usage and a commitment to long-term development, making DPI a reliable barometer of the sector’s overall momentum.

DPI’s construction, backed by transparent methodologies and managed by a decentralized community of contributors, represented a significant step forward in simplifying crypto investing. Over time, the Index Coop expanded its contributor base to include financial analysts, developers, marketers, and DeFi enthusiasts, all working together to maintain and grow the utility of DPI. As DeFi matured and diversified, DPI remained a foundational product within Index Coop’s suite, reinforcing its role as a strategic investment tool and a benchmark for the sector’s performance. Through this innovative collaboration, DPI has helped bridge traditional investing frameworks with the emerging world of decentralized finance.

How Does DeFi Pulse Index Work? Methodology and Maintenance

The DeFi Pulse Index (DPI) is structured as a capitalization-weighted index, meaning each token’s representation within the index is based on its market capitalization relative to others. This weighting methodology reflects real market dynamics, granting more influence to widely adopted, valuable DeFi assets while avoiding overconcentration by capping individual token weights at 25%. Any value exceeding that threshold is proportionally redistributed to the remaining constituents. This mechanism ensures balanced exposure while capturing the sector’s leading projects. DPI includes only Ethereum-based assets, focusing on the most active and established blockchain ecosystem in the DeFi space. Tokens must be bearer assets—not synthetic, wrapped, or claim-based—and must relate directly to functional, live DeFi applications. Projects must be listed on DeFi Pulse, meet transparency and operational requirements, and demonstrate decentralization, including open governance and community participation. Additionally, security is a core component: a project must have undergone professional auditing or established community trust through long-term, incident-free operation.

TokenSets, a Set Protocol-based infrastructure, implements the DPI on Ethereum, enabling DPI to function as a single ERC-20 token. This simplifies DeFi exposure by offering diversified holdings via one token. Each purchase or redemption of DPI automatically reflects the underlying index composition. The token structure combines modern digital asset functionality with the conceptual clarity of a traditional financial index, making DPI accessible to both newcomers and experienced crypto investors. DPI aims to deliver a reliable, real-time reflection of decentralized finance’s evolution and market dynamics, serving both as an investment tool and a reference benchmark.

Source: indexcoop.com/products/defi-pulse-index

Maintenance

The DeFi Pulse Index is maintained on a quarterly cycle to ensure its composition remains representative of the evolving DeFi market. This maintenance is conducted in two structured phases: the determination phase and the reconstitution phase. The determination phase occurs during the third week of January, April, July, and October. During this period, index administrators assess the circulating supplies of all current and candidate tokens—sourced primarily from CoinGecko—and determine which tokens qualify for inclusion or need to be removed based on the index’s inclusion criteria. This evaluation uses a framework based on four key dimensions: token characteristics (such as supply and issuance), project credibility (including community engagement and governance), protocol fundamentals (including functionality and user adoption), and safety measures (such as audits and incident handling). Tokens must continue to meet all these standards to remain in the index.

Following the determination phase, the reconstitution phase begins on the first business day of the next month. In this stage, the index is rebalanced according to the new weights, and any additions or deletions are applied. The DPI’s market cap-weighted structure means token weights shift naturally with market movements, but reconstitution is essential to account for longer-term changes, such as new leading projects or declining relevance. The 25% cap on any single token remains in effect during this phase, with redistribution rules preserving index balance. Rebalancing is executed using TokenSets smart contracts, ensuring transparency, on-chain tracking, and non-custodial functionality. As the index’s assets grow, future rebalancing windows may be extended to minimize slippage and market impact. Through this disciplined process, the DPI stays aligned with DeFi’s rapid pace while upholding a high standard for index integrity and investor protection.

DeFi Pulse Index Use Cases

By consolidating top DeFi projects into one token, DPI reduces complexity, transaction costs, and individual project risk, while remaining fully composable across decentralized applications. Here are three key use cases that illustrate how DPI is used across the market:

• Passive Exposure to DeFi Sector: For users seeking broad exposure to decentralized finance without the burden of tracking, buying, and managing multiple tokens, DPI offers a cost-effective solution. Investors gain diversified access to the top-performing DeFi protocols on Ethereum, with automatic rebalancing to adjust for market shifts. DPI provides an easy entry point for newcomers and a convenient allocation tool for seasoned crypto participants.
• DeFi Collateral and Yield Farming: As an ERC-20 token, DPI is widely accepted in DeFi protocols as collateral for borrowing, staking, and yield farming. Users can deposit DPI into lending platforms or vaults to earn yield while maintaining exposure to a diversified DeFi portfolio. This use case allows holders to maximize capital efficiency while reducing risk compared to single-token strategies.
• Benchmarking and Portfolio Management: Institutional investors, portfolio managers, and analytics platforms use DPI as a benchmark to track DeFi sector performance. It serves as a neutral reference point for evaluating the returns of DeFi portfolios or strategies. DPI’s transparent, rules-based methodology makes it a credible standard for comparative analysis and performance measurement in decentralized finance.

DeFi Pulse Index Main Features

Accessible Exposure to DeFi

One of the defining features of the DeFi Pulse Index is its accessibility and simplicity. Unlike traditional financial structured products, which are often reserved for institutional investors and require complex processes, DPI allows anyone with an internet connection to gain exposure to top DeFi projects. Users can purchase DPI through popular Web3 wallets like Metamask, Argent, or Rainbow, often by connecting directly to a bank account or using a debit card. It is also widely available on decentralized exchanges such as Uniswap and Sushiswap. This open-access structure aligns with the principles of decentralization, offering a user-friendly entry point into the DeFi ecosystem for both retail and institutional participants.

Decentralized and Community-Driven

The governance of the DeFi Pulse Index reflects the values of the broader DeFi ecosystem. While the index’s methodology is curated by DeFi Pulse, broader product decisions and strategic updates are guided by the Index Coop community. This DAO-led structure ensures transparency and allows anyone to participate in the decision-making process, whether by voting on proposals, contributing to improvements, or engaging in discussions via Index Coop’s forums and Discord. This community-first model supports the ongoing evolution of DPI in a decentralized and participatory manner, and contrasts with traditional finance products typically managed by centralized institutions with limited public input.

Utility and Security Standards

Beyond simple exposure, the tokens within DPI are selected based on stringent inclusion criteria emphasizing user safety, market presence, and protocol maturity. Projects must undergo professional audits or have established reputational trust through long-term operation and incident transparency. Once included, the tokens become accessible for DeFi composability—users can utilize DPI in yield farming, liquidity provision, and collateralized lending. This dual focus on token utility and user safety ensures DPI remains not only a reliable benchmark but also a flexible, productive asset within decentralized finance ecosystems.

What is the DPI Coin?

DPI, is an Ethereum-based ERC-20 token that represents a structured investment product designed to track a basket of leading decentralized finance (DeFi) governance tokens. Created in September 2020 through a collaboration between DeFi analytics firm DeFi Pulse (now Scalara) and the Index Cooperative DAO, DPI provides users with an accessible, cost-effective, and diversified way to gain exposure to the top projects within Ethereum’s DeFi ecosystem. Rather than manually purchasing and managing multiple DeFi tokens, investors can hold a single token that automatically reflects the performance of a dynamic index composed of top DeFi assets.

The DPI token employs a market capitalization-weighted structure, ensuring each constituent’s weight reflects its relative size in the market. Tokens within the index must meet stringent criteria across several dimensions, including user safety, predictable supply, sufficient liquidity, and decentralized governance. Only native DeFi tokens on Ethereum that are not synthetic, wrapped, or derivative-based are eligible. At least 7.5% of a token’s five-year projected supply must be in circulation to qualify for inclusion, ensuring a degree of maturity and liquidity across components.

DPI is also a productive asset within DeFi itself. Token holders can provide liquidity by supplying DPI and ETH to trading pools on platforms like Uniswap or Sushiswap. They can also stake LP tokens for additional yield, use DPI as collateral in lending platforms like CREAM Finance or Alpha Homora V2, or lock DPI in Collateralized Debt Positions (CDPs) to borrow stablecoins. These use cases enable investors to generate yield and maximize capital efficiency while maintaining diversified DeFi exposure.

Currently (March 2025), the DPI token maintains a circulating supply of roughly 559,000 tokens. The current composition includes projects such as Aave (31.6%), Uniswap (21.0%), Maker (13.1%), Ethena (12.4%), Lido DAO (10.8%), Pendle (5.4%), Compound (4.5%), and Rocket Pool (1.2%). The selected tokens represent key pillars of the DeFi ecosystem, each with significant market presence. For example, Uniswap (rank #28, market cap: $4.27B) and Aave (rank #37, $2.79B) are leading protocols in decentralized exchange and lending, respectively. Ethena (rank #42, $2.28B) has gained rapid attention for its innovative synthetic dollar mechanism, while Maker (rank #62, $1.21B) continues to be a cornerstone of decentralized stablecoin issuance. Including these assets ensures the DPI index tracks established and emerging trends in the DeFi sector.

These allocations may vary over time, as the index is regularly rebalanced to reflect evolving market conditions and project developments.

Source: indexcoop.com/products/defi-pulse-index

Is DPI a Good Investment?

DPI offers diversified exposure to leading DeFi protocols, reducing risk compared to holding single tokens. Its structure simplifies portfolio management and is backed by a transparent, rules-based methodology. However, its performance is tied to the broader DeFi market, which remains highly volatile and subject to rapid technological shifts. Additionally, as an Ethereum-native asset, DPI is exposed to Ethereum network costs and limitations. While useful for sector exposure, it may underperform during bearish DeFi cycles or when competing ecosystems gain traction.

News on DeFi Pulse Index

As reported on the Index Coop official blog, DPI and MVI can now be bridged to Arbitrum using Chainlink’s CCIP, unlocking ARB rewards for eligible users. Those who bridge and hold DPI or MVI via the Chainlink Transporter app will earn a share of 42,000 ARB over 12 weeks. While Base bridging is also supported, incentives currently apply only to Arbitrum. Rewards can be tracked via Dune and claimed through the Merkl App.