How the Index Works
GNDX is a fully-backed, on-chain index of Web3 gaming tokens. Every $GNDX token is redeemable for its proportional share of the underlying basket held in the protocol's IndexVault smart contract.
The Core Mechanism
User deposits USDC
↓
MintEngine receives deposit
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Mint routing: USDC → routable basket tokens via Uniswap V3 (skips excluded/inactive)
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Tokens deposited into IndexVault
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$GNDX minted at current NAV and sent to user
The reverse is equally simple: send $GNDX to RedeemEngine, receive your proportional share of the underlying basket (or USDC, or a single overweight token with a 0.22% bonus).
NAV — Net Asset Value
The price of $GNDX is its Net Asset Value (NAV):
NAV per $GNDX = Total Vault Value (USD) ÷ Total $GNDX Supply
- When you mint $GNDX, you receive tokens at the current NAV
- When you redeem, you receive assets worth exactly NAV minus the 0.20% exit fee
- NAV is calculated using Chainlink price feeds with a 20-minute TWAP to prevent manipulation
- At protocol genesis, NAV = exactly $1.00 (hardcoded)
The Basket Structure
The GNDX basket launches with 9 gaming tokens at genesis organized into three tiers, expanding via governance vote as the sector grows on Arbitrum:
| Tier | Weight | Token Count (target) | Focus |
|---|---|---|---|
| Core | 65% | 8–10 tokens (7 at genesis) | Top-ranked established gaming tokens by 90-day average market cap |
| Ascent | 25% | 8–12 tokens (2 at genesis) | Mid-ranked gaming tokens with active ecosystems and proven on-chain liquidity |
| Frontier | 10% | 5–10 tokens (reserved at genesis) | Emerging gaming tokens with strong development momentum and audited contracts |
No single token may ever be assigned a target weight above 10% of the basket (1000 bps) by governance. This limit is enforced at the smart contract level. No governance vote, no admin action can override it.
Passive Rebalancing on Every Mint
Every time a user deposits USDC, the MintEngine applies mint routing among routable tokens: proportional to targets when the basket is near neutral, or 100% of that step to the most underweight routable token. Excluded tokens (governance / optional oracle auto path) receive no new buy flow until Timelock clears the flag.
Example: if Token A is 5% below target and Token B is 1% below—and both routable—new USDC prioritizes the larger underweight. This passive rebalancing is built into every mint transaction.
Scheduled Quarterly Rebalancing
Every quarter, $GAME governance votes on a full rebalancing review:
- Tokens can be added, removed, or re-tiered
- Target weights are reset
- New tokens must pass inclusion criteria
The rebalancing vote requires a 66% supermajority of veGAME and a 48-hour timelock before execution.
Overweight Incentive
When any token drifts more than 5% above its target weight, the protocol activates a 0.22% bonus on redemptions of that specific token. This creates an arbitrage incentive for external actors to correct overweight positions without governance intervention.
What Governance Controls
$GAME holders vote on:
- Which tokens are in the basket
- Target weight for each token (within the 10% cap)
- Fee parameters (within hardcoded bounds)
- Treasury allocation
What governance cannot change: the 10% single-token cap and the core mint/redeem mechanics. (Audit requirements are enforced by governance policy and review, not proven on-chain.)
See also: Three-Tier Structure · Inclusion Criteria · Rebalancing