Three-Tier Structure
The GNDX basket is organized into three tiers reflecting different risk/reward profiles within the Web3 gaming sector. The genesis basket holds 9 tokens and expands via governance vote as the sector grows on Arbitrum, with the combined weight across all tiers always summing to 100%.
Tier Overview
| Tier | Target Weight | Token Count | Sector Rank |
|---|---|---|---|
| Core | 65% | 8–10 tokens | Top-tier of the eligible universe |
| Ascent | 25% | 8–12 tokens | Mid-tier of the eligible universe |
| Frontier | 10% | 5–10 tokens | Early-tier of the eligible universe |
The 65/25/10 allocation is a governance-set target, adjustable within hard floor/ceiling bands enforced on-chain: Core 55–65%, Ascent 20–30%, Frontier 10–15%. All three tiers must be updated atomically and always sum to 100%. The 10% single-token hard cap (1000 bps) cannot be adjusted by any means.
Tier assignment is rank-based rather than tied to absolute market-cap thresholds. Tokens are ordered by 90-day average market cap and assigned to a tier based on where they fall in the eligible universe. This avoids forced re-tiering as the gaming sector's overall valuation shifts up or down.
Tier 1 — Core (65%)
The most established Web3 gaming tokens by sector rank.
- Sector rank: top-tier of the eligible universe by 90-day average market cap
- 30-day average daily on-chain volume: >$1M
- Trading history: minimum 12 months
- Active player base with demonstrable on-chain activity
Current eligible examples: IMX, AXS, SAND, MANA, GALA, APE, ENJ
The Core tier provides the portfolio's stability anchor. Even if every Core token underperforms, the 65% allocation means the index mirrors the sector's established core.
Tier 2 — Ascent (25%)
Proven gaming tokens with active ecosystems and growing player bases.
- Sector rank: mid-tier of the eligible universe by 90-day average market cap
- 30-day average daily on-chain volume: >$300K
- Active development with verifiable GitHub activity
- Audited smart contracts required
Current eligible examples: ILV, MAGIC, BEAM, RON, GMT
The Ascent tier captures the growth phase — tokens that have survived early speculative volatility but still have significant upside as their player bases expand.
Tier 3 — Frontier (10%)
Emerging gaming tokens with strong development momentum and high upside potential.
- Sector rank: early-tier of the eligible universe (newer or recovering projects)
- 30-day average daily on-chain volume: >$75K (universal floor)
- Active development: GitHub commits within the last 90 days
- Audited smart contracts required (no exceptions)
- Must trade on at least 2 DEXes
- Platform floor: minimum 6 months of on-chain history
Current eligible examples: PRIME, PENGU
The Frontier tier provides high-upside exposure with contained downside. Even if every Frontier token fails completely, the maximum impact on the overall index is ~10%. In practice, a basket of 5–10 tokens means a single failure affects at most ~2% of the total portfolio.
Why This Structure?
The three-tier design reflects how successful index products work in traditional finance:
- Large-cap core (analogous to S&P 500 mega-caps): stability and liquidity
- Mid-cap growth (analogous to extended market indices): alpha opportunity
- Small-cap frontier (analogous to small-cap value funds): high-upside diversifier
The key difference from TradFi: the 10% single-token hard cap prevents any individual token — however dominant — from concentrating the index's risk.
Re-Tiering
Tokens can be re-tiered by governance vote if their sector rank changes meaningfully:
- A Core token whose sector rank drops into the mid-tier of the eligible universe for 90 consecutive days can be proposed for re-tiering to Ascent
- An Ascent token whose sector rank rises into the top-tier becomes eligible for Core promotion
- A Frontier token that climbs out of the early-tier becomes eligible for Ascent promotion
- Re-tiering proposals follow the standard governance process and require a 66% supermajority
See also: Inclusion Criteria · Rebalancing