Calculation Methodology
Understanding how Solana Index Fund indexes are calculated and maintained.
Index Calculation Principles
Solana Index Fund indexes are designed to provide accurate, transparent, and representative measures of their respective market segments. The calculation methodology follows these core principles:
Core Principles
- Representativeness: Each index accurately represents its target market segment
- Transparency: All calculation methods and selection criteria are publicly documented
- Replicability: Indexes can be replicated by market participants
- Continuity: Index values maintain continuity through market changes and rebalancing
- Timeliness: Index values are updated in real-time to reflect current market conditions
Index Formula
Solana Index Fund indexes use a market-capitalization weighted methodology, adjusted for circulating supply and liquidity factors. The basic formula for calculating the index value is:
Index Value = (Σ (Pi × Qi × Fi × Li) / D) × Base Value
Where:
- Pi = Price of constituent token i (TWAP over 1 hour)
- Qi = Circulating supply of constituent token i (excluding locked tokens)
- Fi = Float factor of constituent token i (0 to 1)
- Li = Liquidity factor of constituent token i (0 to 1)
- D = Divisor (adjusted to maintain index continuity during rebalancing)
- Base Value = 1,000 (starting value of each index on January 1, 2025)
The divisor (D) is adjusted during rebalancing events to ensure that changes in the index composition do not create artificial jumps or drops in the index value.
Weighting Methodology
Solana Index Fund uses a modified market-capitalization weighting methodology with the following adjustments:
Market Cap Weighting
The base weight of each constituent is proportional to its market capitalization (price × circulating supply). This ensures that larger, more established tokens have a greater impact on the index.
Float Adjustment
Weights are adjusted based on the "float" of each token — the portion of the supply that is actually available for trading. Tokens with large portions of supply locked or held by founders receive a lower float factor.
Liquidity Adjustment
Weights are further adjusted based on the liquidity of each token. Tokens with higher trading volumes relative to their market cap receive a higher liquidity factor.
Capping
Individual constituent weights are capped at 25% to prevent any single token from dominating the index. This ensures proper diversification and reduces concentration risk.
These adjustments ensure that the indexes are not only representative of their target markets but also practical for tracking and replication.
Data Sources
Solana Index Fund uses multiple data sources to ensure accuracy and reliability in index calculations:
Primary Data Sources
- Price Data: Aggregated from multiple Solana DEXes (Jupiter, Raydium, Orca) with outlier filtering using time-weighted average prices (TWAP)
- Market Cap Data: Calculated using on-chain data for circulating supply (excluding program-owned tokens) and current prices
- Trading Volume: Aggregated from DEX trading activity with wash trading detection algorithms
- Liquidity Depth: Measured by analyzing concentrated liquidity positions and AMM pools across major Solana DEXes
- On-chain Metrics: Directly sourced from the Solana blockchain using RPC providers with load balancing and redundancy
All data is validated through multiple sources to ensure accuracy. In case of discrepancies, the system uses a consensus mechanism to determine the most reliable value.
Selection Universe
Each index draws from a defined universe of eligible tokens. The selection universe is determined based on the following criteria:
| Index | Universe Criteria | Minimum Requirements |
|---|---|---|
| SINDEX | Aggregate of sub-indexes | N/A (derived from sub-indexes) |
| MINDEX | Meme tokens on Solana | $10M market cap, $1M daily volume, 30+ days history |
| DINDEX | DeFi protocols on Solana | $50M TVL, $5M daily volume, security audit |
| NINDEX | NFT projects on Solana | $500K daily volume, 1000+ unique holders |
The selection universe is reviewed quarterly to ensure it remains representative of the evolving Solana ecosystem. New sectors may be added as they emerge and gain significance.
Index Maintenance
Solana Index Fund indexes are maintained through a combination of scheduled rebalancing and event-driven adjustments:
Scheduled Rebalancing
- Regular rebalancing every 6 hours
- Comprehensive review of weights and constituents
- Gradual implementation to minimize market impact
- Divisor adjustments to maintain index continuity
Event-Driven Adjustments
- Token delistings or significant security issues
- Mergers, acquisitions, or protocol migrations
- Extraordinary market events or liquidity crises
- Regulatory actions affecting specific tokens
All maintenance activities are announced in advance when possible and documented transparently to ensure market participants can anticipate and understand changes to the indexes.