Reserve: Index DTFs and their Governance via Vote Locking

Key Insights

• Index DTFs surpassed $3.46 million in market cap across Ethereum and Base. This shows growing user demand for tokenized access to diversified crypto exposure.
• DEX trading volume for Index DTFs reached $22.2 million. Daily trading activity is increasing, indicating that Index DTFs are gaining traction as tradeable assets.
• Vote locking DTF governance tokens gives token holders control over Index DTF design without taking on collateral default risk. This model is separate from RSR staking in the Reserve Yield Protocol, where staked RSR serves as a backstop in case of a collateral default.
• Top-performing Index DTFs have delivered strong returns in the past month. From April 18, 2025, to May 18, 2025, VTF led with a 121.7% rally, ABX climbed 86.8%, OPEN gained 37.8%, BGCI rose 32.7%, and CLX rose 24.6%.
• Permissionless Index DTF creation and expansion to Solana are in development. These features will increase the accessibility of Reserve’s Index Protocol and drive DTF creation.

Primer

Reserve (RSR) is building infrastructure for onchain index investing through Decentralized Token Folios (DTFs), its open standard for tokenized portfolios. The platform supports two protocols: the Yield Protocol, which powers RTokens designed to maintain a peg and earn yield from collateral, and the Index Protocol, which supports permissionless creation of tokenized indexes known as DTFs. These Index DTFs are already live and available on Ethereum and Base, with an upcoming deployment planned for Solana.

Reserve’s Index DTFs are tokenized portfolios that track crypto investment themes through curated, fully backed baskets of assets. They are permissionless to create, easy to mint and redeem, and governed by token holders. The model simplifies onchain portfolio construction for users who want to “diversify & chill,” by accessing broad market exposure without managing individual positions.

Index DTFs are governed by a mechanism called vote locking. Each Index DTF is governed by a token chosen by its creator. This can be an existing governance token, a newly created token specific to the DTF, or any other compliant token. While RSR is often used, it is not required. DTF governance token holders can lock governance tokens to a specific Index DTF to gain voting power. This allows token holders to shape key parameters of the respective DTF, like basket composition, rebalancing logic, and fee structure, without taking on collateral risk.

Vote locking is distinct from staking. While staking RSR secures Yield DTFs and exposes participants to slashing in the event of collateral default, vote locking only grants voting rights and never puts tokens at risk. This distinction makes vote locking an accessible way to participate in the governance of Index DTFs through Reserve’s Index Protocol.

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Index DTFs

Index DTFs are tokenized portfolios that track curated baskets of crypto assets. Each DTF is fully backed by the assets that compose the DTF and redeemable onchain, with portfolios managed by smart contracts rather than intermediaries. Like index ETFs in traditional finance, they offer broad market exposure through a single token. Unlike ETFs, they are transparent by default, available 24/7 to anyone with an internet connection, and designed for future permissionless creation.

Each Index DTF is built using the Reserve Index Protocol, which is designed to support large, diverse portfolios. On Ethereum, baskets can include up to 50 tokens. On Base, they can support 100+. This flexibility is possible due to the protocol’s minimalist design: just over 1,000 lines of code, compared to more than 10,000 in the Yield Protocol. The Index Protocol does not rely on oracles or collateral adapters because minting and redemption are executed with fixed token quantities and fully backed assets, making external price feeds unnecessary. Any token can be added to a DTF without writing new contracts or relying on offchain inputs.

DTFs cover a wide range of strategies and themes. The BTC ETH DCA Index (BED) holds WBTC, WETH, and USDC, rebalancing monthly to support a dollar-cost averaging strategy into BTC and ETH. The Alpha Base Index (ABX) tracks high-growth Base ecosystem tokens like TIBBIR and DRB. The Clanker Index (CLX) concentrates exposure to the Clanker ecosystem, including tokens like CLANKER and Based Fartcoin. Other DTFs mirror offchain benchmarks, such as the Bloomberg Galaxy Crypto Index (BGCI), which holds bridged versions of BTC and ETH. For more targeted exposure, products like the DeFi Growth Index (DGI) hold emerging DeFi tokens selected for early signs of traction in TVL and trading volume.

As of May 18, 2025, Index DTFs launched by Reserve’s Ethereum partners hold a combined market cap of $1.4 million. On Base, where baskets can include more assets, Launch Partner DTFs now have a market cap of $2.0 million. These early results indicate growing demand for Reserve’s index products as a simple way to diversify & chill.

Index DTF Issuance and Trading Trends

Reserve launched the Index Protocol on Feb. 25, 2025. While still early, onchain activity across the Index Protocol is growing. Aggregate mint and burn data show a steady net increase in Index DTF supply, with most days seeing more tokens minted than redeemed. This rising supply points to sustained demand for tokenized index exposure among users looking for simpler ways to allocate capital onchain.

DEX trading volumes have climbed alongside the expansion of the Index DTF catalog, with $22.2 million in cumulative volume since inception. Activity has picked up recently, with the highest daily volumes recorded on May 9 ($1.14 million) and February 27 ($902,5022). While still modest in absolute terms, several products trade daily with visible bid-ask formation. This early liquidity shows that Index DTFs are beginning to function as live market instruments, not just static positions. As more users mint, hold, and rebalance these tokens, the flywheel of onchain issuance and trading continues to turn.

Index DTF Price Performance

Several Index DTFs have risen in price since launch, showing that broad sector exposure through tokenized portfolios can deliver strong returns and simplify portfolio construction.

• Bloomberg Galaxy Crypto Index (BGCI) - The Bloomberg Galaxy Crypto Index holds the largest market cap among Reserve’s Index DTFs at $688,946 as of May 18, 2025. The underlying index measures the performance of the largest crypto assets by market capitalization, with constituent weights ranging between 1% and 35%. BGCI has gained 32.7% since April 18, 2025, driven by strength in large-cap assets like BTC and ETH. Its performance shows users value onchain access to familiar institutional benchmarks.
• Clanker Index (CLX) - The Clanker Index is the second-largest Index DTF with $415,161 in market cap as of May 18, 2025. The Clanker Index provides simple access to top-performing tokens in the Clanker ecosystem. Clanker is a token launcher project on Base that lets users deploy tokens through interfaces like clanker.world, Farcaster mini apps, and API partners like clank.fun. These tokens often include memecoins or social tokens, and creators earn rewards based on trading volume. As of May 18, 2025, CLX is up 24.6% since April 18, 2025, but the index experienced a sharper rally in early May 2025, rising from $0.95664 to $1.83482 between May 6 and May 13, providing exposure to the key assets within the Clanker ecosystem.
• Open Stablecoin index (OPEN) - The Open Stablecoin Index ranks third by market cap at $393,361 as of May 18, 2025. It is an equal-weighted Index DTF tracking stablecoin-focused projects emphasizing transparency, composability, and decentralized governance. Constituents are selected based on verifiable asset-backing, peg design, mint and redeem mechanics, safety mechanisms, and user-aligned incentives. From April 18 to May 18, 2025, OPEN rose 37.8%. This move suggests that users are positioning themselves around the growing adoption of stablecoins as a foundational layer in DeFi.

Other indices have also seen outsized short-term gains. The Alpha Base Index (ABX) rallied 86.7% from April 18 to May 18, 2025. It curates top-performing Base projects with strong risk-adjusted growth potential, selected through DAO governance and community intelligence from the Base trenches. The Virtuals Index (VTF) leads all DTFs with a 121.7% rally over the same period. It tracks the largest AI agents launched on the Virtuals Protocol and rebalances frequently to capture upside from new agent deployments. These moves show growing interest in newer Base ecosystem tokens and the re-emergence of sector narratives like decentralized AI.

Launch, Govern, Earn

While Index DTFs are not yet permissionless to create, the Reserve Index Protocol is designed to support permissionless creation in future updates. As of May 18, 2025, the Reserve team is the gatekeeper of DTF creation. Permissionless DTF creation will allow individuals, DAOs, and institutions to launch tokenized portfolios that express a market thesis. Upon creation, each DTF creator selects a governance token and defines key parameters such as basket composition, rebalancing cadence, and fee structure. Once live, these portfolios can be governed by a community through vote locking, where token holders shape DTF configuration without taking on slashing risk or managing infrastructure.

The protocol also creates financial incentives for index creators. Each DTF charges TVL and mint fees, which are split between the platform and governance token holders. For example, the Bloomberg Galaxy Crypto Index DTF applies a 2% annualized TVL fee and a 0.3% minting fee. This fee model rewards creators who launch compelling portfolios and attract users. Governance tokens can also be distributed to early participants or liquidity providers to bootstrap engagement. As permissionless creation becomes available, Index DTFs will offer a streamlined path for anyone to launch, govern, and earn from curated crypto exposure.

Vote Locking

How Vote Locking Works

Vote locking allows governance token holders to participate in the governance of a specific Index DTF. To gain voting power, a user commits governance tokens to a DTF’s smart contract, where they are locked for seven days to prevent governance manipulation and promote long-term alignment. Once locked, governance participants can vote on proposals influencing the Index DTF's operation.

These proposals can modify core DTF parameters, including basket composition, token weights, rebalancing cadence, fee rates, and governance permissions. Depending on how governance is configured, some DTFs may also allow votes on branding or veto rights. Voting power is proportional to the number of tokens locked and only applies to the D in which those tokens are committed.

Each Index DTF is governed by a token chosen by its creator. This can be an existing governance token, a newly created token specific to the DTF, or any other compliant token onchain. While RSR is often used, it is not required. This flexibility allows communities and institutions to govern with their own tokens while still integrating with the Reserve ecosystem. As of May 18, 2025, tokens used to govern Index DTFs include RSR, VIRTUAL, SQUILL, ALTT, DTF, BYTES, and more. Each Index DTF pays a platform fee that is automatically used to buy and burn RSR. This creates a consistent value link between all Index DTF activity and RSR holders, regardless of which token is used for governance.

Governance Scope

Vote locking gives token holders direct influence over how an Index DTF operates. Users who vote lock can participate in onchain votes that determine key aspects of the DTF’s design and ongoing configuration.

This includes decisions around:

• Basket Composition: Which tokens are included in the index and how they are weighted.
• Rebalancing Parameters: When and how the DTF rebalances its holdings, including any defined logic or discretionary updates.
• Fees: The level of TVL and mint fees charged to DTF holders.
• Governance Rules: Who can propose changes, approve or veto proposals, or manage other roles like branding.

RSR Staking

RSR staking is part of Reserve’s separate product, the Reserve Yield Protocol, which powers Yield DTFs backed by overcollateralized, yield-bearing assets. RSR holders who stake to Yield DTFs contribute first-loss capital and can be slashed if a collateral asset defaults. In return, they earn a share of the DTF’s revenue, calculated as the average yield of the collateral multiplied by the RToken market cap divided by staked RSR. Each Yield DTF has its own staking contract, and participants who stake RSR receive a transferable ERC-20 token that represents their position. Unstaking RSR triggers a 14-day delay before funds become available.

Reserve Index Protocol Ongoing Development

The Reserve Index Protocol launched in February 2025 on Ethereum and Base, introducing tokenized index portfolios with plans to enable permissionless creation in future updates. Since then, over a dozen Index DTFs have gone live across both networks, and early usage data shows growing user engagement.

The next phase of development will focus on expanding network reach and unlocking creator participation. Key development items include:

• Solana Deployment: A third implementation of the Index Protocol is being developed for Solana.
• Permissionless Index Creation: While current DTFs have been launched by Reserve partners, future protocol upgrades aim to support open creation by any user or team. This change will enable broader experimentation in index design, governance models, and community-led asset curation.

Together, these development items will push the Index Protocol toward wider adoption as infrastructure for onchain index products. The goal is to make Reserve a permissionless platform where anyone can build, govern, and scale tokenized portfolios aligned with emerging sectors, narratives, or institutional needs.

Closing Summary

The Reserve Index Protocol is creating new infrastructure for onchain portfolio construction. Index DTFs provide transparent, fully backed exposure to curated baskets of crypto assets. They are live on Ethereum and Base, easy to mint and redeem, and designed for 24/7 accessibility. Governance is handled through vote locking, which gives token holders control over each DTF’s structure without taking on collateral risk. This stands in contrast to RSR staking in the Yield Protocol, where stakers back assets and face slashing if collateral fails.

Adoption is still early but accelerating. Index DTFs have surpassed $3.46 million in market cap across Ethereum and Base, with rising trading activity and strong price performance across several products. With permissionless DTF creation and Solana deployment in development, Reserve is building a platform for users who want to simplify their exposure, participate in decentralized governance, and diversify & chill.

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