On the Construction of the Duck Index.

Principals have asked, with increasing frequency and decreasing patience, how the Duck Index is constructed. This letter is our answer, or at least the parts of it that survived review.

The Duck Index is a capitalisation-weighted basket of monetary cryptoassets, rebalanced quarterly against a volatility budget. Constituents must meet three criteria: credible issuance, deep settlement, and a social contract that has survived at least one cycle without requiring a Discord announcement.

Weights are capped at 40% per constituent. Stablecoins are excluded on principle; we do not index things that are trying not to move.

The fourth input, which we refer to internally as proprietary avian sentiment, contributes a modest overlay of between 0% and 100%. Its methodology is documented in an internal memorandum that is currently being read.

We consider the index robust. It has outperformed its benchmark in every period in which it was not compared to one.

Distribution: principals only. Forwarding this letter to a goose is a breach of the memorandum.