Index Token
A token designed to track the combined value of a defined basket of underlying crypto assets, offering diversified exposure through a single token.
An index token is a token designed to track the combined value of a defined basket of underlying crypto assets, letting a holder gain diversified exposure across multiple assets by holding a single token, rather than needing to acquire and manage each underlying asset individually.
An index token's methodology — which assets it includes and how each is weighted — is a key factor determining what the token actually tracks, and these methodologies vary meaningfully between different index products. See Kaavon's "Evaluating Crypto Fund and Index Products" guide for the broader factors worth understanding before considering one.
Examples
- Holding a single index token can provide exposure to a defined basket of several underlying crypto assets, without needing to individually acquire and manage each one.
- Two index tokens claiming to track a similar market segment can perform quite differently, depending on their specific underlying methodology and weighting.