Fungible basket tokens represent ownership stakes in a diversified collection of underlying digital assets, where each token holds an identical value and can be exchanged for any other token of the same type. These tokens are created by locking a predefined set of assets into a smart contract, with the basket token serving as a liquid representation of that underlying portfolio. They allow investors to gain exposure to multiple assets through a single, easily tradable token. This mechanism simplifies portfolio management and access to diversified holdings.
Context
Fungible basket tokens are gaining traction as a method for passive investment and risk diversification within the volatile cryptocurrency markets. News reports often feature new platforms or protocols launching various themed basket tokens, such as those tracking DeFi blue chips or specific industry sectors. Key considerations include the transparency of the basket’s composition, the methodology for rebalancing, and the audit status of the smart contracts that custody the underlying assets. Regulatory classification of these tokens remains a subject of ongoing debate.
The ERC-7621 standard creates a universal liquidity layer for on-chain fund baskets, unlocking capital efficiency across the DeFi asset management vertical.
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