Index Token

Definition ∞ An Index Token is a digital asset designed to represent exposure to a basket of underlying cryptocurrencies or other digital assets. Holding an Index Token provides diversified exposure to a specific market segment or the broader crypto market, similar to an exchange-traded fund. These tokens simplify investment by allowing users to gain exposure to multiple assets through a single instrument. They are typically managed by smart contracts or specialized protocols.
Context ∞ Index Tokens are gaining traction in the digital asset market as a means for investors to manage risk and simplify portfolio management. News often discusses the performance of various Index Tokens and the specific assets they track. The regulatory classification of Index Tokens remains a subject of ongoing discussion, impacting their accessibility and trading venues.