# About Index Tokens

In crypto, the fragmented ecosystems require users to operate across multiple wallets, chains, and platforms to store, stake, and rebalance their assets.

OpenDelta Index Tokens provide a simple exposure to broad-market, sector, and ecosystem categories. Users can access them through existing wallet infrastructure or other integrated front ends.

Holding a single token grants users exposure to a curated basket of assets that are held, managed, and rebalanced by OpenDelta. Importantly, exposure via OpenDelta Index Products _includes_ staking and lending rewards from productive assets when applicable.&#x20;

## The Problem(s)

Despite the immense popularity of index products in traditional finance, they have yet to gain significant traction in crypto-native markets. We attribute this to three key challenges:

1. **Timing**
2. **Inefficiency due to excess decentralization**
3. **Poor design**

### **Timing**

In 2024, DeFi has experienced an explosion of new token issuances. From highly volatile assets to fixed-income opportunities in RWAs and money markets, the sheer number of new tokens and yield-generating mechanisms flooding the market has made it nearly impossible for even the most seasoned crypto investors to keep up.

Crypto-native index products are no longer just about diversification — they are now essential for curation and simplifying the management of underlying assets. Additionally, the growing influx of retail investors through traditional financial service providers reinforces the idea that crypto-native index baskets will ultimately become the primary vehicles through which the majority of retail investors engage with the market.

### **Inefficiency Due to Excess Decentralization**

One of the most critical requirements for index product providers is the ability to efficiently assemble and manage baskets of diverse assets. While blockchain technology has democratized accessibility and transparency, it has also introduced significant challenges.

Today, tokens exist across multiple blockchain networks and layers, making it extremely difficult to build products that can seamlessly and securely operate across these fragmented ecosystems. Still, cross-chain interoperability is essential for developing high-performing index products. Historically, projects have focused on building fully decentralized index token issuance protocols that function well within their own ecosystems but fail to incorporate external assets, severely limiting their scalability.

Additionally, index products rely on efficient rebalancing and trading mechanisms to accurately track benchmarks, as well as smooth minting and redemption processes. While decentralized exchanges (DEXs) have seen steady growth in both adoption and liquidity, they remain too rigid and underdeveloped to fully support the operational needs of index product issuers and their authorized participants.&#x20;

Ultimately, this has meant that "fully decentralized" index products are less efficient and more costly than alternatives. &#x20;

### Poor Design

A proven formula for creating successful index products consists of three key components:

1. **Professional Parties**&#x20;
2. **Index Issuers**
3. **Methodology Providers**

Traditionally, these responsibilities are handled by three independent entities. However, past and current crypto-native index providers have attempted to take on two or even all three roles themselves. As a result, they stretch their resources too thin, failing to execute any of these functions effectively —ultimately leading to poorly designed and underperforming products.

For an index product to succeed, each of these roles must be executed with the highest level of expertise. A failure in any one of these areas will inevitably result in a subpar product.

In addition, many of these projects pursued a design where _any_ user was allowed to create an index. This ultimately resulted in the proliferation of a very high number of low-quality indexes that failed to capture meaningful liquidity or market share.&#x20;

## The Solution&#x20;

The OpenDelta Protocol was built to directly address these issues and create the first high-quality, scalable crypto indices. OpenDelta is built on top of hybrid on-chain/off-chain infrastructure that allows for native custody of assets across chains and layers, efficient rebalancing, and fast and cheap minting and redemption.&#x20;















