Overview
Alongside builds on-chain crypto index tokens that provide diversified, passive exposure to the crypto market. The flagship product, AMKT, is a single ERC-20 token backed by a basket of major cryptocurrencies weighted by market capitalization. Holding AMKT gives exposure to the broad crypto market's performance without needing to manage individual positions.
The concept mirrors traditional finance index investing — the same way an S&P 500 ETF provides diversified equity exposure, AMKT provides diversified crypto exposure. The index is rebalanced periodically to reflect changes in market capitalization rankings, and the underlying assets are held in custody backing each AMKT token.
The product thesis is sound: most active traders underperform passive strategies, and index investing has dominated traditional finance for decades. However, crypto markets have not embraced index products with the same enthusiasm. Crypto participants tend to prefer concentrated, high-conviction bets on individual tokens rather than diversified exposure.
Alongside has positioned AMKT as suitable for institutional and retail investors who want crypto exposure without the complexity of managing multiple positions, rebalancing, and custody across different assets.
Smart Contracts
AMKT's smart contracts manage the minting and redemption of index tokens against the underlying basket of cryptocurrencies. The architecture includes price oracles for index calculation, rebalancing logic for periodic weight adjustments, and mint/burn functions for creating and destroying index tokens.
The contract design follows established patterns from earlier index protocols (Set Protocol, Index Coop). The rebalancing mechanism handles the complexity of adjusting position sizes across multiple assets while minimizing slippage and front-running risk. Authorized market makers handle large rebalances to maintain tight tracking.
Security
Security centers on the custody of underlying assets backing AMKT tokens. The protocol uses institutional-grade custody solutions for the basket assets, reducing smart contract risk by keeping most value in secure custody rather than complex DeFi smart contracts.
The smart contract surface area is relatively small — minting, redemption, and rebalancing logic. The contracts have been audited. The primary security concern is oracle reliability for price feeds used in index calculation and rebalancing triggers. A compromised oracle could lead to incorrect rebalancing.
Yield Generation
AMKT itself doesn't generate yield beyond market appreciation of the underlying basket. The token provides market beta exposure — it goes up when crypto markets go up and down when they go down. There are no staking rewards, lending yields, or DeFi farming mechanisms built into the base product.
The yield proposition is capital appreciation through diversified crypto exposure. For users who would otherwise hold only BTC or ETH, AMKT provides exposure to mid-cap tokens that may outperform during certain market cycles. However, in practice, BTC and ETH have often outperformed diversified crypto baskets.
Adoption
Adoption is very limited. On-chain crypto index products have consistently struggled to gain traction. AMKT's market cap and trading volume are minimal. The product competes with simpler alternatives: just buying BTC and ETH, using CEX portfolio features, or purchasing crypto ETFs in traditional finance.
The failure of index products in crypto is well-documented — Index Coop's DPI (DeFi Pulse Index) also struggled despite strong branding and a useful product. Crypto market participants generally prefer active, concentrated strategies over passive diversification.
Tokenomics
Alongside's token model is still developing. AMKT itself is the index token (backed by underlying assets), and any governance or utility token has limited traction. The protocol generates revenue through management fees on AMKT (similar to ETF expense ratios), but with low AUM, fee revenue is negligible.
The value proposition depends entirely on growing AMKT's assets under management. Without significant AUM growth, the fee-based business model cannot sustain the protocol.
Risk Factors
- Low adoption — on-chain index products have repeatedly failed to gain traction
- Crypto culture mismatch — crypto users prefer concentrated bets over diversification
- TradFi competition — crypto ETFs in traditional finance serve the same passive exposure need with better UX
- Index tracking error — rebalancing costs and execution create tracking differences
- Custody risk — underlying basket assets depend on custodial security
- Fee pressure — minimal AUM generates insufficient revenue to sustain operations
Conclusion
Alongside brings a proven TradFi concept — index investing — to crypto, but the market hasn't responded. The product is well-designed and the thesis is economically sound, but crypto market participants consistently prefer active, concentrated strategies. The 4.2 score reflects good product design and sound concept, heavily discounted by the persistent failure of on-chain index products to gain adoption. The emergence of traditional crypto ETFs (BlackRock's IBIT, etc.) further undermines the need for on-chain index tokens.