Index investing emerged as the most significant method of capital accumulation in the 20th century. Most active managers underperform a passive basket of assets.

In the cryptocurrency market, returns are always available, but they are not constant and shift from one category or project to another. Investing in a single asset will sooner or later lead to financial losses. An index doesn't promise you ultra-high returns, but it protects against deep drawdowns and losses.

In 2026, crypto users have several ways to build a diversified portfolio, but each has its drawbacks.

Envelop offers an on-chain index with separate contracts for each user, eliminating the risks associated with a shared pool, and features smart wallet technology that makes it easy to set up with a single click.

With the Envelop Index, crypto investors don’t have to choose between CEXs and a DeFi portfolio. In this solution, each index is a separate, isolated smart contract, a “basket” that holds your assets.

Let's take a look at the levels of the stack:

1. Odos is a DEX aggregator that finds the best swap path by sending trades through dozens of on-chain liquidity pools. When you set up a basket in Envelop Index (for example, 40% $ETH, 30% $WBTC, 20% stablecoins, and 10% DeFi governance tokens), Odos buys all of the items in one transaction at the best price. Your money never stays in Envelop's contract; it goes straight from your wallet to your own index basket contract.

2. The Security Model of Isolation by Design. Every index is its own smart contract. This is a planned architectural choice that goes against the "shared liquidity pool" model that most DeFi index protocols use.

It's much more profitable for attackers to target contracts holding $100,000+. In practice, a single retail investor almost never puts that amount into a single protocol.' The attack incentive doesn't exist because the attack reward doesn't exist.

The indices are based on the Envelop Protocol v2, which uses an innovative approach not previously seen in the industry.

The user creates a smart wallet (SW) into which they deploy the index. All smart wallets are separate contracts, and the assets held within them are isolated from one another. This approach enhances security by eliminating a single point of failure.

The owner of a SW can manage the assets stored within it.. Transferring ownership of such a wallet with assets doesn't involve disclosing any private keys. This can be done by simply transferring the SW to another address. Trading on a DEX, borrowing, or providing liquidity to any protocol is now also available to holders of Envelop’s Smart Wallet.

Information on the current collateral balance of each index is available via the Envelop Oracle API.

Initially, we focused on long-term investors who value non-custodial solutions, but over time we decided to expand the product to cater to as many users as possible. Now you can:

• simply visit the platform and review reports on assets in the indices

• request reports on the assets you are researching

• invest in a completed index

• build your own non-custodial index

• hedge your index or place a bet (Yes or No) on another index

The Envelop Oracle automatically displays the index's yield since its create, as well as providing other useful information:

1. A green fill color indicates that the index’s return is currently positive, while red indicates a negative return.

2. Index token contract

3. Assets in the index

4. Initial and current index value

5. Yield in percent