The crypto market in 2025 may undergo a paradigm shift.

On January 24, the assets under management (AUM) of Bitcoin spot ETFs surpassed ESG ETFs ($117 billion) and reached a level comparable to gold spot ETFs. The influx of traditional capital is driving a wave of institutionalization, with the Trump administration pushing for regulatory easing and Wall Street institutions rushing in. The era of easy money is over, bringing forth a crucial question: How can retail investors capture systemic gains in the mainstream adoption of the industry with minimal cognitive cost?

On-chain passive index funds may provide the answer. By bundling a basket of assets and leveraging AI-driven strategies to help investors diversify risk and capture industry beta returns, SoSoValue’s MAG7.ssi is a product of this emerging trend.

1. SoSoValue SSI Protocol: The On-Chain Answer to Passive Investing

SoSoValue is an AI-driven investment research platform that combines the efficiency of CeFi with the transparency of DeFi. By integrating on-chain and off-chain data streams, it aims to address key pain points in the crypto market, such as information overload and complex asset allocation. It can even be considered an AI-powered “crypto Bloomberg Terminal.”

To more efficiently capture value growth in the crypto market, SoSoValue has introduced the SSI protocol—an innovative spot crypto index protocol. Its core objective is to bring the logic of traditional passive index investing on-chain while solving two major challenges: information overload and lack of trust. This helps reduce information noise and capture crypto beta more effectively. The protocol’s ecosystem consists of six key participants:

• Retail Users: Purchase index tokens (such as MAG7.ssi) to gain market-average returns without researching individual tokens.
• Liquidity Providers (UNI LPs): Provide liquidity on exchanges like Uniswap and earn trading fees.
• Professional Arbitrageurs (WLPs): Mint or redeem tokens to balance market prices, ensuring index tokens remain aligned with underlying asset values.
• Market Makers (PMMs): Purchase underlying assets and deposit them into custodial accounts to maintain asset reserves.
• Custodians: Use professional custody services like Cobo and Ceffu, publishing daily proof of reserves to ensure fund security.
• Index Compilers: Set component rules (e.g., selecting the top seven tokens by market cap) and dynamically adjust weightings.

The brilliance of this mechanism lies in its ability to maintain price stability. When the price of MAG7.ssi on exchanges exceeds the value of its underlying assets, professional arbitrageurs (WLPs) mint new MAG7.ssi tokens and sell them on the market to capture the price difference. This process is executed automatically through smart contracts, leveraging arbitrage to balance market prices and minimize volatility.

2. Product Matrix: Multi-Strategy Index Tokens

1. SoSoValue’s Four Major Indexes

In December 2024, SoSoValue officially launched four index tokens: MAG7.ssi, MEME.ssi, DEFI.ssi, and USSI. Each of these tokens represents a carefully curated basket of crypto spot assets, designed with transparent rules and rigorous methodologies:

• MAG7.ssi: Tracks the top seven crypto assets by market cap (BTC, ETH, SOL, etc.) using a “10% equal weight + circulating market cap weight” hybrid strategy, balancing the stability of leading assets with the growth potential of emerging ones.
• MEME.ssi: Focuses on the highly volatile Meme sector, covering projects with a market cap exceeding $800 million to mitigate single-token risk.
• DEFI.ssi: Captures growth opportunities in the DeFi sector, especially amid regulatory easing (e.g., under a Trump administration), by selecting large-market-cap, high-liquidity DeFi assets.
• USSI: Implements a delta-neutral hedging strategy, maintaining a systematically hedged delta exposure to achieve low-drawdown returns.

The flagship MAG7.ssi adopts a “10% equal weight + market cap weight” hybrid approach—ensuring BTC and ETH serve as stable anchors while granting at least 10% allocation to secondary leaders like SOL and XRP. The allocation automatically adjusts based on market cap fluctuations. This design ensures that if SOL surges due to a payments adoption boom, its weight will be automatically increased by AI, driving up MAG7.ssi’s overall returns.

2. MAG7.ssi’s Breakthrough in the “Impossible Triangle”

In traditional finance, index funds often struggle to balance returns, liquidity, and accessibility. However, MAG7.ssi leverages an on-chain architecture to break through all three barriers:

• Returns: Backtesting data from 2021-2023 shows that the prototype portfolio of MAG7.ssi achieved a cumulative return of 125.2%, outperforming Bitcoin’s 31.4% by 93.8%. Notably, in the 2021 bull market, MAG7.ssi delivered an annual return of 252.2%, while Bitcoin’s return was only 43.6% in the same period.

• Liquidity: By aggregating on-chain liquidity from seven major tokens, MAG7.ssi has ranked among the top five liquidity pools on Uniswap’s Base chain.
• Accessibility: SoSoValue utilizes Cobo/Ceffu as third-party custodians, with smart contracts automatically handling asset allocation and rebalancing. This combination of compliance and on-chain transparency makes MAG7.ssi an ideal entry point for institutional and off-chain capital.

3. The $500 Billion Market: The Crypto Singularity of Passive Investment

For retail investors, picking the next SOL in the crypto market is as difficult as spotting Amazon in the 1990s. This is precisely where passive index funds thrive—replacing speculative gambling with systematic allocation.

SoSoValue’s whitepaper predicts that by 2030, the crypto passive investment market will surpass $500 billion.

In recent years, crypto market infrastructure has significantly improved, including independent custody, multi-asset liquidity, and clearer regulatory frameworks, laying a solid foundation for index products. Currently, the total crypto market cap is approaching $4 trillion, comparable to the $4.5 trillion U.S. stock market size in 1993 when the first S&P 500 ETF (SPY) was introduced. This suggests that crypto may be at an ideal moment for index product adoption.

In the U.S. stock market, ETFs account for approximately 10% of total market cap. If crypto follows a similar trajectory, passive investment products could exceed 5% of the total crypto market cap within the next five years, potentially surpassing $500 billion. This highlights the immense growth potential of index investing in crypto.

Perhaps by then, the idea of “Just keep the faith (DCA), and let the algorithm handle the rest” will no longer be just a vision—it will be reality.

4. Conclusion: A Ticket to the Era of Crypto Mainstream Adoption

In 1985, the birth of the Nasdaq-100 Index allowed retail investors to share in the trillion-dollar growth of Microsoft and Apple. In 2025, MAG7.ssi aims to replicate this historical trajectory—leveraging on-chain transparency and AI-driven dynamic rebalancing to transform crypto market growth into an accessible financial instrument.

Perhaps the true takeaway from this experiment is that as the industry transitions from the wild west to the mainstream, embracing index-based allocation is no longer an option but an inevitability of the times.

Risk Disclaimer: The long-term outperformance of the index remains uncertain; the SEC’s stance on index derivatives is still evolving, and the implementation progress of Trump’s policies should be closely monitored.

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