Money Market-based Leverage Tokens

Smarter Leverage, Built for Stability

Toros offers money market-powered leverage tokens, providing automated, debt-based exposure to major crypto assets. These tokens use borrowed funds to amplify returns—while Toros’ intelligent rebalancing system ensures liquidation protection and optimal leverage management.

Currently, the only money markets Toros uses are:

• Aave

• Compound

Key Features

Cheap Debt-Based Leverage

• Toros borrows assets to achieve leveraged exposure to an underlying asset by looping. This looping to target leverage is automated by Toros.

• Borrowed assets from money markets tend to have lower borrowing costs, decreasing overall decay compared to perpetual markets.

• Smart contract automation dynamically manages debt, preventing excessive risk.

Downside Liquidation Protection

• Toros tokens eliminate forced liquidations, ensuring smoother performance in volatile markets.

• Debt positions are rebalanced dynamically to keep leverage safe and sustainable.

Intelligent Leverage Adjustments

• Leverage is only adjusted when price movements exceed predefined thresholds (e.g., 2.8x to 3.2x for a 3x Bull Token).

• Minimizes unnecessary rebalancing, reducing volatility decay and borrowing costs.

Considerations

Volatility Decay

• Sideways markets can lead to underperformance due to:

  • Interest fees on borrowed assets.

  • Rebalancing costs to maintain leverage.

  • The compounding effects of leveraged exposure over time.

Lower Maximum Leverage

• Money markets tend to have more sensitive liquidation thresholds, meaning only 2x and 3x long tend to be possible.

• For the short side, while -2x short is possible, -1x short is safer, so only maximum -1x shorts are available on Toros.