Synthetix Perpetuals-based Leverage Tokens

Toros uses Synthetix Perpetual Futures (Perps) to create leveraged tokens. These tokens allow users to gain exposure to the price movements of an underlying asset without holding the actual asset.

Key Features:

• Perpetual Futures Contracts: Each leveraged token is backed by a single perpetual futures contract on Synthetix, which is adjusted automatically based on asset price movements or user actions like deposits and withdrawals.

• Margin in sUSD: The tokens' margin is held in sUSD, and the counterparty for all these leveraged positions is the SNX debt pool.

• Leverage Range: These tokens maintain a predefined Target Leverage Ratio (TLR), ensuring positions are adjusted to stay within safe leverage limits.

• No Liquidation Risk: These tokens are protected against liquidation through automatic rebalancing when price movements occur, maintaining the TLR. This means they provide more stability than typical perpetual futures contracts.

• Volatility Decay: In markets with a lot of sideways movement, these tokens can experience volatility decay due to the nature of their rebalancing mechanism, interest fees, and the costs associated with maintaining leverage.

Example: BTC 4x Long Token

• If BTC moves favorably, the leverage token increases exposure to the underlying asset, amplifying gains.

• Rebalances when the target leverage threshold (e.g., between 3.8x and 4.2x) is crossed.

Benefits:

• Directional Upside Potential: These tokens are designed for short- to medium-term directional trading, benefiting from continuous leverage adjustments during favorable market moves.

• Efficient Leverage Management: By utilizing Synthetix Perps, users can gain asset exposure with reduced risk of liquidation.

Further information on Synthetix Perps: https://docs.synthetix.io/