⚡Perpetuals–based
Leverage created using perpetual futures protocols like GMX and Flat Money
TLDR
Built on perpetual futures protocols (currently GMX and Flat Money).
Leverage is achieved by opening and maintaining perp positions.
Costs = funding payments (positive or negative).
Exposure = synthetic long or short.
Higher leverage (e.g., up to 4x longs) is possible compared to money markets.
How it works
Margin is deposited into a perpetuals DEX like GMX or Flat Money.
A perp position (long or short) is opened at the target leverage.
Toros automatically rebalances the position to keep leverage constant.
Profits are reinvested, so gains auto-compound.
Example: a BTCBULL4X token backed by GMX maintains ~4x exposure to BTC using perp contracts.
Key Features
Higher Leverage Potential: Perp protocols allow more aggressive leverage, enabling tokens like 4x BTC or ETH bulls.
Synthetic Exposure: Tokens are backed by perp contracts, not directly by the underlying asset.
Auto-Compounding Profits: As price rises, profits are added back into the position, reinforcing exponential gains.
Considerations
Funding Payments:
Perps have continuous funding costs paid between longs and shorts.
Depending on market imbalance, funding can be positive (earn) or negative (cost).
Costs are less predictable than borrowing from money markets.
Volatility Decay:
Rebalancing still applies.
In sideways/choppy markets, frequent adjustments can erode value. Learn more →
Protocol Risks:
Smart contract or liquidity risk from GMX or Flat Money.
Oracle risk (mispricing of perp contracts).
Risks
Funding costs can swing sharply if perp markets are imbalanced.
Extreme volatility can still push leverage outside safe ranges.
Usual DeFi risks: contract bugs, oracle manipulation, liquidity squeezes.
Key Takeaways
Mechanism: leverage via perpetual futures (GMX, Flat Money).
Costs: perp funding (variable, sometimes positive).
Risks: funding volatility, protocol risk.
Use case: higher-leverage tokens (e.g., 4x) and assets not easily looped in money markets.
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