🛡️Protected Leveraged Tokens Overview

Smart, Automated Leverage With Downside Protection

Toros protected leveraged tokens give depositors amplified upside exposure to key crypto assets and a downside protection floor. They perform similarly to regular leveraged tokens on the upside, but with additional fees to maintain downside protection close to the current underlying asset price.

They are optimally used during volatile periods when it’s appropriate to pay larger vault fees for additional downside protection whilst capturing potential upside. Protected leveraged tokens will not outperform regular Bull leveraged tokens during market run-ups due to the additional underlying costs to maintain downside protection.

Just like regular Leveraged Tokens, the Protected Leveraged Tokens have: - Upside directional power - Volatility decay risk (downside volatility decay is replaced with option roll-over fees)

BTC Protected 2X vs BTC Bull 2X leverage token

Technical Details

🚀 Automated Leverage Management

  • No manual adjustments required—Toros automatically rebalances leverage, optimizing risk and maximizing returns.

  • Built for efficiency, leveraging perpetuals or money markets to execute trades seamlessly.

💹 Smarter Risk Management

  • Target Leverage Ratio (TLR): Maintains a safe leverage range, preventing excessive risk exposure.

  • Eliminates forced liquidations: Unlike perpetual contracts, Toros tokens automatically adjust leverage to protect your position

  • Downside Protection Management The downside protection layer is provided by Flat Money which has a close to at-the-money call option backed by the underlying asset (eg. BTC). The margin backing is further hedged out by Aave to fully remove exposure to the underlying asset below the strike price floor. The option is partially rolled as the underlying asset moves in price to maintain exposure close to at-the-money.

Slippage: What to Expect When Exiting a Position

When withdrawing from a leveraged Toros vault, the token price displayed is based on oracle pricing. However, on-chain market prices can sometimes diverge slightly, causing withdrawal slippage.

🔷What to Expect:

  • Slippage is typically <1%, but we recommend accounting for 2-3% in volatile conditions.

  • Higher leverage amplifies slippage, so adjusting for it ensures a smoother exit.

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