FAQ

General

What is Toros?

Toros is a DeFi protocol that provides automated, tokenized strategies. All Toros products are ERC-20 tokens that maintain their strategy through onchain management. Products include leveraged tokens, 1x tokens, yield vaults, and options strategies.

What chains does Toros support?

Toros is deployed on Arbitrum, Base, Ethereum, Optimism, and Polygon. Not all products are available on every chain. Arbitrum has the widest selection.

What do I need to use Toros?

A compatible Web3 wallet (such as MetaMask) with funds on a supported chain. Connect your wallet at toros.finance to browse and invest in products.

Are Toros tokens transferable?

Yes. All Toros products are standard ERC-20 tokens. You can hold them in any compatible wallet, transfer them, or use them in other DeFi protocols that accept ERC-20 tokens.

Leveraged Tokens

Can I get liquidated holding a leveraged token?

Toros leveraged tokens use automated rebalancing to reduce effective leverage as prices decline. This significantly reduces liquidation risk compared to managing a leveraged position manually. Toros reports no forced liquidation events in over 4 years of operation.

What is volatility decay?

Volatility decay is the gradual erosion of value that happens in sideways or choppy markets. Each rebalance during a range-bound period can lock in small losses that compound over time. This is the main risk of holding leveraged tokens through extended periods without a clear trend. See Volatility Decay for a worked example.

How long should I hold a leveraged token?

Leveraged tokens are designed for short to medium-term positions where you have a directional view. They are not designed for passive, long-term holding. In trending markets, compounding works in your favor. In choppy markets, volatility decay works against you.

What is the difference between money market-based and perpetuals-based tokens?

Money market-based tokens use Aave lending loops. Perpetuals-based tokens use GMX perpetual futures. The mechanism affects cost structure (interest vs funding rates) and which assets are available. See Money Market-Based and Perpetuals-Based for details.

What are Protected Leveraged Tokens?

Protected Leveraged Tokens (PLTs) combine leveraged upside with a downside protection floor built using Toros Everlasting Options. They cost more than standard leveraged tokens (due to option premiums) but cap losses during drawdowns. See Protected Leveraged Tokens.

1x Tokens

Why would I use a 1x token instead of just buying the asset?

1x Tokens provide synthetic spot exposure to assets that are difficult to access natively on Arbitrum. If an asset has no native spot market on Arbitrum or liquidity is shallow, a 1x token lets you hold exposure as a simple ERC-20 token without bridging.

Do 1x tokens have costs?

Yes. Because 1x tokens use GMX perpetual futures under the hood, they are subject to funding payments, trading fees, and minor tracking differences vs the spot price. Over long periods, these costs can add up.

Yield Vaults

How do Yield Vaults generate returns?

Yield Vaults deploy capital across DeFi lending protocols and liquidity pools. The vault manager optimizes allocations to balance yield and risk. Returns are variable and depend on market conditions.

What is the difference between USDy, USDmny, and USDpy?

All three accept stablecoin deposits and differ in strategy:

• USDy — earns yield from stablecoin liquidity pool farming (e.g. providing liquidity to stablecoin pairs and collecting fees).

• USDmny — a market-neutral strategy designed to generate yield without directional exposure.

• USDpy — earns yield from perpetual markets, typically by going short perps and long spot to collect funding rates, or by providing liquidity to perpetual protocols and earning fees.

Vault allocations are dynamic and may shift based on market conditions. See Yield Vaults for details.

Options Strategies

What is the Covered Call strategy?

The Toros Covered Call provides recurring income on Bitcoin exposure using Everlasting Options. It behaves like a covered call: full downside, capped upside, and ongoing premium income. It is designed for sideways to moderately bullish markets. See Covered Call.

What is the Short Volatility strategy?

The Short Volatility strategy profits when Bitcoin stays range-bound. It combines a Covered Call LP position with an Aave BTC short to reduce directional exposure. It can lose value when BTC trends strongly in either direction. See Short Volatility.

Security

Has Toros been audited?

Toros is built on the dHEDGE protocol. The smart contracts powering Toros vaults have been covered by 6 independent audits from firms including Sherlock, CertiK, and independent auditors. See Security and Audits for the full audit timeline.

Is there a bug bounty program?

Yes. dHEDGE maintains a bug bounty program on Immunefi with rewards up to $50,000. See Security and Audits for details.