ETH-X ****is ****native to Optimism and utilises Perpetual Protocol V2 to create a three-times levered long on Ethereum. The smart contract itself is maintained by Keeper bots that rebalance the product regularly when upper or lower bounds are breached.
<aside> 🤖 Automated Strategy: Management of underlying spot and perp positions are fully managed; token holders require no interaction.
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<aside> 🧱 Composability: ETH-X can be integrated, issued, redeemed, and exchanged across DeFi due to being an ERC20 compliant token.
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<aside> 🚪 Ease of Access: Abstracts a sophisticated trading strategy into a single token; simply swap in and out of the strategy.
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By utilising Set Protocol infrastructure and their Perpetual Protocol integration, we can encapsulate this 2-3x Long strategy within one tradable, issuable and redeemable ERC20 token. Additionally, the ETH Dynamic Leverage Index has several significant advantages over other leverage-based tokens:
This is an important question; when open interest is dominated in favour of long positions, those long positions have to pay a fee to the shorters and inversely, if shorts outweigh longers, they have to pay to maintain their open positions. This means while the market is majoritively short, ETH Dynamic Leverage Index will get paid to maintain its open positions, and when the market is majoritively long, it will have to pay a few to maintain its open long interest.
<aside> 🧪 Target Leverage Ratio: 3.0x
Minimum Leverage Ratio: 2.0x
Max Leverage Ratio: 4.0x
Ripcord mechanism:
Rebalance Interval: when the ratio drops below -2.0x or moves above -4.0x
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