2x Leverage Tokens FAQ
All your questions about the new 2x leverage tokens answered.
March 20, 2024
Note to existing ETH2x-FLI or BTC2x FLI users: You are not required to take any action at this time. If you would like to exit your ETH2x-FLI or BTC2x-FLI position, you can see detailed instructions here.
How can I buy ETH2x or BTC2x?
Non-restricted persons can buy ETH2x and BTC2x tokens in the Index Coop App. Based on the amount you intend to buy or sell, the app will recommend the optimal path: Flash Mint (which issues new 2x token units) or DEX Swap (powered by 0x). At launch, there may not be DEX liquidity for the new 2x tokens, so Flash Mint is likely to be the recommended path.
If DEX liquidity is provided, then third-party DEX aggregators like CoW Swap and 1inch can also be used to trade 2x tokens.
What are the benefits associated with holding ETH2x or BTC2x?
In addition to the time-tested features of the legacy FLI tokens–liquidation protection, automated rebalancing, persistent leverage–these new 2x tokens are more gas-efficient to issue and redeem and have upgraded risk automation.
You can find more info on all these benefits in the introductory article for ETH2x and BTC2x.
What are the costs associated with holding ETH2x or BTC2x?
ETH2x and BTC2x charge an annualized streaming fee of 3.65% or 365 bps. There is also a 0.10% or 10 bps issuance and redemption fee. Token holders also pay carrying costs attributed to the underlying collateralized debt positions in Aave V3.
All fees on the legacy FLI tokens have been disabled, so FLI holders do not pay “double fees”.
How long should I hold ETH2x or BTC2x tokens?
Unlike standard index products, ETH2x and BTC2x are not intended to be held for extended periods of time. The primary reason for this is volatility drift, a naturally occurring phenomenon in leverage products that frequently rebalance; a deep dive article on volatility drift and how it affects 2x token holders will be published imminently. For this reason, it is recommended that holders manage their positions in daily or weekly terms, not monthly or yearly terms.
Do I need to do anything with my ETH2x-FLI or BTC2x-FLI?
If you are a FLI holder, you do not need to do anything to maintain 2x exposure to ETH or BTC. The new 2x tokens are operating “under the hood” of the legacy FLI tokens, fully enabled with liquidation protection, automated rebalancing, and persistent leverage on Aave V3.
What if I want to exit my ETH2x-FLI or BTC2x-FLI position?
To exit your legacy FLI position, you can “unwrap” your FLI tokens for the underlying 2x tokens. From there, you may flash redeem or swap the 2x tokens in exchange for your preferred output token; the Index Coop App will recommend the optimal path based on liquidity conditions.
A guide for unwrapping FLIs and redeeming 2x tokens is available here.
What if I want to provide liquidity for ETH2x or BTC2x?
Anyone can provide liquidity for ETH2x or BTC2x due to the permissionless nature of issuance and redemption and the permissionless nature of DEXs. As of now, the following liquidity pools have been initialized on Uniswap V3:
ETH2x/WETH (30bps): https://info.uniswap.org/#/tokens/0x65c4c0517025ec0843c9146af266a2c5a2d148a2
BTC2x/WBTC (30bps): https://info.uniswap.org/#/tokens/0xD2AC55cA3Bbd2Dd1e9936eC640dCb4b745fDe759
A guide for programmatic issuance and redemption is also available here for liquidity providers and bot operators. Index Coop does not provide liquidity for ETH2x or BTC2x, so it is up to the market to determine where / when / why / how much liquidity is provided for these leverage tokens.
Disclaimer: This content is for informational purposes only and is not legal, tax, investment, financial, or other advice. You should not take, or refrain from taking, any action based on any information contained herein, or any other information that we make available at any time, including blog posts, data, articles, links to third-party content, discord content, news feeds, tutorials, tweets, and videos. Before you make any financial, legal, technical, or other decisions, you should seek independent professional advice from a licensed and qualified individual in the area for which such advice would be appropriate. This information is not intended to be comprehensive or address all aspects of Index or its products. There is additional documentation on Index’s website about the functioning of Index Coop, and its ecosystem and community.
You shall not purchase or otherwise acquire our restricted token products if you are: a citizen, resident (tax or otherwise), and/or green card holder, incorporated in, owned or controlled by a person or entity in, located in, or have a registered office or principal place of business in the U.S. (defined as a U.S. person), or if you are a person in any jurisdiction in which such offer, sale, and/or purchase of any of our token products is unlawful, prohibited, or unauthorized (together with U.S. persons, a “Restricted Person”). The term “Restricted Person” includes, but is not limited to, any natural person residing in, or any firm, company, partnership, trust, corporation, entity, government, state or agency of a state, or any other incorporated or unincorporated body or association, association or partnership (whether or not having separate legal personality) that is established and/or lawfully existing under the laws of, a jurisdiction in which such offer, sale, and/or purchase of any of our token products is unlawful, prohibited, or unauthorized).