FLI Strategy Parameter Updates

What is the Flexible Leverage Index?

For an introduction, navigate to this page.

Where can I find the current parameters for the FLI products?

View this guide to retrieve the current parameters for FLI products here.

What are most frequently updated parameters through Index Coop governance?

The most frequently updated parameters are max trade sizes, exchange for rebalances, and supply cap as they depend on liquidity and market conditions.

Parameter

Considerations

Who

Supply cap

For initial launch, the ETH2x-FLI (and other FLI products) will have a guarded roll-out to ensure stability with a more risky leverage type product

Technical Team - Typically the Index Coop technical team will create proposals to raise the supply cap as comfort is reached at each TVL threshold based on the supply cap framework below

Max trade size

The max trade size denominated in the collateral asset in a single transaction. Rebalances will be TWAPed if above the max trade size. As ETH price goes up, this number may be adjusted down to limit single trade price impact in DEXs and allow liquidity to be replenished

IC Product / Analytics Teams - Community members who monitor liquidity on Sushiswap/Uniswap create proposals as liquidity conditions change to target ~0.5% price impact on rebalances

Exchange

The DEX which daily rebalances will source liquidity from. This is not the AMM pool where FLI sits. Typically Sushi or Uniswap.

IC Product / Analytics Teams - Community members who monitor liquidity on Sushiswap/Uniswap or other DEXs create proposals to update the exchange used for rebalances

Rebalance bot whitelist

In the initial guarded launch, there will be a whitelist of addresses allowed to call the rebalance() and iterateRebalance() functions. Therefore, any keeper addresses need to be whitelisted prior to launch or go through Index Coop governance post launch. Ripcord() does not have this restriction, and will be callable by anyone.

Technical Team - The Index Coop technical team will create proposals to request whitelisting additional rebalance bot addresses

What is a framework for evaluating supply cap increases?

Metric: Liquidation risk <1%

Levers: Keeper redundancy, SC upgrades, single trade size, supply cap

TVL: $0 - 5M

TVL: $5-20M

TVL: $20-100M

TVL: $100M+

Confidence level

99% confident in handling 10-15% drawdowns in 1 day

99% confident in handling 10-15% in 1 day

99% confident in handling 20-25% drawdowns in 1 day including TWAP trades

99% confident FLI would’ve avoided liquidation on Black Thursday

Redundancy

2 keeper bots

3 keeper bots and multiple watchers for emergency delever

3-5 keeper bots

3-5 keeper bots + additional rebalance incentivization

SC system upgrades

Existing SC system

Existing SC system

Existing SC system

SC with flashloan delevering

Single trade liquidity

TWAP using Uniswap or Sushiswap ~$1.2m chunk size

TWAP using Uniswap or Sushiswap ~$1.2m chunk size

TWAP using Uniswap or Sushiswap ~$1.2m chunk size

Trade splitters across both Sushiswap and Uniswap ~$2.4m chunk size

Timeline

T+0

2-4 weeks

1-2 months

3-6 months

How can I contribute to maintaining FLI?

Community members can request to update parameters through an IIP. Here is an example of a FLI strategy update in the forum.