Leverage Suite
Simplified leverage with automated liquidation protection and low transparent fees.
What is The Index Coop Leverage Suite?
The Index Coop Leverage Suite provides streamlined access to leverage, featuring built-in liquidation protection and low, transparent fees. Built on Index Protocol, our suite of automated tokens simplifies leverage trading by utilising Aave V3 to offer users six distinct strategies for ETH and BTC.
To learn more about The Index Coop Leverage Suite, see our article: Introducing The Index Coop Leverage Suite.
Are leverage tokens similar to perpetual futures (perps)?
Both leverage tokens and perps offer a way for users to amplify their exposure to an asset. However, leverage tokens differ from perps in their collateral structure.
Perps allow traders to speculate on asset prices without directly holding the underlying asset, using collateral (often WETH, WBTC, or stablecoins) to open long or short positions with synthetic leverage. Traders must maintain sufficient margin to avoid liquidation if the market moves against them.
Leverage tokens are fully collateralized by the underlying spot assets. For example, the ETH3x product supplies WETH to Aave, borrows USDC, and swaps it for more WETH. This looping process is repeated until the desired leverage is achieved, creating an overcollateralized debt position directly tied to the underlying assets' value.
All Index Coop leverage tokens adjust real-time leverage ratios by rebalancing within defined bounds. This automated rebalancing enables liquidation protection and creates a hands-off experience for users.
Leverage tokens can also be substantially cheaper than perps because the carrying costs on Aave are significantly lower than funding rates on most perp platforms.
Fixed Fees
Index Coop charges annual fees based on the type of product: -1x and 2x products incur a 3.65% annual fee, while 3x products carry a 5.48% annual fee. Additionally, all products are subject to issuance and redemption fees of 0.10%.
Dynamic Costs
Costs associated with utilising assets within Aave involve the concept of "Cost of Carry," wherein assets deposited accrue interest from borrowers. This results in a spread between the interest earned from deposits and the interest paid for the debt. For example, if ETH2x deposits $1,000 of WETH and borrows $500 of USDC, where ETH deposits earn +2% APY and borrowing USDC costs -5% APY, the resulting net Cost of Carry is -1% APY, leading to a slight reduction in the position's value over time. This Cost of Carry may vary, sometimes favourably and sometimes unfavourably for users, depending on fluctuating borrowing and deposit rates, necessitating regular monitoring via the app.
Regarding rebalancing costs, while Index Coop itself doesn't impose charges, swapping assets through DEX pools incur small fees paid to liquidity providers, such as the 0.05% swap fee in Uni v3 WETH/USDC pools. Moreover, swaps also entail "price impact," wherein larger swaps lead to higher overall prices paid for buys or lower overall prices received for sells, thus gradually reducing the net value of the position over time.
Leverage Suite Resources
Trade now on the Leverage Interface
| Token | Contract Address | Chain |
|---|---|---|
iETH1x | 0x749654601a286833aD30357246400D2933b1C89b | Arbitrum |
ETH2x | 0x26d7D3728C6bb762a5043a1d0CeF660988Bca43C | Arbitrum |
ETH2x | 0x65c4C0517025Ec0843C9146aF266A2C5a2D148A2 | Ethereum Mainnet |
ETH3x | 0xA0A17b2a015c14BE846C5d309D076379cCDfa543 | Arbitrum |
iBTC1x | 0x80e58AEA88BCCaAE19bCa7f0e420C1387Cc087fC | Arbitrum |
BTC2x | 0xeb5bE62e6770137beaA0cC712741165C594F59D7 | Arbitrum |
BTC2x | 0xD2AC55cA3Bbd2Dd1e9936eC640dCb4b745fDe759 | Ethereum Mainnet |
BTC3x | 0x3bDd0d5c0C795b2Bf076F5C8F177c58e42beC0E6 | Arbitrum |
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