December 9, 2021 – The Index Coop and Pulse.inc today announced the launch of the first Polygon-native Flexible Leverage Index (“FLI”) offering 2x exposure to the price movement of ETH.
The Index Coop is a decentralized autonomous organization (DAO) with the mission to make crypto investing simple and accessible for everyone. Pulse.inc, a subsidiary of the DeFi market intelligence provider DeFi Pulse, creates, maintains, and licenses financial indexes for a decentralized world.
FLIs implement a collateralized debt position in a safe and efficient way to achieve leveraged returns and, by abstracting its management into a simple index, make it investable as a single ERC20 token. Thereby implementation costs are socialized and the continuous effort to maintain a healthy debt position is automated away. “Legacy processes for creating leverage positions in DeFi require users to monitor health ratios, manage collateral and debt positions, and risk liquidation during downturns. Flexible Leverage Indices are a simpler and safer alternative to such manual leverage methods,” said Etienne Royole, CEO of DeFi Pulse. In addition, a unique algorithm helps to lower the transaction fees.
The newly launched ETH 2x Flexible Leverage Index (“ETH2X-FLI-P”) implements Pulse.inc’s successful and proven FLI methodology but will now for the first time be available natively on the Polygon chain. “Market participants will be able to quickly trade in and out of a leveraged ETH product without paying high gas fees. Launching FLIs on Polygon is part of our ongoing effort to make the benefits of DeFi accessible to everyone,” said Lemonade Alpha, a member of the Index Coop. In addition, as the overall cost of rebalancing is significantly lowered, the collateralized debt position is recentered every four hours further reducing the risk of large deleveraging trades. The recentering process moves the current leverage ratio gradually back towards the target leverage ratio after being over or under leveraged due to ETH price movements.
Like the existing FLIs, ETH2X-FLI-P is exceedingly easy to use: At launch, ETH2X-FLI-P can be traded on Sushiswap with liquidity provider rewards available for the ETH2X-FLI-P / WETH pool. While holding the FLI token no constant monitoring of liquidation thresholds is necessary. More sophisticated users will be able to mint/issue FLI tokens directly at TokenSets by exchanging amWETH for ETH2X-FLI-P and amUSDC.
The token’s 1.95% (annualized) streaming fee is considerably less expensive than alternatives on centralized exchanges that can charge upwards of 10% annually.