Title: Launch ETH2xBTC and BTC2xETH on Arbitrum
Status: On Snapshot
Author(s): @anthonyb.eth
Reviewer(s): @MrMadila
Created: 16 December 2024
1 Abstract
The Index Coop core team proposes that the DAO launch two new automated leverage tokens on Arbitrum. These automated leverage tokens will be built on Index Protocol and utilise Aave V3 to achieve specific target leverage ratios.
- ETH2xBTC (2x Long ETH, 1x Short wBTC): 0xE7b1Ce8DfEE3D7417397cd4f56dBFc0d49E43Ed1
- BTC2xETH (2x Long wBTC, 1x Short ETH): 0x77F69104145f94a81cEC55747C7a0Fc9CB7712C3
This proposal seeks approval $INDEX holders to add these products to the Index Coop DAO. Upon a successful vote, the operator role will be transferred to the Index Coop Arbitrum Product Controller Safe.
2 Financials
2.1 Fees
| Symbol | Annual Streaming Fee | Issuance/Redemption Fee |
|---|---|---|
| ETH2xBTC | 3.65% | 0.10% |
| BTC2xETH | 3.65% | 0.10% |
2.2 Fee splits
Index Coop will earn 100% of the revenue from these new leverage tokens but may enter into revenue-sharing agreements with third parties when appropriate and compliant. Index Coop will also cover 100% of the gas costs associated with rebalancing.
2.3 Product Costs
The cost to Index Coop to launch and maintain these products is negligible in terms of capital outlay and ongoing expenses due to extremely low gas costs. The protocol has already been deployed to Arbitrum, including the internal smart contract infrastructure.
3 Specification
3.1 Range-Bound Methodology
The Index Coop Leverage Suite will utilise a range-bound methodology.
For users familiar with the legacy FLI products, please read here for the differences between range-bound and flexible leverage methodologies.
3.2 Token Parameter Settings
3.2.1 ETH2xBTC
| Parameter | Value |
|---|---|
| Name | Index Coop 2x ETH Short 1x BTC Ratio |
| Symbol | ETH2xBTC |
| Chain / Lending Protocol | Arbitrum / Aave V3 |
| Collateral Asset | aArbWETH |
| Collateral Asset Address | 0xe50fA9b3c56FfB159cB0FCA61F5c9D750e8128c8 |
| Underlying Collateral Address | 0x82aF49447D8a07e3bd95BD0d56f35241523fBab1 |
| Debt Asset | Variable Debt WBTC |
| Debt Asset Address | 0x92b42c66840C7AD907b4BF74879FF3eF7c529473 |
| Underlying Debt Address | 0x2f2a2543B76A4166549F7aaB2e75Bef0aefC5B0f |
| NAV at Launch | $1,000 |
| Issuance Module | DebtIssuanceV3 |
| Fee Module | StreamingFeeModule |
| Leverage Module | AaveV3LeverageModule |
| Target Leverage Ratio | 2.00 |
| Minimum Leverage Ratio | 1.752229 |
| Maximum Leverage Ratio | 2.282806 |
| Ripcord Leverage Ratio | 2.50 |
| Ripcord Incentive | 0.25 WETH |
| Rebalance Interval | Range Bound |
| Recentering Speed | 0.10% |
| Epoch Length | max |
| Initial Token Supply Cap | 27,000 |
| DEX | Uniswap V3 |
| Pool | WBTC/WETH 0.05% |
| Pool Address | 0x2f5e87c9312fa29aed5c179e456625d79015299c |
| TVL | $55.8m |
| Slippage Tolerance | 0.50% |
| Max Trade Size | 100 wETH |
| Ripcord Slippage Tolerance | 2.00% |
| Ripcord Max Trade Size | 250 wETH |
BTC2xETH
| Parameter | Value |
|---|---|
| Name | Index Coop 2x BTC Short 1x ETH Ratio |
| Symbol | BTC2xETH |
| Chain / Lending Protocol | Arbitrum / Aave V3 |
| Collateral Asset | aArbWBTC |
| Collateral Asset Address | 0x078f358208685046a11C85e8ad32895DED33A249 |
| Underlying Collateral Address | 0x2f2a2543B76A4166549F7aaB2e75Bef0aefC5B0f |
| Debt Asset | Variable Debt WETH |
| Debt Asset Address | 0x0c84331e39d6658Cd6e6b9ba04736cC4c4734351 |
| Underlying Debt Address | 0x82aF49447D8a07e3bd95BD0d56f35241523fBab1 |
| NAV at Launch | $1,000 |
| Issuance Module | DebtIssuanceV3 |
| Fee Module | StreamingFeeModule |
| Leverage Module | AaveV3LeverageModule |
| Target Leverage Ratio | 2.00 |
| Minimum Leverage Ratio | 1.752229 |
| Maximum Leverage Ratio | 2.282806 |
| Ripcord Leverage Ratio | 2.50 |
| Ripcord Incentive | 0.25 WETH |
| Rebalance Interval | Range Bound |
| Recentering Speed | 0.10% |
| Epoch Length | max |
| Initial Token Supply Cap | 11,000 |
| DEX | Uniswap V3 |
| Pool | WBTC/WETH 0.05% |
| Pool Address | 0x2f5e87c9312fa29aed5c179e456625d79015299c |
| TVL | $55.8m |
| Slippage Tolerance | 0.50% |
| Max Trade Size | 3.5 WBTC |
| Ripcord Slippage Tolerance | 2.00% |
| Ripcord Max Trade Size | 8.75 WBTC |
3.3 Governance
Any material changes to the methodology will be communicated externally and subject to an $INDEX token vote.
3.4 Liquidity Analysis
The underlying assets, WETH and WBTC are all extremely liquid.
4 Product Liquidity
Users can directly issue and redeem leverage tokens via a dedicated Leverage Suite app site; there will be no dependency on secondary market liquidity for leverage tokens.
5 ‌Methodologist Background
The Index Coop core product team has proposed leverage, trade and risk parameters, which this IIP will confirm.
6 Disclaimer
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 unauthorised (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 unauthorised).
None of our token products have been or will be registered under the U.S. Securities Act of 1933, as amended, or with any securities regulatory authority of any state or other jurisdiction of the U.S. Our restricted tokens may not be offered, sold, or delivered within the U.S. to, or for the account or benefit of, Restricted Persons. Our restricted tokens that may be offered on secondary markets and other platforms are not for distribution to any Restricted Person. No offers, sales, resales, or deliveries of any of our token products may be made in or from any jurisdiction (including the U.S.), except in circumstances that will result in compliance with any applicable laws and regulations and that will not impose any obligations on Index Coop. Persons who obtain our token products are required to inform themselves about and adhere to any such restrictions. Index Coop reserves the right to impose further restrictions at its sole discretion, which will be communicated through its terms of service or on its website. All website users, including U.S. Persons, must read our Terms of Service and List of Restricted Tokens. U.S. person(s) must comply with our Terms of Service and not use restricted Index Coop tokens.
Index Coop does not provide tax advice. Nothing contained in this document should be construed as tax advice, and you should consult with your own tax advisor before making any financial decisions.
7 Copyright
‌Copyright and related rights waived via CC0.