Pulse

Creates, maintains, and
licenses financial indices
for a decentralized world.

The Flexible Leverage Index lets you leverage a collateralized debt position in a safe and efficient way, by abstracting its management into a simple index.

No slippage

Zero slippage via composable entry and exit

No liquidations

Emergency deleveraging possible during Black Swan events for additional fund safety

Reduced gas costs

Unique Index algorithm reduces rebalancing needs by an order of magnitude

The FLI
makes leverage
effortless.

Discover the ETH2x-FLI on TokenSets

Flexible Leverage Index

Version 0.1

Objective

Flexible Leverage Index (FLI) makes leverage effortless.

The end user does not have to worry about:

  • Monitoring his leveraged loan 24/7, having to always be ready to act.
  • High fees, transactions not being included fast enough or the relative UIs being unresponsive during times of high volatility.
  • Paying for overpriced stablecoins to deleverage on time or panic trading to save his positions.
  • Managing their liquidation ratio since this is automatically managed by FLI, which drastically reduces liquidations, even during black swan events.

FLI has several key advantages over Legacy Leveraged Tokens:

  • Zero slippage via composable entry and exit.
  • Unique Index algorithm reduces rebalancing needs by an order of magnitude.
  • Emergency deleveraging possible during Black Swan events for additional fund safety.

Methodology

Objective

Flexible Leverage Index enables market participants to take on leverage while minimizing the transaction costs and risks associated with maintaining collateralized debt.


Definitions

  • Borrow Rate — the cost to borrow the asset at the DeFi Lending Protocol over the most recent epoch.
  • Epoch Length — the time between rebalances.
  • Target Leverage Ratio (TLR) — the long term target for the value of the assets held by the index divided by the value of the debt held by the index.
  • Current Leverage Ratio (CLR) — the value of the asset currently held by the index divided by the current value of the debt held by the index.
  • Maximum Leverage Ratio (MAXLR) — the highest leverage ratio the index will ever have after a rebalance.
  • Minimum Leverage Ratio (MINLR) — the lowest leverage ratio the index will ever have after a rebalance.
  • Re-centering Speed (RS) — the rate at which the Current Leverage Ratio is adjusted each period to return to the Target Leverage Ratio, when the index is not being adjusted back to the Maximum Leverage Ratio or the Minimum Leverage Ratio.


Index Price:

FLIt = FLIt-1 * (1 + ((Pricet/Pricet-1–1) * CLRt-1 — (BorrowRatet * (CLRt-1 -1)/CLRt-1)))



Calculation of the new Current Lever Ratio for the period:

CLRt+1 = max(MINLR, min(MAXLR, TLR * (1 — RS) + CLRt * RS))