Chainlink Bull 2XLINKBULL2X

In sideways (up-down) markets, Toros pools can underperform typical leverage products. This is known as Volatility Decay. Toros pools work similarly to Leveraged ETFs. They maintain a leverage range by rebalancing AAVE debt. Volatility decay occurs through rebalancing, rebalance fee, and debt interest. Toros pools are therefore intended for short term directional bets for best results.

Vault receives deposits

Deposits are added to AAVE as collateral

Stablecoins are borrowed from AAVE

Stablecoins are swapped to the deposit asset. The process is repeated until the target leverage is achieved

Toros leverage tokens are best used for short term directional upside. Single direction movements can exceed returns compared to typical perp leverage products. This is because Toros increases leverage as its price increases, to maintain the leverage range. Toros uses AAVE to manage debt leverage positions.

All Toros leverage tokens have built-in protection against downside liquidation. For example, if you had held a typical -2X ETH Short perp from March to May 2021, you would have been liquidated several times over as ETH went up in price. Holding the Toros Ethereum Bear -2X however, would have protected you from liquidation. This is because Toros rebalances on price movements to maintain the leverage range. When a Toros token decreases in value, its leverage also decreases.

In sideways (up-down) markets, Toros pools can underperform typical leverage products. This is known as Volatility Decay. Toros pools work similarly to Leveraged ETFs. They maintain a leverage range by rebalancing AAVE debt. Volatility decay occurs through rebalancing, rebalance fee, and debt interest. Toros pools are therefore intended for short term directional bets for best results.