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Leverage Token Design

# Inside the Bear

Using the Bear as the example, here is a breakdown of the Bear's inner workings, with an example Bear token with x-2 targeted leverage.

## Mandate: These are fixed value given upon the token's inception.

Leverage Target
Number of Token
Token Start Price
Maintenance Margin
Account Leverage
x-2
100
$100 6.25% 10 • Target Leverage: The mandated leverage for this token. • Number of Token: The starting number of token minted. • Token Start Price: The starting token price. • Maintenance Margin: The maintenance margin DEX required for margin trading. • Account Leverage: The leverage used in margin trading provided by DEX. ## Current State: These values fluctuates as market moves. Indexed Price Equity Token Unit Price Net Exposure Effective Leverage 100$ 10,000.00
$100$ 20,000.00
2
• Indexed Price: The price of the underlying asset being tracked.
• Equity: This is the net buy in from users, hence our total value locked. It changes as users mint/withdraw.
• $Equity = Σ (BuyInAmount * BuyInPrice)$
• Token Unit Price: This is the price at which we take mint/withdraw, hence the book value of token.
• $Token Unit Price = NetAssetValue / NumberOfToken$
• Net Exposure: This is the Bear's margin trading account's total short exposure.
• $NetExposure = MarginUsed * AccountLeverageUsed$
• Effective Leverage: The effective leverage Bear's account currently has over Equity, hence this is how much user's are leveraged.
• $EffectiveLeverage = Exposure / Equity$

## Margin Account State: These values fluctuates as market moves, and changes as the Bear rebalances.

Average Entry Price
Margin Used
Cash Left
Float PL
Realized PL
NAV
$100.00$ 2,000.00
$8,000.00$ -
$-$ 10,000.00
• Average Entry Price: The average price of the short position that the Bear maintains. In other words, it is the weighted sum of each buy in, hence the average price of our current position. This only change when there is new buy in, either due to redemption or re-leveraging.
• $AverageEntryPrice = Σ(BuyInAmount * BuyInPrice) / TotalBuyIn$
• Margin Used: This is the margin used to maintain current position.
• $MarginUsed = Exposure / AccountLeverageUsed$
• Cash Left: The cash we still have in the account after margin used and float P/L. The cash left amount represents the buying power we have left.
• $(Cash Left + Float P/L) * Account Leverage = Buying Power$
• Float P/L: The unrealized float P/L the Bear's current exposure results to. The current exposure is also referred to as notional position amount that we are maintaining with margin used.
• $Float P/L = Exposure * (Average Entry Price - Indexed Price)$
• Realized P/L: This is the realize P/L whenever we exited our position. It only register when an exit trade (buy trade for the Bear) is executed, then the amount will be add to Cash Left.
• $Realized P/L = Exited Amount * (Average Entry Price - Indexed Price)$
• NAV (Net Asset Value): This is the Net Asset Value of Bear's margin trading account. It's the actual value we have after float P/L. This is used to calculate book value of each token.
• $NAV = Margin Used + Cash Left - Float P/L$