The leveraged tokens protocol is finally here. TLX is now live on Optimism Mainnet! Launch details can be summarized by the following points:

• Users can mint leveraged tokens through the TLX front-end

• Users can redeem their leveraged tokens at any time

• Leveraged bonding has been enabled

• $TLX holders can stake their TLX to participate in governance

What is TLX?

TLX is a leveraged tokens protocol that enables users to mint and redeem leveraged tokens for over 50 assets with up to 20x leverage. Built on the Optimism Superchain and powered by the Synthetix liquidity layer, TLX brings next-generation leveraged tokens on-chain.

With founders from Curve Finance and GyroStable, work on the TLX protocol began roughly 1 year ago. As part of a community-led and decentralized launch, the $TLX governance token was deployed ahead of protocol launch on April 11th.

Through this token first launch model, the TLX protocol is backed by the community and its governing bodies from day 1 of being live.

Leveraged Tokens

Unlike traditional perps, leveraged tokens maintain constant leveraged exposure and do not require any margin management. On TLX, leveraged tokens are minted as fully composable ERC-20 tokens. This means that after minting, leveraged tokens will appear in your wallet and can be used across virtually any DeFi protocol (e.g., AMMs, money markets, etc.).

The TLX protocol currently supports leveraged tokens for ETH, BTC, SOL, LINK, and OP. Each supported asset supports leverage factors of 1x, 2x, and 5x for both long and short. Support for more leveraged tokens and leverage factors will be continuously rolled out.

Composable Perps

Unlike previous implementations of leveraged tokens, the TLX protocol utilizes a novel design that enables new DeFi primitives. Where old leveraged tokens utilized a money market design, TLX is built on perpetual futures markets. Meaning, each leveraged token can be seen as a composable perp that puts funding rates on-chain.

All holders of TLX leveraged tokens will realize the benefits or costs of the underlying funding rates directly in their position. For example, if ETH has a positive 12% annualized funding rate, holders of ETH short leveraged tokens would earn 12% per year in yield.

The funding rate dynamics of TLX leveraged tokens are utilized to offer a new DeFi primitive: delta-neutral LP tokens.

Delta-neutral LP tokens can be created by any user through TLX and the AMM of their choice and it's as simple as:

1. Minting a 1x short leveraged token

2. Pairing it with its spot equivalent in a liquidity pool

wstETH/ETH1S
Upon launch, the TLX DAO will support the wstETH/ETH1S liquidity pool on Velodrome. By pairing ETH1S with wstETH LPs of the pool will remain relatively delta-neutral while earning staking yields from wstETH and funding yields from ETH1S (as long as ETH funding rates stay positive). As creating delta-neutral LP tokens is permissionless, it is expected that more will be created over time (e.g., wBTC/BTC1S).

Leveraged Bonding

The TLX protocol utilizes a bonding mechanism to distribute $TLX governance tokens. After minting leveraged tokens, users have the option to bond their leveraged tokens in exchange for $stTLX at a discount rather than redeeming them for their underlying.

To bond leveraged tokens, go to the bond page where you can view the current bonding discount and the total amount of stTLX that can be bonded at that moment. From there click the Bond Leveraged Tokens button, enter the amount of leveraged tokens you'd like to bond, and then confirm the transaction in your wallet.

Once the transaction has been confirmed a success notification will appear and your received stTLX will be visible on the portfolio page.

stTLX

Users can acquire stTLX either by bonding or directly staking their TLX governance tokens. By holding stTLX, users are granted the right to participate in governance and to receive protocol fees (if enabled by governance).

Unstaking stTLX is subject to a 5 day unstacking period (i.e., once stTLX is unstaked, it takes 5 days before users can withdraw their TLX).

POL

The TLX DAO accumulates protocol-owned liquidity (POL) every time a user bonds leveraged tokens in exchange for $stTLX tokens. This liquidity, while initially being acquired in the form of leveraged tokens, undergoes a weekly rebalance whereby 80% of newly acquired POL gets allocated to the wstETH/ETH1S Velodrome pool and the remaining 20% gets allocated to the TLX/ETH Velodrome pool.

Minting

To get started trading leveraged tokens head over to tlx.fi, connect your wallet, and go to the Mint page. Once there, you can select the underlying asset, direction, amount, and leverage factor. After making your selections, click the mint button and confirm the transaction.

Once the transaction has been confirmed a success notification will appear and your leveraged tokens will now be visible in your wallet as well as on the TLX portfolio page.

Redeeming

TLX leveraged tokens can be redeemed at any time in exchange for their current value. The value of your leveraged tokens will change over time depending on the performance of the underlying asset.

To redeem go to the portfolio page, select the tokens you'd like to redeem, the amount you'd like to redeem, and then click the redeem button and confirm the transaction. Once the transaction has been confirmed a success notification will appear.

Fees

The TLX protocol charges a streaming fee and redemption fee on leveraged tokens. Currently, all protocol fees are distributed to the staker contract. Fee participation for stTLX holders can be enabled by governance.

Learn more about protocol fees in the docs.

What's next?

The launch of TLX marks the first step in bringing truly retail-friendly leveraged trading to DeFi. Where gaining leveraged exposure to a wide range of assets is as simple as one click.

Following this initial launch support for more assets and leverage factors will be continuously added. The TLX protocol is built on Synthetix perps meaning there's no limit to the number of assets that can be supported.

Leveraged tokens are here to provide users with the freedom to trade without the worry of active management. No margin maintenance, no headaches. Constant leveraged exposure all in a simple ERC-20 token.

Try it out and mint your first leveraged token today 👉 tlx.fi

A note to those who read the full post: Users can unlock a 50% rebate on redemption fees by using a referral link. Head over to the TLX Discord to find a referral link before you start trading!