Leverage Tokens (LTs)
Overview
Leverage Tokens (LTs) transform complex DeFi strategies into simple, tradable ERC-20 tokens. Instead of manually looping, borrowing, swapping, and monitoring positions, users can now access these strategies with just one click — all by holding a single token in their wallet.
Designed to make DeFi more accessible and composable, Leverage Tokens are modular and permissionless by default. Anyone can create a tokenized strategy, customize how it works, and allow others to trade or hold it just like any ERC-20 asset. LTs are currently live on Base.
Whether it’s ETH staking loops, delta-neutral LP farming, or point-maximizing reward strategies, Leverage Tokens automate the underlying mechanics, reducing both complexity and risk.
Why Leverage Tokens?
In traditional DeFi, accessing leverage means juggling perp DEXs, managing health factors, and stressing over liquidation risk. Strategies like looping ETH staking positions or farming LPs can offer strong returns — but are often gated behind complexity and constant attention.
Leverage Tokens solve that by wrapping these strategies into a single, user-friendly token that handles:
Collateral deposits
Borrowing
Swapping
Automated rebalancing
Key Benefits
Passive Leverage: Gain leveraged exposure to DeFi strategies through automated tokens that simplify position management. While you still hold a leveraged position, LTs handle the operational complexity—so you can focus on entering and exiting your position responsibly without managing lending or collateral mechanics directly or worrying about liquidation thresholds.
ERC-20 Simplicity: Hold, trade, or LP Leverage Tokens just like any standard token. They're compatible across the DeFi stack.
Modular & Permissionless: Anyone can create their own LT using customizable adapters — no whitelist required.
Composable Building Blocks: Use Leverage Tokens as collateral, in yield farms, or in points-maximizing strategies across protocols.
Onchain Transparency: Leverage Tokens logic and state is completely onchain, no centralized/opaque entity managing positions.
How It Works
At the core of each Leverage Token is a system of smart contracts that coordinate:
Collateral Management – what asset is being deposited and looped.
Borrowing Logic – where and how funds are borrowed.
Rebalancing Mechanics – how leverage is maintained over time.
This is enabled by the Leverage Manager, a foundational contract that abstracts away the manual work of maintaining a leverage position.
Adapter Types
Each Leverage Token is composed of modular Adapters that plug into different DeFi protocols and strategies.
Collateral Adapters: Define the asset that’s being used as collateral (e.g., ETH, LP tokens, yield-bearing assets, or even RWAs).
Lending Pool Adapters: Specify which lending protocol to borrow from. Currently includes support for Morpho — but others (like Aave or Compound) can be added by token creators.
Rebalance Adapters: Define what leverage mechanics to enforce.
How Rebalancing Works
Leverage Token rebalancing logic is completely modular. When launching a new Leverage Token, the creator must specify the address of the Rebalance Adapter to be used. Seamless contributors have created 3 types of rebalance adapters as a starting point:
These can be used individually, combined or forked by token creators. Token creators are also free to build their own custom rebalance adapters from scratch, provided they adhere to the required interface.
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