Launch Strategy Example: weETH-17x

One of the first live Leverage Tokens is a high-yield ETH strategy:

• Token Symbol: WEETH-WETH-17x

• Token Name: weETH / WETH 17x Leverage Token

• Collateral: Ether.fi’s weETH

• Borrowed Asset: WETH

• Borrow Market: Morpho | weETH/WETH LLTV: 94.5 Oracle: Chainlink weETH/eETH exchange rate oracle IRM: AdaptiveCurveIRM

• Target Leverage (Target Collateral Ratio): 17x (1.0625)

• Min Leverage (Max Collateral Ratio): 16.9x (1.062893082)

• Max Leverage (Min Collateral Ratio): 17.3x (1.06135)

• Mint Token Fee: 0%

• Redeem Token Fee: 0.1%

• Dutch Auction Duration: 1 hour

• Dutch Auction Initial Price Multiplier: 1.01

• Dutch Auction Min Price Multiplier: 0.999

• Pre-liquidation Collateral Ratio: 1.06061 (17.5x)

• Pre-liquidation Rebalance Reward: 0.501% (30% of Morpho liquidation penalty)/For a 94.5 LLTV market the Morpho liquidation penalty is 1.67%

• Strategy: Auto-looped exposure to restaked ETH for max points and rewards

• Use Case: For users seeking boosted yield and points on Base without manual management

Mint and Redeem fees are designed to mitigate oracle price sandwich attacks. These fees are not extracted externally but are instead internalized into the Leverage Token’s (LT) NAV, effectively redistributing value back to LT holders pro rata.

The strategy liquidation and rebalance design balances capital efficiency with risk protection:

• ⚖️ Robust Pre-Liquidation Threshold: A 1.06061 collateral ratio (17.5x leverage) maintains a safe buffer to ensure rebalance prior to liquidation. This is an additional safeguard to reduce the cost of a liquidation (i.e.: liquidation penalty) paid by the Leverage Token if for whatever reason the dutch auction cannot complete in time. A pre-liquidation reward of 0.501% s calibrated as a share of Morpho’s liquidation penalty, aligning incentives while avoiding unnecessary dilution of LT token value.

• 🧮 Dutch Auction Rebalance: A 1-hour Dutch auction with a tight price range (1.01 → 0.999 multipliers) ensures efficient market execution without excessive slippage or stale pricing.

These parameters ensure that the system self-corrects rapidly and fairly—minimizing losses and gas inefficiency, while maintaining leverage positions safely and transparently.