Enabling Innovative Leverage Products on Polygon with Aave & Index Coop
Set is excited to co-announce the Index Cooperative Polygon deployment of the industry-leading ETH 2x Flexible Leverage Index (FLI) product as their technology partner.
ETH2x-FLI-P is a structured product in ERC20 format that enables traders to automate a target leveraged exposure to ETH in a completely decentralized manner by utilizing the Set Protocol Aave Leverage Module. Being deployed on Polygon means that both investors and Asset Managers can take advantage of significantly cheaper and faster transactions.
If you would like to learn more about this great product now available on Polygon, navigate over to the Index Coop press release below. This article will show a little more about the underlying infrastructure being used.
Introducing the Aave Leverage Module (ALM)
The ALM is a Set Protocol smart contract module, available on both Polygon & Ethereum, enabling leverage trading within Sets using Aave as the lending protocol. Paired with this module is a Debt Issuance Module that will call functions on the ALM to keep interest accrual and liquidation state updated.
The Index Cooperative uses this module to power the FLI mechanism, which automatically levers and delevers the product depending on specific thresholds and parameters, ultimately ensuring a zero liquidation and fully managed product to investors.
Why use the ALM?
The ALM allows Asset Managers, such as the Index Cooperative, to create leveraged strategies and products fully collateralized and compliant with the ERC-20 token standard. In addition, by utilizing Set Protocol infrastructure and the ALM, you are unlocking the full composability of your products out of the box, which enables integration into the broader ecosystem of services to broaden use-cases.
At the time of writing, the ETH2X-FLI deployed on Ethereum has $180M+ TVL less than a year after being released, validating the product-market fit of decentralized, non-custodial, decentralized leverage products.
How does the module work?
The ALM has a series of functions that allow Asset Managers to initialize, lever and delever any Set assets listed on Aave easily. In addition, the module completely abstracts the aToken management and collateral swaps on DEX’s so you can focus on developing the product itself and, most importantly, is available to be utilized today by Asset Managers.
Dive into our documentation below and get in touch with any questions.
Interested in creating your own products?
The ALM lets you build custom leverage strategies such as long/short pair strategies to create unique ratio based sets (e.g. ETH/BTC pair) or larger, more diversified leveraged indices to perhaps capture sectoral moves with more weight (DeFi, BTC).
If you have a product idea utilizing the ALM on Ethereum or Polygon or simply want to use Set Protocol to create your next passive index, then reach out today and let’s help you understand how you can leverage decentralized infrastructure to create the structured products of the future.
Alternatively, if you want to try the protocol features out, you can always self-serve via TokenSets, our community and documentation linked below.
TokenSets, Discord & Documentation
Growth: andrew@setprotocol.com
Business Development: alejandro@setprotocol.com
Where do you want to see leveraged products next?
Avalanche? Arbitrum? Optimism? Fantom?
Let us know! We want Asset Managers, like the Index Cooperative, to create and get their products into as many community members hands as possible in the future. We will be taking temperature checks over Twitter & Discord today via polls, so please take the time to tell us!
Frequently Asked Questions
Resources
For more information on Set & Index Cooperative,
- Join the Set community on Discord
- Create a Set or invest at TokenSets
- Follow Set on Index Coop on Twitter
- Explore the products built by the Index Cooperative
- Learn more about Set Protocol through our documentation
