Spartan Space Notes - Synthetix & TLX Network - April 4, 2024

Building atop Synthetix Perps: TLX Leveraged Tokens

Background Info on TLX

• Max, who manages comms for TLX, discusses the team of seven’s extensive background in academia and DeFi. This includes PhDs in computer science with a focus on Ethereum security, and Daniel, co-founder of TLX, was also a founder of stablecoin project Gyroscope. 

• Started TLX 8 months ago, prior was working in making DeFi collateral more efficient, then with the advent of DeFi perps decided leverage tokens were a perfect opportunity

Leverage Token Deep Dive

• Max explains that leverage tokens are not a new concept, but have been around for a long time in traditional markets, and TLX is looking to fill a gap by providing a go-to place for trading them.

• In short, leverage tokens are an automated way to go long or short a specific asset, where the position continuously rebalances as the price moves.

• While other platforms like FTX used a fix time interval as the primary variable for rebalancing, TLX uses a target range of leverage. Once it goes outside of that range the protocol will add or reduce leverage to get it back in range

• Max explains the difference between leveraged tokens and perps, highlighting the benefits of leveraged tokens, such as maintaining leverage as positions appreciate.

• Overall: In a trending market, leverage tokens can provide higher exposure to price movements, either for or against the trend. In a stalled price action or flat and volatile market, leverage tokens can lead to volatility decay and reduce exposure over time.

• Max also discusses using leverage tokens for liquidity provision and delta neutral strategies using TLX that go beyond just users longing and shorting an asset.

• Assets will start with 2x leverage and potentially go up to 10 or 20x for different assets, and they will slowly roll out the assets and leverage offered, 

TLX Governance Structure, Liquidation Points, Rewards Program

• Taking inspiration from Synthetix, TLX uses multiple councils that oversee project decisions. Primary council (Tabby Council), Ecosystem Council, and Intern Council

• Max believes that voting on delegates rather than parameters will increase participation in crypto governance.

• Westie also suggests the governance structure is the best option for representing the community's views, as it solves for voter apathy and requires individuals to spend most of their time and expertise in the field, rather than being extremely knowledgeable about the protocol.

• The Intern Council is a new idea that allows community members to participate in a more unorthodox way, such as posting memes or educational content, to foster community building and create a fun and enjoyable environment.

• Protocol aims to reward users who lost heavily in trades with "liquidation points" as a way to engage and appreciate the community.

• Taking inspiration from other exchanges, the referral program is a key feature of TLX’s product in order to facilitate more users migrating to the platform.

TLX vision

• TLX's vision is to create a niche market for leveraging tokens within the DeFi ecosystem.

• TLX aims to be the best leverage tokens protocol, focusing on dominating the niche and providing a go-to platform for trading leverage tokens on chain.