They're a simple way to get leveraged exposure to a variety of tokens without risk of liquidation. Currently ETH, BTC, AAVE, LINK, UNI and YFI are supported. The design makes it simple to add support for more tokens in the future.
Cube tokens like cubeBTC roughly track
BTC price ^ 3while inverse cube tokens like invBTC roughly track
1 / BTC price ^ 3. This means that unlike FTX or Binance leveraged tokens, rebalancing occurs continuously.
Being a pool, it's a zero sum game, apart from protocol fees. This means it's completely fair for all cube token holders. Other leveraged tokens can suffer from issues such as volatility drag or having their rebalances frontrun, which extracts value from leveraged tokens.
Please note the following caveats.
- 1.Performance is relative to other tokens. If BTC goes up 1%, cubeBTC could theoretically still go down if the rest of the pool goes up by more than 1%.
- 2.The level of leverage won't be exactly 3x. It can vary a lot and could easily be 1.5x or 4x for example. If lots of people have bought the same cube token, it becomes diluted and the leverage will be lower for that cube token. The potential upside is also capped by the amount available in the rest of the pool. If the pool share of your cube token is really high (say > 40%) you could consider selling it as the potential upside might be lower than the possible downside.
- 3.The code is unaudited. Do not deposit more than you're willing to lose.