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Automatically rebalancing ERC-20 long and short leveraged tokens based on recursive borrowing with AAVE, Uniswap and Chainlink integration


Created At

HackMoney 2021

Project Description

Leto abstracts collateralized debt management and allows to create automatically rebalanced leveraged positions on ERC-20 tokens that are available on core lending protocols (Compound, AAVE).

Starting with ETH, Leto allows creating L-ETHup and L-ETHdown tokens, that provide an x2 leveraged exposure to ETH by pooling collecting users’ funds into separate Leto pools and performing borrowing, lending, and trading operations on behalf of Leto pools.

L-Tokens represent the proportion of Net Value of the Leto pool, where Pool Net Value = Value of Deposited Assets – Value of Borrowed Assets, Pool Leverage = Value of Deposited Assets / Pool Net Value. The same strategy can be used for any ERC-20 tokens available on core lending protocols.

How it's Made

The project is built on top of AAVE money market, Uniswap DEX and Chainlink Price oracle. LetoPool contract consumes the price feed from chainlink interface. Leto universal LendingMarketAdapter connects to a specific money market adapter (AAVE for MVP). Universal ExchangeApapter connects to a particular DEX adapter (Uniswap for MVP). LetoStrategyAdapter specifies which rebalancing strategy will be utilized for this pool (long or short). When the rebalance transaction is called, the pool rebalances its assets according to the active Strategy.

The above infrastructure allows for flexible implementation of new components, including new money markets, DEXs, aggregators, and strategies. Further on we plan to introduce a coincident of wants rebalancing. When there is a need to rebalance long toke, we should

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