What is the Phoenix Protocol for Leveraged Tokens (PPLT)?¶
PPLT stands for Phoenix Protocol for Leveraged Tokens. It is one of the main products of Phoenix.
PPLT provides a decentralized way for creating and trading decentralized leveraged tokens on cryptoassets, like BTC, ETH, etc., on different chains. These leveraged tokens are powered by no-loss lending pools, where participants can earn interest. All the core functions of token minting, redeeming, taking leverages, borrowing and lending occur on-chain and are managed by smart contracts. It is a permissionless, censorship-resistant, and non-custodial protocol.
PPLT’s goal is to make it simple to trade leveraged tokens in an easy, secure, transparent and decentralized way. It also provides a friendly venue for lenders to earn interest for powering the leveraged positions for the leveraged tokens.
Why does DeFi Need Leveraged Tokens?¶
Traditional leveraged tokens are traded on centralized exchanges, like Binance, FTX, Huobi, etc. These innovative derivative products have attracted great volume since their creation.
Few pieces of research have covered the possibility of decentralization before, yet the Phoenix team believes these products are a winning innovation in the DeFi space.
- On-chain leveraged tokens will be borderless and permissionless. Anyone can get access to the leveraged tokens trading freely without KYC requirements.
- Leveraged tokens have a rebalancing mechanism adjusting their leverages according to the current exposure. Phoenix codes are open-source and all the mechanisms and transactions are public and on-chain. Therefore, better transparency will be guaranteed as compared with centralized exchanges.
- All leveraged tokens will be fully collateralized with underlying crypto assets. There will be no counterparty risks when redeeming.
- All leveraged tokens will be ERC-20 tokens, making it simple to store them in wallets or transfer them between addresses.