F(x) Protocol Research Article 1: The Optimal Choice for Long-Term Leverage Product Highlights 1. Minimizes funding rates through mechanisms like the Fx invariant formula, collateral yield, flash loans, and stability pools. 2. Utilizes Rebalance + Fx invariant formula to dynamically adjust at typical contract liquidation points, resulting in lower liquidation risk compared to other perpetual trading platforms. Initially, I perceived the F(x) Protocol as a decentralized stablecoin product. However, with the launch of F(x) 2.0 and the introduction of shorting mechanisms, its core functionality has shifted toward a perpetual decentralized exchange (Perp DEX). Unlike other Perp DEXs and CEXs, F(x) demonstrates significant innovation in its mechanisms, appealing to many “long-term leverage players.” Core Trading Mechanism To avoid confusion with formulas, let’s start with examples of longing and shorting: Example 1: Long Position User A deposits $100 of stETH into the F(x) Protocol and opens a 10x leverage long position: The protocol borrows $900 via a flash loan and mints $900 fxUSD. An xPOSITION is created with $100 collateral and a total exposure of $1,000 ($100 stETH + $900 fxUSD). If ETH price rises 10%, the position’s value increases to $1,100, yielding a $100 profit (10x the $10 collateral gain). If ETH price falls, rebalancing burns fxUSD and sells stETH to maintain safe leverage. Example 2: Short Position User B deposits $1,000 fxUSD to create a 3x leverage sPOSITION to short ETH: The protocol borrows $3,000 worth of stETH, sells it for fxUSD, and creates an sPOSITION. If ETH price drops 10% (stETH value falls to $2,700), User B repurchases stETH for $2,700, returns it to the protocol, and earns a $300 profit (after fees). If ETH price rises 10% (stETH value rises to $3,300), the position loses $300, covered by the $1,000 fxUSD collateral. Key Questions Answered What are xPOSITION and sPOSITION? xPOSITION (long) and sPOSITION (short) are NFTs representing long and short positions on assets. Currently, long positions offer up to 7x leverage for ETH and 10x for BTC. Collateral (ETH or BTC) can generate staking yield (e.g., via stETH). How do these mechanisms work? Why can A mint $900 fxUSD with 10x leverage? This involves the core mechanism: the F(x) invariant formula C = S + L, where: C = Collateral (or collateral value with x leverage). S = Minted fxUSD. ...