Creating Long/Short positions: xPOSITION & sPOSITION
xPOSITION is a non-fungible, high-beta leveraged long position, designed as a powerful decentralized tool for on-chain high-leverage trading. When a user opens an xPOSITION, the process is executed through a flash loan within an atomic transaction — ensuring that all steps succeed together or the entire transaction is reverted, safeguarding both user funds and protocol integrity.
Mechanism Overview
Collateral Submission The user deposits eligible collateral (e.g., BNB), which is used to mint bnbUSD and initiate the leverage mechanism.
Flash Loan for Additional Collateral The protocol utilizes flash loans to temporarily obtain the additional collateral required to achieve the desired leverage. Both the flash loan and position creation occur atomically, eliminating the risk of partial execution.
Minting bnbUSD For each unit of xPOSITION, the protocol mints the necessary amount of bnbUSD to maintain volatility control and full collateralization. For example, a 7× leveraged position would consist of 1 unit of user-supplied collateral and 6 units of leveraged collateral represented in bnbUSD.
xPOSITION Activation Once the flash loan is repaid and the required bnbUSD is minted, the leveraged position is finalized and activated. The user now holds an xPOSITION with amplified exposure to the underlying asset.
sPOSITION is the inverse of an xPOSITION — a non-fungible, high-beta leveraged short position designed for decentralized, on-chain high-leverage trading. Instead of borrowing bnbUSD against collateral to go long, users deposit bnbUSD to borrow the underlying asset (e.g., BNB) and immediately short it.
Like xPOSITION, every sPOSITION is opened via a flash loan within an atomic transaction, ensuring that all steps execute in full or the transaction is reverted — eliminating partial execution risk.
Mechanism Overview
Collateral Submission The user deposits bnbUSD as collateral, which will be used to borrow the underlying asset from the xPOSITION reserve.
Flash Loan for Underlying Asset The protocol flash-borrows the required amount of the underlying asset (e.g., BNB) and sells it on an AMM for bnbUSD, creating the short exposure. Both the flash loan and the position creation occur atomically, removing any risk of partial execution.
Borrowing from the xPOSITION Reserve The combined bnbUSD — consisting of the user’s initial deposit and the proceeds from the asset sale — is deposited into the protocol to borrow the same underlying asset from the xPOSITION reserve. The borrowed asset is then used to repay the flash loan, completing the transaction.
sPOSITION Activation Once the flash loan is repaid and the collateral is secured, the leveraged short position is activated. The user now holds an sPOSITION with amplified short exposure to the chosen underlying asset.
xPOSITIONs and sPOSITIONs may be minted against a range of crypto assets, but only those explicitly approved through governance. To safeguard the protocol, governance whitelists only secure, battle-tested assets as eligible collateral.
In principle, any asset could serve as collateral, provided it passes a governance vote. Each approved collateral type is also subject to a minting cap — the maximum amount of bnbUSD that can be issued against it — which is likewise determined by governance.
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