fx Docs
  • f(x) Protocol Documentation
  • OVERVIEW
    • πŸ“–Abstract
    • ⭐Core Products of f(x) Protocol 2.0
  • f(x) Protocol Mechanisms
    • βš–οΈThe f(x) Invariant
    • βš™οΈKey Functions of f(x) 2.0
    • πŸš€Creating a Leveraged Position (xPOSITION)
    • πŸͺ‚Rebalancing the Position (Liquidation Brake)
      • Understanding the band system
      • Liquidation process
    • πŸ’°Stability Pool
    • πŸ’΅Fees
  • RISK MANAGEMENT
    • πŸ§˜β€β™‚οΈRisk framework
    • βœ…Advanced Peg Protection Mechanisms
      • Understanding the redemption mechanism
    • 🚨Risk parameters
    • 🧭Oracle
    • πŸ›‘οΈAudit Reports
  • Earn with f(x)
    • πŸ’²USD high & sustainable yield
    • πŸͺ™$FXN Tokenomics
      • veFXN
      • FXN Farming and veFXN Boost
    • πŸ”₯Protocol Revenue & Distribution
  • POWER TO THE PEOPLE
    • 🀝Get involved - Community Booster Program
    • πŸ«‚Referral Program
  • FAQ
    • 🟦Is fxUSD an algorithmic stablecoin?
    • 🟦How do f(x) Protocol stablecoins maintain stability?
    • 🟦Is there any LUNA-like risk?
    • 🟦How does f(x) Protocol minimize liquidations?
    • 🟦What could go wrong?
    • 🟦Why are there different stablecoins?
    • 🟦What is the difference between f(x) Protocol V1 and V2?
    • 🟦What price drop would it require for my xPOSITION to be rebalanced/liquidated?
  • GUIDES
    • πŸ“ˆHow to open a leverage position (xPOSITION)
    • πŸ“‰How to close a leverage position (xPOSITION)
    • πŸ“How to adjust your leverage / how to reduce your Liquidation Brake
    • βž•How to add/reduce a leverage position?
    • πŸ’°How to stake into the stability pool?
    • πŸšΆβ€β™‚οΈHow to unstake from the stability pool?
  • MORE
    • πŸ”‘Token Breakdown
    • 1️⃣f(x) Protocol 1.0
      • Leverage
      • Earn
      • Stability Mechanism
      • FX Auto-Compound
      • Oracle
    • πŸ–₯️Resources
      • Contracts
      • Useful links
    • πŸͺ”Aladdin DAO
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  1. f(x) Protocol Mechanisms

The f(x) Invariant

The magic behind non-liquidatable leverage

PreviousCore Products of f(x) Protocol 2.0NextKey Functions of f(x) 2.0

Last updated 1 month ago

The f(x) Invariant is the core mechanism behind both V1 and V2. It enables non-liquidatable leverage while delivering 100% capital efficiency for the stablecoins. f(x) Protocol ensures that the total value of all fxUSD combined with the total value of all xPOSITIONs is always equal to the total value of the collateral reserves. Dynamic adjustments to the leverage ratio of xPOSITION and the peg ratio of fxUSD enable seamless collaboration between low-volatility stablecoins and high-leverage trading tools.

The relationship is represented as:

Where:

𝑛 is the number of TOKEN collateral,

𝑠 is the TOKEN price in USD,

​nf is the number of fxUSD,

𝑓 is the fxUSD NAV in USD,

nx is the number of xPOSITION units, and

π‘₯ represents the NAV of xPOSITION in USD.

This formula ensures that the system remains balanced, maintaining integrity and stability across its decentralized financial tools.

βš–οΈ