IIP: 182 Title: Launch ETH2x & BTC2x, Deprecate FLIs Status: Proposed Author(s): @anthonyb.eth Reviewer(s): @allan.g , @MrMadila , @sidhemraj Created: 2024-01-17 Quorum: ~673k

---

Simple Summary

This proposal follows on from the successful IIP-181 to proceed with the deprecation and replacement of the FLI products; $ETH2x-FLI and $BTC2x-FLI. The replacement tokens $ETH2x and $BTC2x will be built on Index Coop Protocol and utilise Aave v3. For more details please see the forum post (link in discussion section below)

Motivation

ETH2x-FLI and BTC2x-FLI were originally launched in 2021 on Set Protocol and Compound V2. Because Set Protocol cannot be upgraded and Compound V2 is undergoing deprecation, the Index Coop plans to launch new 2x tokens that will replace the legacy FLI products. These new tokens will employ a novel range-bound methodology rather than the historical FLI methodology provided by Scalara and be built on new Aave V3 infrastructure on Index Protocol.

FLI holders still represent a significant share of Index Coop’s user base and they contribute meaningfully to TVL and recurring revenue. This agreement enables the Index Coop to execute the deprecation plan more seamlessly and to continue serving legacy users with modernised products in a sustainable way.

Without this migration process legacy users face increasing costs inherent to the products as borrowing USDC on Comp v2 becomes much more expensive. As USDC liquidity leaves Comp v2 there would become a point in time where the FLIs would no longer be able to maintain their target leverage ratios, a drastic change in their expected behaviour from users. Migration protects current holders by ensuring the majority of the original performance characteristics remain.

Specification

1. De-lever the FLI tokens to 1.0x Leverage Ratio
2. Reduce all fees on FLI tokens to 0%
3. Deploy the new tokens on Ethereum main-net with an initial state of 1.0x Leverage Ratio
4. Rebalance the underlying components of the FLIs into the new respective tokens.
5. Lever up the new tokens to their target 2.0x Leverage Ratio
6. Switch on fees on the new tokens. (3.65% Streaming, and 0.10% Mint and Redemption fees)