← Drops/Drop 001·LIVE

IL Eliminator

one asset in · ~1.0× delta out · base 8453

Deposit one asset. Watch it split, lever, LP, and recombine into ~1.0× ETH — full upside, LP fees, and the impermanent loss of LPing hedged on the way up. For the bulls.

↓ Watch it happen on-chain
0.0%
round-trip, flat market (fork-tested)
~0.0×
net delta restored at entry
⅔ / ⅓
capital split at 2× leverage
0 / 30
contract tests passing
01 / 07

Deposit one asset.

Send WETH to the instrument. Everything after this happens in one atomic transaction — no multi-step approvals, no manual rebalancing.

02 / 07

One deposit, split two ways.

At 2× leverage and a 50/50 pool the optimal split is exactly ⅔ to the LP and ⅓ to the lever — derived on-chain from L and d, never hardcoded.

03 / 07

The ⅓ leg becomes 2× ETH.

FlashMint atomically mints Index Coop ETH2x — no pre-funding, no extra approvals. ⅓ of your capital now carries 0.66× of ETH exposure.

04 / 07

The ⅔ leg LPs on your venue.

Add WETH + USDC liquidity on Uniswap v4 or Aerodrome. The ETH half adds 0.33× exposure; the USDC half stays stable and earns swap fees.

05 / 07

Both legs, one NFT.

You receive a single position NFT representing both legs. It tracks every custodied balance — admin rescue() can never touch an open position.

06 / 07

The legs recombine to ~1.0×.

0.66× from the lever plus 0.33× from the LP add back to ~1.0× net delta — you track ETH on the way up while the LP keeps earning fees.

The payoff

Track ETH up. Leave the LP lag behind.

A plain LP underperforms holding as price rises — that gap is impermanent loss. The leveraged long restores the missing exposure, so Hedger tracks close to a full ETH position on the upside while still earning fees.

Honestly: on the downside the leverage amplifies losses and the position is short volatility — it bleeds in chop. A directional instrument, not a neutral hedge.

0.5×1×1.5×2×2.5×3×0.5×1×1.5×2×2.5×3×ETH price ratio (r)Hedger (~full upside)Plain LP (lags = IL)Hold ETH (1×)

Run the scenarios

If ETH moves, what do you actually get?

Compare Hedger against holding ETH, a plain LP, and a raw 2× — net of fees, carry, and friction. Drag the sliders.

Hedger
+29.5%
Hold ETH (1×)
+30.0%
Plain LP
+15.4%
ETH2x only (2×)
+59.2%

Illustrative model (single monotonic move). Assumes a 50/50 pool (δ=0.5), 2× leverage, 3.65%/yr streaming, 0.2% mint/redeem, ~0.4% zap friction. Ignores volatility drag and path-dependence, which worsen choppy paths. Not a guarantee of returns.

07 / 07

Exit in one transaction.

Zap out to a single asset whenever you want. Both legs unwind atomically and the NFT is burned — no dangling positions, no multi-step exit.

Verified on Base

Live, on-chain, auditable.

  • 🛡️ No admin rug. Custodied legs are tracked; rescue() can never touch open positions.
  • 🔒 Ownable2Step + timelock-ready · Pausable · reentrancy + slippage + deadline guards.
  • 🧪 30/30 tests, incl. live-Base forks (ETH2x 99.5%, Aerodrome 99.7%, Uniswap v4 99.7%, full round-trip 98.8%).
The math

Derived on-chain, not hardcoded

To restore a net delta t with a leverage token of ratio L and pool delta d: allocate c_LP = (L − t)/(L − d) to the LP and c_lev = (t − d)/(L − d) to the leverage leg. For L = 2, d = 0.5, t = 1.0⅔ LP, ⅓ leverage. Impermanent loss for a 50/50 pool is IL(r) = 1 − 2√r/(1 + r).

FAQ

Straight answers

Does this actually remove impermanent loss?+

No. IL is a convexity (gamma) cost. Hedger restores your delta to ~1×, which offsets the upside underperformance vs holding, but the position stays short volatility. A directional bet with better fee economics, not a neutral hedge.

Is it delta-neutral?+

No. Net long with amplified downside — built for bulls who want LP fees without giving up upside.

What do I get back?+

A single position NFT representing both legs. Zap out in one transaction to WETH; both legs unwind atomically.

Who custodies my funds?+

The instrument holds the leg tokens while a position is open, but it tracks every custodied balance — the admin rescue() is provably unable to touch open positions. Ownership is intended to sit behind a timelock.

When does this make money?+

When LP fees + ETH appreciation beat carry (≈3.65%/yr streaming + 0.10% mint/redeem) plus volatility drag and swap costs. In flat or choppy markets you can bleed.

Risk

Read this before you ape

  • It hedges delta, not gamma → short volatility. Does not remove IL; choppy markets bleed.
  • Net long, downside amplified, not delta-neutral. For the bulls.
  • Volatility drag from the constant-2× token, stacked on a short-gamma LP.
  • Leverage rebalance/liquidation (ETH2x band ~1.74–2.30× + ripcord), correlated with LP losses in the tail.
  • ~3.65%/yr streaming + 0.10% mint/redeem + swap slippage. Win only if fees + appreciation beat carry + drag.
  • Third-party dependency (Index Coop) + pre-audit smart contracts. Use at your own risk.

One asset in. ~1.0× out.

Earn LP fees, keep full upside, hedge the IL of LPing on the way up — in one transaction on Base.

Zap in →