What are Leveraged Tokens?

What are leveraged tokens?

Leveraged tokens represent a packaged form of leveraged exposure to an underlying asset — their prices are designed to amplify the movement of that asset by a fixed multiple. For instance, a 5XSOL token would increase or decrease about 5 times faster than SOL itself.

Mooncake reimagines this concept for the Solana ecosystem. It’s a native leveraged token protocol that automates leverage through on-chain rebalancing, offering simple and composable leveraged exposure to Solana’s major and meme tokens — all without facing liquidation or managing debt positions.

Instead of juggling perps, lending markets, and collateral ratios, users can simply hold leveraged tokens in their wallets. These tokens behave like any other SPL asset, trade freely, and continuously maintain their target leverage through Mooncake’s on-chain mechanisms.

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Why it matters

Traditional finance has long used structured products to provide leveraged exposure — like the multi-billion-dollar 3x Nasdaq ETF that tracks triple the index’s daily performance.

In crypto, centralized exchanges once offered similar tokens, and some DeFi platforms have their own versions. Mooncake takes the next step: it brings the entire process fully on-chain, removing intermediaries and making leverage transparent, efficient, and permissionless.

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How Mooncake’s leveraged tokens work

While the idea is simple, the implementation defines how smooth and sustainable the experience is. Mooncake’s model is built around a few essential design principles:

• Supported assets & leverage:

  Mooncake covers both leading Solana tokens and high-beta meme assets, typically offering fixed 3x-10x exposure.

• Leverage generation:

  Instead of borrowing or using derivatives, Mooncake achieves leverage via internal balancing between “leveraged” and “funding” pools, keeping the system self-contained and stable.

• On-chain rebalancing:

  As prices move, the protocol automatically rebalances positions once deviation thresholds are hit — no manual intervention, no liquidations, and no hidden debt.

• Minting & redeeming:

  Users can mint or redeem tokens directly through the Mooncake pools anytime, with transparent fees and real-time pricing.