Summary

Add support for TLXs Leveraged Tokens to Kwenta on Optimism.

Abstract

This KIP proposes the addition of TLXs Leveraged Tokens via a custom integration. Allowing users to mint & redeem LTs through the Kwenta UI.

Motivation

With Kwenta expanding to other chains and moving to aggregate products for traders, it seems there is a goal to become a powerhouse of decentralised trading; a one stop shop for crypto traders.

Integrating TLXs Leveraged Tokens would provide Kwenta users with a powerful new trading tool to complement the existing perpetual and spot features.

TLX is a new protocol which utilises Synthetix perps to create Leveraged ERC20 tokens. LTs rebalance if the underlying position falls out of a target range, thus maintaining leverage - making them a powerful tool in strong directional markets.

TLX charges a protocol fee when tokens are redeemed, Kwenta would receive 50% of redemption fees from the integration - driving additional fee revenue and volume for Kwenta.

Specification

Create custom integration for the minting and redemption of TLXs Leveraged Tokens.

• Integrate: TLX Core Contributors can assist with the integration where necessary, minimising impact on other Kwenta projects in development.
• Inform: LTs have existing documentation and educational material which could be used as is, or adapted for Kwenta users. TLX can also assist with this.
• Add Value: Kwenta would earn 50% of Redemption Fees generated through this integration. With Kwenta’s existing user base this could be a powerful new source of revenue. Since launch (as of writing, about 5 weeks ago) TLX has generated around $220,000 in fees, and reached over a 30% share of Synthetix v2x OI.

These fees should be handled in the same way as Synthetix’s Volume rewards as stated in KIP-125.