LEVEL: Permissionless Risk Management Launch on BNB Chain

5 min readOct 18, 2022

Dear BNB Chain community, we’re excited to announce LEVEL, a decentralized perpetual exchange on the BNB Chain focused on delivering highly efficient risk management along with first of a kind liquidity solution using original code designed from the ground up. Mainnet launch date is set for Q4 2022.

🏡 Website: Level.Finance
🐦 Twitter: twitter.com/Level__Finance
🎮 Discord: discord.gg/LevelFinance
📖 Docs: docs.level.finance
👷 GitHub: https://github.com/level-fi
📟 Telegram: t.me/LevelFinance
📚 Medium: medium.com/@level-finance
📺YouTube: youtube.com/@levelfinance

Survive the Winter

Digital assets and blockchain technology empower people by reintroducing autonomy that was long thought lost. Decentralized finance and tokenization brought new perspectives to investors but made little progress as an institutional asset class due to inherent volatility and the lack of available risk management.

💡We aim to change that

From the first principle, LEVEL is designed to be permissionless. This means it will never have custody of customer assets or store personally identifying information. Everything is open, transparent, and immutably recorded on the BNB blockchain.

Through self-executed smart contracts, the protocol offers continuous access to programmatic pools of liquidity designed to help a wide range of digital asset owners hedge token positions with virtually zero impact on the underlying spot market.

Decentralized Risk Management

Many digital assets are known for their permissionless nature, often functioning as an alternative to traditional analogues that are highly centralized and tightly controlled. Yet 85% of crypto still trades on centralized exchanges. Automated Market Makers (AMMs) execute the remaining 15% of transactions only but are prone to slippage and high fees. This makes decentralized trading typically undesirable.

🛠 We fixed that

LEVEL’s unique system architecture aims to deliver capital-efficient access to programmatic liquidity. By using just 1/30th of the collateral necessary to take comparable positions on traditional AMMs, we deliver near frictionless access to WBTC, WETH, BNB, stablecoins and other high liquidity tokens.

To be genuinely permissionless and decentralized, and to ensure that the protocol serves the interest of its community in perpetuity, the LEVEL governance will be democratic and transparent. To achieve this in the first place, the Level DAO will be established to govern and decide on all strategic matters.

Tokenomics

As a fair start project, the team’s economics are wholly aligned with that of Level’s users. A 4-year time lock will be implemented on LVL tokens allocated to the team. These tokens will vest linearly and cannot be unstaked from the smart contract until the schedule has been met. This aligns our long-term commitment towards building a systemically relevant marketplace with that of our stakeholders. To efficiently facilitate community rewards as well as governance, there will be two classes of tokens associated with Level: LVL, the utility token, and LGO, the governance token.

LVL is earned by providing liquidity, trading, and in general participation within the Level framework. It plays a principal role in the incentive mechanisms of the Level economy.

Having ample available liquidity to facilitate trades is the cornerstone of all successful liquidity centers. As such, most of the LVL emissions would likely be allocated to incentivize our LPs (Liquidity Providers), but this too will be determined by the community via voting on the LEVEL DAO. LP assets staked into LEVEL smart contracts automatically become on-demand liquidity for users to utilize.

In addition to earning LVL tokens, liquidity providers also earn profits generated from trading and lending (trading fees, funding rates, etc.).

Our goal is to generate sustainable #RealYield available to the greater crypto community while facilitating some of its most essential services.

For more details, visit our Tokenomics page in LEVEL Documentation.

The DAO Governance

LGO (pronounced algo) is the governance token of LEVEL. At the start of the project, there will not be any pre-allocations of LGO. All members of the community, including the team, are invited to join Governance by staking LVL tokens. Once the DAO is established, proposals will be submitted to the DAO to determine platform fees, trading incentives, as well as staking rewards.

▪ Expenditure, including engineering, will be submitted to, and approved by the DAO
▪ Treasury functions, partnerships, and incentive programs will be submitted to, and approved by the DAO
▪ Fees, features, and functionalities of the platform will be submitted to, and approved by the DAO

Anyone can join LEVEL Governance, and the LEVEL community will collectively plot the course. To encourage early participation, fees generated prior to the initial fee proposal voted on by LGO will be rebated to the community in the form of LVL tokens retroactively.

Risk Management & LP Seniority on the Credit Table (RMLP)

LEVEL is vigorously focused on risk management. We are excited to introduce user-elected credit exposure to LEVEL’s liquidity providers. Developed entirely from scratch, the RMLP aims to tackle functional issues endemic to zero-price impact perpetuals. Creditor structure, a feature that is almost ubiquitous across traditional capital markets, is something that has yet to be adapted for digital assets. On LEVEL’s RMLP system, we built tranches with varying risk profiles that reflect underlying exposure. Ranging from the lowest-risk (AAA) super senior on the top of the credit structure, to the highest rewards (BB).

Each tranche represents a pool of mature assets such as BTC, ETH, BNB as well as stablecoins. By offering different risk profiles, participants of each liquidity pool, called a Tranche, may determine the amount of risk exposure most suitable to their needs. To establish different risk-reward profiles for LEVEL Liquidity Providers (LLPs), we have developed 3 tranches:

▪️ Senior Tranche (AAA) — lowest risk and lowest APR
▪ ️Mezzanine Tranche (AA) — medium risk and medium APR
▪️ Junior Tranche (BB) — highest risk and highest APR

In case of unexpected shortfalls resulting from adverse market conditions or other incidents, the Junior Tranche bears the highest risk. In compensation for undertaking additional risk relative to the Senior and Mezzanine tranches, the Junior Tranche will receive the highest allocation of trading revenue. The higher the risk, the higher the #RealYield.

See you soon!

LEVEL is a decentralized and non-custodial perpetual DEX on BNB Chain with custom risk management and innovative LP solutions. Experience LEVEL’s advanced DeFi venue that offers a great user experience, leverage trading, and real yield. Start trading on LEVEL today and take control of your decentralized trading journey.