f(x) Protocol introduces sPOSITIONs, a new way to short the market with fixed leverage, liquidation brake and zero funding costs

f(x) Protocol has introduced sPOSITIONs, a new short-side primitive in its v2 design that lets users take fixed-leverage short exposure to assets like ETH and BTC while avoiding the variable funding costs and hard liquidations typical of perpetual futures markets. Instead of using an orderbook or AMM perps model, sPOSITIONs are created through the protocol’s invariant that splits yield-bearing collateral (such as wstETH or WBTC) into two sides: the stablecoin fxUSD and leveraged positions (long xPOSITIONs and short sPOSITIONs), all backed by a single collateral pool. Users pay a one-time open/close fee rather than recurring funding, and leverage remains mechanically fixed over time because of the way the protocol rebalances position parameters around the shared collateral. The key risk tool for sPOSITIONs is a “liquidation brake”: when a position’s loan-to-value ratio breaches a critical threshold, the protocol partially sells down the position to restore healthier collateralization instead of fully liquidating it, with hard liquidation reserved only as a last resort. This design aims to reduce the common DeFi experience of sudden full wipeouts during volatility spikes while still protecting the solvency of the fxUSD system. For traders, sPOSITIONs offer a way to short the market with predictable, fixed leverage and near-zero ongoing funding costs, and for the protocol, they complete the symmetry between long and short directional exposure around fxUSD, potentially deepening liquidity and improving the robustness of its yield-bearing stablecoin architecture.

✨ AI-generated background, compiled from web sources — not editorial content.

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