f(x) Protocol is a DeFi trading and stablecoin system built around a rebalancing mechanism that is designed to reduce the chance of hard liquidations on leveraged ETH positions. Its documentation and project descriptions say the protocol splits collateral into a low-volatility stablecoin leg, fxUSD, and a leveraged ETH leg, often referred to as xETH or xPOSITION, with liquidation risk managed through automatic rebalancing rather than a traditional all-or-nothing liquidation model.

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