Seamless Protocol launched as @Base’s first native lending and borrowing platform in 2023. In 2024, Integrated Liquidity Markets (ILMs) went live, giving Base users access to simple yet powerful tokenized leverage strategies. The community excitement and response were amazing, and to date, ILMs have seen over 6,500 all-time users.

Before ILMs, tokenized leverage was very complex. If you wanted to lever up, you had to find a Perp DEX, click across a bunch of platforms, manage your collateral ratios, and constantly monitor your positions to avoid liquidation, if you didn’t, a bit of normal crypto volatility would get you rekt. ILMs made the stress of using leverage go from 11 to 1 by mitigating liquidation risks through automated rebalancing. ILMs automate borrowing, swaps, and leverage all under the hood, opening up advanced investing strategies to anyone with strong conviction and a stack on Base.

Since Seamless’s ILMs were so easy to use (and the only passive approach to leverage), the initial wstETH/ETH ILM was a huge hit. It was so popular, in fact, that deposits had to be capped to account for the total available wstETH liquidity on Aerodrome at that time! This early momentum signaled that ILMs were onto something and set the stage for their successor: Leverage Tokens.

In 2025, Seamless Protocol is moving to where the puck is headed in DeFi by leaning into composability and modular blockchain architecture with the launch of Leverage Tokens. Leverage Tokens embrace a future where DeFi protocols easily interconnect, allowing users and builders to assemble and reassemble financial products like modular building blocks, unlocking never-before-seen efficiencies.

WTF is a Leverage Token?

Leverage Tokens are ERC-20 tokens that make even the most right-curve DeFi strategies accessible as tradable assets on a decentralized exchange (DEX). This upgrade represents a paradigm shift in DeFi engagement and provides three core benefits:

1. Easy Leverage Exposure: Access leveraged trading directly through tokens you can trade or hold in your wallet.

2. Capital Efficiency and Utility: Acts as ‘DeFi lego’ building blocks, integrating into protocols like yield-splitting platforms or as collateral for lending and borrowing.

3. Composable and Permissionless: Their architecture lets anyone become a token creator, enabling instant tokenization of strategies with onchain liquidity.

ILMs made lending on Base efficient and user-friendly, but Leverage Tokens double down by tokenizing leverage strategies, expanding accessibility and tradability across Base and beyond. This means Leverage Tokens are a major advancement in Seamless Protocol’s technology, designed for everyone: the DeFi community, SEAM holders, traders, and builders alike.

Just like Uniswap tokenized liquidity and Pendle tokenized yield (growing to $4B TVL in 2024), Leverage Tokens tokenize leveraged strategies to provide the most reliable, permissionless, composable way to access leverage in DeFi.

Why Leverage Tokens Matter

DeFi borrowing has been tricky, involving multiple steps, many clicks, and constant monitoring to avoid liquidation. Leverage Tokens simplify this dramatically by letting you trade or hold them while the underlying strategy does the heavy lifting.

Looping? You got it. Short ETH to hedge your position? Yep. Leverage Tokens simplify leveraged trading into a single ERC-20 token, reducing complexity and unlocking new investing opportunities. It’s actually similar to how Leveraged ETF investment instruments work in the traditional finance industry.

While new to DeFi, Leveraged ETFs have gained traction in the TradFi space. Leveraged ETFs are investment funds that use borrowed money and derivatives to amplify the daily returns of an underlying index, aiming to deliver multiples (like 2x or 3x) of its performance.

Leveraged ETFs reached a record $126 billion in assets globally in late 2021, growing 30% year-over-year by 2023 across 1,200 products on 30 exchanges. Leverage Tokens want to bring that demand to DeFi through some killer use cases. Here are just a few:

• Leveraged Farming: Boost returns from liquidity provision.

• Margin Trading: Take leveraged positions on assets like ETH or memecoins.

• DEX LP Boosts: Enhance liquidity provider yields.

• Meta Strategies: Combine tokens for advanced, market-neutral plays.

But here’s where they really shine: Leverage Tokens encode these strategies within a single ERC-20 token, making them composable across various DeFi protocols. They can earn you yield, be used as collateral, and seamlessly integrate into diverse financial ecosystems. This isn't just simpler DeFi, it’s the promise of DeFi – composability.

Imagine you're a casual retail investor, experienced with decentralized exchanges but hesitant about complex DeFi strategies. With Leverage Tokens, entering DeFi becomes as simple as purchasing any other token on a CEX or DEX. Pick up the Leverage Token, and just like that, you’ve entered an advanced leveraged position.

You don’t need to constantly watch the market or stress over the intricacies of leverage and risk management, Leverage Tokens handle all of that for you. This simplicity makes advanced trading strategies approachable even if you’re starting out. It’s like having a DeFi tool that works quietly in the background, 24/7, letting you confidently enter positions.

For degens that have been in the trenches a few cycles now, there’s an added layer of alpha: Leverage Tokens draw liquidity from highly trusted lending markets with strong risk management practices and use leading risk curators to provide maximum peace of mind.

And for Seamless Protocol’s community, builders, and SEAM holders: look, nobody likes gatekeepers. With permissionless architecture, anyone can launch a Leverage Token. Token creators (that’s you) can instantly tokenize any strategy imaginable as long as onchain liquidity exists. This composability enables integrations with protocols like Morpho for lending or Balancer for stablecoin yield, driving capital efficiency.

For example, a builder could create a 5x LBTC/ PT LBTC Loop that auto-compounds protocol rewards back into a user’s principal, while SEAM holders might vote to allocate any protocol fees associated with the strategy towards the Seamless Staking Module.

Seamless Protocol’s vision: simpler, more powerful DeFi for all.

*BTW like Leveraged ETFs, Leverage Tokens also come with higher risks due to potentially magnified losses.

Leverage Tokens Turn Strategies Into Tradable Tokens

Leverage Tokens are built with users in mind, taking advantage of modular architecture to offer compelling DeFi leverage strategies:

Leverage Manager

Leverage Manager is the foundational component that lets anyone create a Leverage Token. It breaks leverage into collateral and debt, tokenizes it as an ERC-20, and manages operations for a seamless, hands-off experience. Token creators can define the adapters when building a Leverage Token for max flexibility and control.

Adapters

Adapters unlock the true composability of Leverage Tokens. Creators can build and refine these to introduce new use cases or modify existing ones:

• Collateral Adapters: Token creators can make a Leverage Token out of any asset, present or future, by using an existing collateral adapter or building a new one, such as ERC-20 tokens, yield-generating LP positions, DEX LPs, or even RWAs.

• Rebalance Adapters: These permit any rebalance logic and associated incentive system to be designed to optimize execution for Leverage Token strategies, ensuring efficiency tailored to your preferences. The benefit is dependable, cost-effective adjustments suited to your strategic needs.

• Lending Pool Adapters: Leverage Tokens are built by tokenizing a leverage position on DeFi lending market protocols. Leverage Tokens can be built on top of any lending protocol using a lending pool adapter. Starting with the @MorphoLabs adapter at launch, a top-tier lending protocol.

While still conceptual and not yet implemented, Meta Strategies emerge organically when you hold multiple Leverage Tokens in your wallet. They can enable setups like market-neutral positions or custom exposure, unlocking access to unique financial strategies crafted through your token choices. This is real next-gen, flexible DeFi that's tailored to your portfolio vision and conviction.

The system ensures secure, independent development, testing, and auditing by isolating each adapter's functionality. This permissionless framework also allows community contributions, facilitating integration with emerging asset classes and trading strategies, keeping Leverage Tokens innovative and responsive to market changes.

The modular design reinforces the security, reliability, and scalability inherent in DeFi composability.

An Ecosystem of Collaborators

The Leverage Tokens ecosystem thrives on the interplay between:

• Users (Traders): Buy, sell, or hold leverage tokens to unlock strategies. Just like an ERC-20, but easy, cheap, and fast.

• DEX Liquidity Providers (Arbitrageurs): Supply DEX pools, earn fees, and align prices with token value (NAV). They’re the market’s invisible hand.

• Token Deployers: Dreamers or protocols can mint new tokens to spark utility. No gatekeepers.

• Adjacent Actors: Lending protocols, LPs, curators, liquidators, adapter developers, and Seamless DAO fuel the liquidity and innovation backbone.

At the end of the day, Leverage Tokens are designed for accessibility and innovation. Their permissionless nature lets anyone turn a strategy into a tradable token, potentially scaling across Base and other ecosystems. With automatic rebalancing and integrations with leading DeFi protocols, they offer reliability to casual traders and big players alike. Leverage Tokens let anyone dial risk up or down with a single token.

For SEAM holders, the benefits go even further. Trading and rebalancing fees flow directly to SEAM stakers and the SEAM DAO, with distributions automatically handled onchain for stkSEAM holders. Seamless is entirely governed by SEAM holders, who decide the protocol’s development and how rewards are allocated to incentivize specific behaviors. Some of the revenue may also fund grants for creators building new tokens and strategies, driving continuous innovation and adoption.

DeFi Is Young, It’s Early, Let’s Build

Leverage Tokens significantly advance DeFi, turning complex leveraged investing into a streamlined, secure, permissionless experience. Building on Seamless’ lending expertise, Leverage Tokens equip users to shape the future of decentralized finance.

In short, Leverage Tokens let users maximize financial opportunities securely, simply, and efficiently. This is the unique promise of Leverage Tokens: amplified gains made simple.