# Leveraged Tokens

## What are leveraged tokens?

Leveraged tokens are ERC-20 tokens that offer leveraged exposure to an underlying asset while maintaining the leverage factor within a targeted range. The tokens are built using the Synthetix Perps V2 engine.

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## Key characteristics

#### Constant leverage

What distinguishes leveraged tokens from conventional perpetual futures is the reactive rebalancing of the margin-to-notional ratio, otherwise known as the leverage factor. As opposed to a fixed amount of borrowed funds from the outset, the dynamic management of the leverage factor maintains constant leveraged exposure throughout their lifecycle. As a result, leveraged tokens do not require any margin management by the holder.

#### Composability

Leveraged tokens implement the ERC-20 token standard. This means these tokens will appear in your wallet, can be transferred at your discretion, and seamlessly integrate into the broader DeFi ecosystem.

#### Deep liquidity

All leveraged tokens are tokenized representations of perpetual futures contracts accessed through Synthetix's Perps V2 engine. By drawing from the deep liquidity and benefiting from the cost-effective fees provided by Synthetix, these tokens offer a powerful and efficient way to access leveraged positions.