How xTokens work

Each xToken mirrors Liminal Customized’s delta-neutral strategies but is managed via a single pooled position.

Let’s dive into how xTokens work:

Pooled Capital

When users mint xTokens with stablecoins, their deposits are grouped into one shared position for that asset. Instead of running many small positions, Liminal Tokenized operates a single pooled delta-neutral line, and each xToken represents the holder’s share of it.

Delta-Neutral Position

Stablecoins deposited by users are then used to open delta-neutral position:

• Long Spot Leg: The strategy acquires spot exposure to the underlying asset, using Unit assets and, when available, LSTs. For example, a significant portion of the current $HYPE spot exposure uses $kHYPE (HYPE Liquid Staked Token powered by Kinetiq), allowing the strategy to earn additional staking yield and potential extra rewards. This boosts the overall performance on top of the funding rates.

• Short Perp Leg: Simultaneously, the strategy shorts the equivalent amount on perpetual futures on Hyperliquid, for the same asset. We’re using leverage on the perp side to maximize capital efficiency and yield, while carefully maintaining a net market exposure of ≈ 0 (delta-neutral), similar to our Customized product

Yield & Token Value

The strategy continuously earns funding payments from the perp short and yield on the spot leg when available (e.g. staking rewards from LSTs). These earnings accumulate in real time, increasing the overall value of xTokens.

For holders, the process is seamless: just hold xTokens and watch them appreciate over time.

Oracle

An oracle updates the on-chain value of the xToken relative to its underlying asset. For example, 1 $xHYPE initially starts at $1, if the strategy earns 5%, its price-per-share will update to $1.05. This ensures transparency and accurate redemption.

Custody and Management

Underlying assets (stablecoins, spot, and perps) are secured by institutional-grade custodians and smart contracts. Automated systems manage rebalancing and collateral, similar to the Customized product but strengthened by the pooled structure.

Scalability & Limits

Because strategies are pooled, Tokenized can handle larger total capital per asset more efficiently than individualized accounts. Each pooled strategy will still have prudent TVL caps based on market depth, but per-user limits can be higher since everyone shares a single large position. Operationally, one consolidated strategy is also easier to manage than many smaller ones, making Tokenized inherently more scalable.