Fun Coupons

Abstract

Fun Coupons is an on-chain market for taking leveraged long and short positions on tokenized stocks. It launches with TSLA, NVDA, SPCX, RDDT and AMZN. Traders post FUN, the platform's token, as collateral and choose up to 1000x leverage. Each stock is priced from its own Uniswap v3 pool on Robinhood Chain, with no outside price feed. Every trade is taken by a shared pool that acts as the house. The pool earns a spread, an opening fee and a holding fee, keeps what losing traders lose, and pays winners from its balance. All of that income stays in the pool, so the pool grows from trading as well as from deposits. A first-loss cushion, funded by the team at launch, pays winning trades before the pool's own funds are touched. Positions are closed by their owner, by a stop-loss or take-profit order, or by liquidation, and anyone can execute those last two for a fee. FUN launched fairly on the Pons launchpad and trades against ETH. It can be redeemed for any listed stock in one transaction.

1Introduction

In The Wolf of Wall Street, money gets handed around like fun coupons. We took the name literally. A coupon is usually worth a few cents. This one pays out when a stock moves a tenth of a percent.

Robinhood Chain puts real stocks on-chain as ERC-20 tokens, but holding a token only gives you the stock's own return. Fun Coupons adds leverage. You pick a stock, a direction and a multiple, and your gain or loss is that multiple of the stock's move.

The platform never buys or holds the stock to do this. A position is a contract between you and the pool, settled at the stock's price on-chain. Going short is as easy as going long, and a trade settles in one transaction.

2How a trade works

A trade has four inputs:

1. Market. The stock you are trading, for example TSLA.
2. Direction. Long profits when the price rises. Short profits when it falls.
3. Collateral. What you put up, in FUN. FUN is the only collateral.
4. Leverage. The multiple. Your position size, called notional, is collateral times leverage.

When you open, the platform takes a small opening fee from your collateral and records your entry price. While the position is open, a holding fee accrues every second. When you close, you receive your collateral plus your profit, or minus your loss, less the holding fee. Both fees, and any loss, stay in the pool that took your trade (Section 3).

Every figure in a market is counted in FUN. A position never converts to dollars: you put in FUN, and you are paid in FUN. That design means the contracts never need to know what FUN is worth, so there is no FUN price feed anywhere to manipulate.

3The pool

Every market has the same counterparty: the FUN pool. When a trader wins, the pool pays. When a trader loses, the pool keeps the loss.

Deposits are not the only money that comes in. Every trade refills the pool, in five ways:

• Spread. You open slightly above the market price on a long (below on a short) and close slightly below it (above on a short). You cross the spread twice per round trip.
• Opening fee. A percentage of notional, taken from collateral when the position opens. It belongs to the pool from that moment.
• Holding fee. A yearly rate on notional, accrued every second the position is open and kept when it closes.
• Losing trades. When a position closes at a loss, the pool keeps the collateral it doesn't pay back.
• Liquidations. What is left of a liquidated position's collateral after the keeper's bounty and any equity returned to the trader is split in two: half is burned and the pool keeps the other half (Section 4).

The spread, opening fee and holding rate are set per market. At launch every market charges a 0.01% spread, a 0.01% opening fee and a holding fee of 10% of notional a year. They are small numbers on a large notional. At high leverage they are large numbers on your collateral, so the pool has a steady edge over many trades while any single trader can still win big. That edge is what rebuilds the pool after it pays a winner.

Money leaves the pool two ways: profit paid to winning traders, and withdrawals by depositors. Keeper bounties, stop-order fees and liquidation burns come out of the position's own collateral, not the pool's funds. There is no protocol fee, treasury cut or team share. Every fee a trade pays goes to the pool, except the ones paid to whoever executes a liquidation or stop order.

Depositors. While deposits are open, anyone can deposit FUN and receive shares in the pool. A deposit buys shares at the current share price, so it makes the pool bigger without making any share worth more. What raises the share price is trading income: spread, fees, losses and liquidations, less the profit the pool pays winners. Holding fees count toward the pool's value as they accrue, so the price rises while positions are still open. After a large payout the pool recovers from the same income. It doesn't need new deposits to do so, although deposits add to the balance winners are paid from.

The pool protects itself with limits:

• A maximum open interest per market and per side, so exposure to one stock in one direction is bounded.
• A maximum leverage and a minimum position size per market.
• Deposits and withdrawals take two steps. You make a request, wait, then execute it within the following 48 hours or it expires. A deposit waits 24 hours; a withdrawal waits 24 hours, because leaving takes money the pool owes its open positions. Either executes at the share price when it was requested or the price when it executes, whichever is worse for the depositor, so no one can time an entry just ahead of a gain or an exit just ahead of a payout.
• No new deposits while open winning positions could be owed more than the pool and cushion hold. New money would only fund that shortfall.
• Opening can be paused per market or everywhere. Closing and liquidating are never paused, so no one is trapped in a position.

The pool values itself continuously as its token balance, minus the collateral traders have posted and deposits still waiting to execute, adjusted by open traders' combined profit and loss. Open losses and accrued holding fees count for the pool, and open wins count against it. It computes this in constant time from running totals per market, however many positions are open.

4Liquidation, stop-loss and take-profit

Liquidation. A position is liquidated when what's left of it falls to the maintenance margin, a small percentage of notional set per market. Anyone can call liquidate on such a position. The caller earns a bounty, a percentage of the position's collateral, and whatever equity remains after the bounty goes back to the trader. Half of the collateral left after that is burned, sent to an address no one controls, and the pool keeps the other half. The bounty, the returned equity and the burn all come out of the liquidated position's own collateral, so paying keepers never draws on the pool's own funds.

Smart contracts don't act on their own. Something has to send the transaction. The platform runs its own keeper that watches every position every second, and because the bounty is paid to whoever calls first, anyone else can run one too.

Stop-loss and take-profit. You can set a price at which to cut a loss and a price at which to take a win, either when you open or later. When the reference price (Section 5) crosses one, anyone can execute it and close your position for you. They earn a fee of 0.1% of your collateral, which the contract will never let exceed 0.5%. The fee comes out of your payout, so the pool pays the same as if you had closed the position yourself.

A triggered order closes at the price when it executes. If the price jumps past your level, you get the price that exists, as on any exchange. If a price jumps past both your stop and your liquidation line, the position is liquidated instead.

5Prices

Each stock's price comes from its Uniswap v3 pool on Robinhood Chain, where the tokenized stock trades against USDG, a dollar stablecoin. There is no oracle or outside price feed. A contract called the price router reads two prices from each pool whenever a position opens, closes or is liquidated:

• Spot, the pool's current price.
• Reference, the pool's average price over the last 5 minutes (a TWAP), taken from the pool's own price history.

A single swap moves spot. Moving the reference means holding the pool at a distorted price for much of the 5 minutes while arbitrage trades against you.

The contract decides on the reference: whether a position can be liquidated, and whether a stop-loss or take-profit has been crossed. Trades fill at whichever end of the range between spot and the reference is worse for the trader, so a swap that pushes spot inside the same transaction can only worsen the swapper's own fill. Opening is refused when spot is more than 2% from the reference, or when the pool has no liquidity at its current price. A liquidation also settles at the worse end, but never more than 1% past the reference, because the keeper, not the trader, picks when it runs.

Opening always requires a fresh price in that same transaction, and so does executing a stop-loss or take-profit. Closing and liquidating can fall back to the last reference price the contract saw, for up to 7 days, so a trader can always exit and a bad position can always be closed even if a read fails. That remembered price is moved 5% against whoever acts on it. Past 7 days without a fresh price, settlement stops until one is available.

6The FUN token

FUN is the platform's token. It has three uses: collateral on every market, the currency winners are paid in, and a coupon you can redeem for real tokenized stock.

Launch. FUN launched on Pons, Robinhood Chain's launchpad, as a fair launch. Pons mints the entire supply of 1,000,000,000 FUN into a bonding curve, and nobody receives an allocation. The team's FUN was bought on that curve too.

The team's FUN. The team launches FUN from its own wallet and buys 6% of the supply inside the launch transaction, the first buy on the curve, at the same price anyone buying in that block would pay. It gets no allocation. The deploy then splits that buy four ways in a single broadcast, and the deploying wallet keeps none of it:

• 2.5% makes the FUN pool's first deposit. This is an ordinary deposit: it earns and loses with the pool, and the team can withdraw it on the same terms as any depositor.
• 2.5% goes to the first-loss cushion (Section 7), which has no owner and no withdraw function. It can only ever leave to pay a winning trader.
• 0.5% goes to the team wallet. Nothing locks it.
• 0.5% goes to the treasury wallet, which pays what the platform runs on: the keeper's gas, hosting, and the rest of the bill.

Half the buy is therefore spent rather than held: the cushion is given away by design, and the pool deposit stands behind traders' winnings. The deploying wallet also owns the platform contracts (Section 9).

The pool and cushion get their addresses when the contracts are deployed. All four are named on the $FUN page with balances read live from the chain, so these figures can always be checked against what the addresses actually hold.

Graduation. The curve sells FUN for ETH. Once it has taken in the amount of ETH set at launch, FUN graduates: Pons moves the curve's ETH and remaining FUN into a Uniswap v4 FUN/ETH pool and locks that liquidity permanently. The team cannot withdraw it. From then on FUN trades in that pool.

Why ETH. FUN trades against ETH, the chain's own currency. Its dollar price is its ETH price times ETH's dollar price, and a buyer needs nothing but ETH to get in.

Trading in FUN. Your collateral, profit and loss are all counted in FUN. Your result is the leveraged stock move measured in FUN. What that FUN is worth in dollars moves separately with FUN's own market price.

7The cushion

At launch the team sends part of its launch buy (Section 6) to the cushion.

The cushion is a contract that sits in front of the FUN pool. When a trader closes a winning position, the profit is paid from the cushion first and from the pool only once the cushion is empty. Fees, liquidations and trader losses go to the pool, not the cushion.

The two split the work. The cushion takes the first hit from winning trades, and the pool keeps all the income. While the cushion has FUN, winners are paid from it, and everything the FUN pool earns from spread, fees and losing trades stays in the pool. Once the cushion is empty, the pool pays winners itself and keeps refilling from the same income.

The cushion contract has no owner and no withdraw function. The only way FUN leaves it is to pay a winning trade. The team cannot take those tokens back. The platform never refills it: no fee or loss is routed to it, and it grows only when someone sends it FUN with a plain transfer, which anyone can do. The buying wallet and the transfer into the cushion are public on-chain.

8Redemption

Any FUN holder can redeem FUN for tokenized stock. Choose a stock and an amount, and one transaction does the rest:

1. Swaps your FUN for ETH in the FUN/ETH pool.
2. Wraps that ETH and swaps it for USDG, then the USDG for your stock, through Uniswap v3.
3. Sends the stock to your wallet.

There is no protocol fee on redemption. You pay only the fees of the pools the swap passes through, and those go to the Uniswap pools' liquidity providers. Redemption adds nothing to the Fun Coupons pools and takes nothing out of them. The platform never holds stock: every redemption buys it on the open market.

Before you confirm, the screen shows the exact route, the amount you will receive, the price impact including pool fees, and a minimum. The transaction reverts if you would receive less than that minimum, which is set by your slippage tolerance (1% by default). Redemption opens when FUN graduates.

The first redemption needs two one-time approvals: one letting Permit2, Uniswap's approval contract, move your FUN, and one letting Uniswap's router use it. After that, each redemption is a single transaction.

9Contracts

All contracts run on Robinhood Chain (chain ID 4663). Platform contract addresses are published on funinthehood.com at launch.

The platform relies on these external contracts:

Other tokens use the FUN ticker. The only FUN Fun Coupons accepts is the address published on the $FUN page.

At launch the team wallet, the same wallet that launched FUN, owns the platform contracts. Its address is on the pool page under Contracts. There is no multisig or timelock yet. The owner can add markets; change a market's maximum leverage, opening fee, holding rate, open-interest caps and minimum position size; change where a stock's price comes from; set the stop-order fee within its 0.5% cap; and open or close deposits. A market's spread, maintenance margin and liquidation bounty are fixed for its life, and a holding rate is locked in for a position when it opens. A guardian address can pause opening and close deposits, but it cannot resume anything, change a setting or move funds. No one can pause closing or liquidating.

10Risks

Read this before you trade.

Leverage loses money fast. At 1000x, a 0.1% move against you is your whole collateral, and liquidation happens before that. Most high-leverage positions are liquidated. Only trade what you can lose.

Prices come from on-chain pools. Stock prices are read from Uniswap v3 pools, which move with the trades in them, and there is no outside oracle to check them against. The 5-minute reference makes a pool slower to push around, but someone willing to hold a pool away from the real price for several minutes can move the price your position is valued at, including into liquidation. A thin pool is easier to move. On-chain stock tokens also trade when the stock market is closed, so their price can move while the real stock doesn't.

FUN's price moves. You win or lose FUN. What that FUN is worth in dollars depends on FUN's own market, independent of the stock you traded.

Winnings depend on what the pool holds. Profit is paid from the cushion and then the pool. If both together can't cover a payout, the payout is limited to what they hold at the moment you close. The pool refills from fees and trading losses over time, but a payout that was cut short is not topped up later.

Execution depends on transactions. Liquidations and stop orders only happen when someone sends the transaction. The platform runs a keeper, and anyone can run another, but a stop fills at the price when it executes, not the price you set.

Smart contract risk. The contracts are code and code can have bugs. They have not been externally audited. Uniswap, Pons, Permit2 and Robinhood Chain itself are outside this platform's control.

One wallet holds the admin keys. The team wallet owns the contracts, with no timelock, so a setting or a price source can change without warning (Section 9). If that wallet is lost or stolen, whoever holds it has the same powers.

Redemption costs. A redemption pays pool fees and price impact on every leg, and a large redemption into a thin stock pool gets a worse price. Check the minimum received before you confirm.

Nothing in this document is investment advice.