Fun Coupons

Abstract

Fun Coupons is an on-chain market for taking leveraged long and short positions on tokenized stocks such as TSLA, NVDA, AAPL and SPY. Traders post collateral in USDC or in FUN, the platform's token, and choose up to 100x leverage on USDC markets and up to 1000x on FUN markets. 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, and pays winners from its balance. A first-loss cushion funded with 5% of the FUN supply pays winning FUN 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 SPY. 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. A stock paired with a collateral token, for example TSLA/FUN or NVDA/USDC.
2. Direction. Long profits when the price rises. Short profits when it falls.
3. Collateral. What you put up, in the market's collateral token.
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.

Every figure in a market is counted in that market's collateral token. A FUN market 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 a counterparty: the pool for its collateral token. There is one pool for USDC markets and one for FUN markets. When a trader wins, the pool pays. When a trader loses, the pool keeps the loss.

The pool makes money in three ways, each set per market:

• 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.
• Holding fee. A yearly rate on notional, accrued every second the position is open.

These 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.

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.
• A cap on profit per position of 2,000% of collateral.
• A 24-hour queue on withdrawals from the pool, so money can't be pulled out just ahead of a known large payout.
• 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, adjusted by open traders' combined profit and loss. 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.

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 market price 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%.

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 pool on Robinhood Chain, where the tokenized stock trades against USDG, a dollar stablecoin. The contract reads the pool's current price when a position opens, closes or is liquidated.

Opening always requires a price read in that same transaction. Closing and liquidating can fall back to the last price the platform 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. 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 FUN markets, the currency winners on FUN markets 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. Everyone, the team included, buys from the same curve at the same price.

Graduation. The curve sells FUN for SPY. Once it has taken in 10.9 SPY, FUN graduates: Pons moves the curve's SPY and remaining FUN into a Uniswap v4 FUN/SPY pool and locks that liquidity permanently. The team cannot withdraw it. From then on FUN trades in that pool.

Why SPY. FUN is priced in the S&P 500. Its dollar price is its SPY price times SPY's dollar price, and redeeming FUN for SPY takes a single swap.

FUN markets. On a FUN market 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 buys about 5% of the FUN supply from the bonding curve, at the public price, and sends all of it to the cushion.

The cushion is a contract that sits in front of the FUN pool. When a FUN 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 cushion only ever shrinks, by paying winners.

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. Anyone can add to it with a plain transfer. 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 SPY in the FUN/SPY pool.
2. If you chose a stock other than SPY, swaps that SPY for USDG and 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. 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.

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 pools, which move with the trades in them. A large trade in a pool can move the price your position is valued at, including into liquidation. 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. On FUN markets 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.

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. Uniswap, Pons, Permit2 and Robinhood Chain itself are outside this platform's control.

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.