Short and baskets

This guide covers two products that sit beside the margin account. A short position borrows a Stock Token, sells it and keeps the USDG. A basket is one ERC-20 that holds a fixed set of up to eight Stock Tokens, which the margin engine prices as that portfolio.

Before you start#

The client, deployments, wallet and owner of open an account, and for a short, USDG in your wallet. The examples use the TSLA pool and the basket PAIR, both in deployments/46630.json.

Short a Stock Token#

ShortPositions borrows the token from the asset's lending vault and sells it through the token's Uniswap v3 pool. Each address holds one short per Stock Token, with USDG as its only collateral, and nothing in your margin account is touched. An address your account authorized with setAuthorization may also sell, buy back and withdraw here.

import { erc20Abi } from 'viem'
import { shorts } from '@tapehouse/sdk'

const margin = 500_000_000n // 500 USDG

await wallet.writeContract({
  address: deployments.tokens.USDG,
  abi: erc20Abi,
  functionName: 'approve',
  args: [deployments.tapehouse.ShortPositions, margin],
})
await wallet.writeContract(shorts.deposit(deployments, { asset: 'TSLA', amount: margin, account: owner.address }))

const amount = 10n ** 18n // one token

const { proceeds, minProceeds } = await shorts.quoteSale(client, deployments, { asset: 'TSLA', amount, slippageBps: 50n })

await wallet.writeContract(
  shorts.sell(deployments, { asset: 'TSLA', amount, minProceeds, account: owner.address }),
)

const { usdgHeld, debt, shares, epoch } = await shorts.position(client, deployments, owner.address, 'TSLA')
const { equity, requirement, missing, regime } = await shorts.health(client, deployments, owner.address, 'TSLA')
const { restricted, close } = await shorts.restriction(client, deployments, 'TSLA')

const { cost, maxCost } = await shorts.quoteCover(client, deployments, { asset: 'TSLA', amount, slippageBps: 50n })

await wallet.writeContract(shorts.cover(deployments, { asset: 'TSLA', amount, maxCost, account: owner.address }))
await wallet.writeContract(shorts.withdraw(deployments, { asset: 'TSLA', amount: margin, account: owner.address, receiver: owner.address }))

The lending fee accrues in the token, so a short owes its share of the vault's debt as borrow shares. Anyone may shorts.liquidate a short whose equity is below its requirement: at the band's high edge while the market is open, and only if it falls short at both edges while it is not. The caller earns half a percent of the cost. What the short's USDG cannot buy back falls on the token's lenders.

Mint and hold a basket#

A basket mints and redeems in kind. You deposit each of its Stock Tokens in the basket's proportions and receive shares, and a redemption gives each token back.

import { baskets } from '@tapehouse/sdk'

const { assets, tokens } = await baskets.components(client, deployments, 'PAIR')
const shares = 10n ** 18n
const needed = await baskets.previewMint(client, deployments, 'PAIR', shares)

const basket = deployments.baskets.PAIR

for (const [i, token] of tokens.entries()) {
  await wallet.writeContract({ address: token, abi: erc20Abi, functionName: 'approve', args: [basket, needed[i]!] })
}
await wallet.writeContract(baskets.mint(deployments, { basket: 'PAIR', shares, receiver: owner.address, maxAssets: needed }))

import { accounts, CROSS } from '@tapehouse/sdk'

await wallet.writeContract({ address: basket, abi: erc20Abi, functionName: 'approve', args: [deployments.tapehouse.MarginAccounts, shares] })
await wallet.writeContract(accounts.deposit(deployments, { position: CROSS, token: basket, amount: shares, account: owner.address }))

const through = await accounts.inBaskets(client, deployments, owner.address, CROSS)

await wallet.writeContract(baskets.redeem(deployments, { basket: 'PAIR', shares, receiver: owner.address, owner: owner.address }))
await wallet.writeContract(accounts.unwrap(deployments, { account: owner.address, basket: 'PAIR', shares }))

The owner may propose a new target, which takes effect seven days later: baskets.target and baskets.pendingTarget read it, so a holder who disagrees redeems first. Anyone may rebalance the basket toward its target, and only if what comes in at the bands' low edges is worth at least what goes out at their high edges.

What to expect#

• A short's equity is its USDG less what it owes at the band's high edge, and it closes only by buying back what it owes. A short that owes more of the buy-ins than it holds closes only by liquidation.
• A basket's share moves only as its tokens could. While the issuer pauses any of them, there is no transfer, mint or redemption.
• A position that falls short has its baskets unwrapped and their tokens sold as any other.

Errors you may hit#

Next#

• Borrow against a cross position that holds a basket.
• Short positions and baskets.
• Earn by lending a Stock Token to the shorts.