2factor Launches Onchain Leveraged Stocks on Base

Traditional leveraged ETFs rely on banking intermediaries to supply exposure, a process that forces investors to pay for expensive hedging costs that compound year after year. According to 2factor, this structure causes roughly $10 billion in annual financing charges above the risk-free rate for holders. By sourcing leverage from investors seeking stable yield rather than short-term traders, 2factor claims to reduce the all-in cost of holding a leveraged position by approximately 75 percent.

Beyond financing, the protocol targets the mathematical drag of volatility by moving away from aggressive 3x multiples. Instead, 2factor utilizes Kelly-optimal sizing—roughly 1.33x for assets like cbBTC—to align with long-term portfolio growth. This approach targets the $112 trillion buy-and-hold market, which has historically been underserved by products built primarily for short-term speculators. Evan Kuo, co-founder of 2factor, noted that the goal is to provide a position that remains viable over five-year horizons, regardless of interim market volatility.

Coinbase CEO Brian Armstrong emphasized that the integration represents the utility of tokenized equities, moving beyond simple asset listing to true protocol composability. By enabling programmable collateral and automated terms, the platform aims to outperform traditional financial instruments on performance metrics rather than just accessibility. For investors, this shift offers a path to hold leveraged equities without the performance erosion that has historically made such strategies prohibitive for long-term capital.