NAV, decay & funding
A leveraged tracker is not a stock at 5×. Two forces separate it from the naive multiple, and both are worth understanding before you rely on one as a floor.
NAV
A tracker's NAV is the equity of its perpetual position divided by its supply. It is posted on chain and readable by anyone, and mint and redeem are open at it — which is the arbitrage that keeps the traded price and the NAV together.
Everything the platform quotes in dollars for a bonded coin passes through NAV. It is the one number that turns "so many trackers" into "so many dollars".
Volatility decay
A 5× tracker rebalances to keep its leverage constant. That is what makes the multiple hold day to day, and it is also what makes it lose ground on a round trip.
Take an underlying that falls 10% and then rises back:
underlying: 100 → 90 → 100 net 0%
5× tracker: 100 → 50 → 77.8 net −22%The stock is unchanged. The tracker is down 22%. Nothing malfunctioned — this is the arithmetic of constant leverage, and it applies to every leveraged product that has ever existed.
A tracker is not a long-term store of value. The more the underlying chops, the more it costs. If you are holding a bonded coin because you like where the stock is going, that thesis has a clock on it.
Funding
A perpetual position pays or receives funding continuously, depending on which side the market is crowded on. On the position backing a tracker, funding is paid out of the position itself — so it shows up as drag on the NAV, not as a charge on your swap.
At 5×, funding is levered too. A rate that looks negligible on a spot position is five times that against the margin behind a tracker.
What this means for a coin's floor
The backing behind a bonded coin is a leveraged position, and it moves like one. It can be worth much more than the dollars that went in, and it can be worth much less. It is not a stablecoin reserve and nothing here pretends otherwise.
What it is, is real, on a venue you can query, at a size you can read. See the hedge book.