How It Works

# Position Tokens

S&F tokens are live perpetual positions.

They are fungible rebase tokens: the token can be transferred like an asset, while the displayed balance can change as protocol accounting changes.

# Shares are the accounting unit

When a trader enters an OTC position, the protocol mints internal shares.

Shares are the durable accounting unit. They track position ownership.

The displayed token balance is derived from internal shares and the funding-rate-adjusted index. With a regular ERC-20, balanceOf usually changes only when tokens are transferred, minted, or burned. With an S&F token, balanceOf can also change because the conversion between shares and displayed tokens changes.

# Why balances can change

An S&F token balance can change because funding costs or credits are pushed into the token through rebasing.

For example:

• positive funding can increase the displayed token balance;
• negative funding can decrease the displayed token balance;
• oracle price updates can change the economic value of the position, but they do not directly change the number of displayed tokens.

Suppose Alice owns S-BTC shares. If funding rate accumulates, Alice's displayed balance can change. When balanceOf is called, the contract converts Alice's shares into the current displayed S-BTC balance using the funding-adjusted index.

That displayed balance can increase or decrease without a transfer.

# Why this is useful

The token can be transferred while still representing a live perpetual position.

If Alice transfers S-BTC to Bob, Bob receives the position token. The protocol updates share ownership, and Bob's displayed balance follows the same accounting rules.

This is what makes S&F positions portable.

The exposure is not only an account entry inside the S&F app. It is a token that can be held, transferred, pooled, or traded.

# User mental model

An S&F token is not a fixed-balance receipt.

It is a live position token. The balance can move because funding costs or credits are pushed into the token through rebasing.

The token remains fungible: one unit of the same S&F token is equivalent to another unit of that token. This lets secondary markets and other integrations treat the position as an asset.