SAN FRANCISCO — Sept. 17, 2026
Executive Summary
2factor has launched on Base for Coinbase’s tokenized stocks, introducing a structure designed to provide moderate leverage for long-term investors. The company stated that its approach reduces the cost of holding leveraged single-stock positions by approximately 75% by sourcing leverage from investors seeking stable yield. It targets leverage levels designed for longer holding periods, including approximately 1.33x for cbBTC, rather than conventional 2x and 3x structures.
Announcement Overview
The launch brings 2factor’s onchain leveraged-position structure to Coinbase’s tokenized stocks on Base. The company stated that its model addresses financing costs associated with traditional leveraged ETFs by sourcing leverage from stable-yield investors rather than short-exposure investors. 2factor said this can reduce the all-in cost of holding a leveraged single-stock position by approximately 75%. The company also described a broader opportunity among buy-and-hold investors, estimating that approximately 88% of investable capital, or $112 trillion, is held for longer periods. The launch follows Coinbase’s introduction of real equities onchain and the resulting ability for developers to compose listed stocks with other onchain assets and protocols.
Key Announcement Details
- Announcement Type: Product Launch
- Announcing Entity: 2factor.finance
- Announcement Date: September 17, 2026
- Dateline: SAN FRANCISCO
- Launch: 2factor on Base
- Underlying Assets: Coinbase tokenized stocks
- Core Offering: Moderately leveraged stock positions
- Target Users: Long-term investors
- Leverage Cost Reduction: Approximately 75%
- Leverage Source: Stable-yield investors
- cbBTC Target: Approximately 1.33x
- Estimated Buy-and-Hold Capital: $112 trillion
- Estimated Addressable-Market Increase: 750%
- Platform: Onchain
- Primary Focus: Long-duration leverage
- Co-Founder: Evan Kuo
- Coinbase Executive: Brian Armstrong
LEVERAGED ETFS CANNOT BE HELD, LIMITING THEM TO SHORT-TERM USE
2factor stated that leveraged ETFs face a structural difference between the multiple advertised by a fund and the return ultimately experienced by a holder. The company refers to this difference as beta slippage, or beta decay.
According to 2factor, a fund carrying a 3x target does not necessarily deliver three times the underlying asset’s return over a year, and holding such a product across several years can result in performance below that of the underlying stock.
The company separates this effect into two costs that compound against holders:
- Volatility drag: 2factor describes this as a mathematical consequence of the difference between arithmetic and compound returns.
- Financing drag: The company states that leveraged ETFs obtain exposure from banks that must hedge their positions, with the cost of that hedging passed through to investors.
2factor stated that approximately $250 billion is held in leveraged ETFs and that investors pay an estimated $10 billion annually in financing above the risk-free rate.
The company also stated that only about one-third of single-stock leveraged ETFs have beaten simply holding the underlying stock, while no crypto leveraged ETF has beaten spot over its own lifetime.
2FACTOR CUTS THE COST OF LEVERAGE BY 75 PERCENT
2factor stated that the cost of leverage has traditionally been determined by the intermediary providing the leverage and hedging the resulting exposure.
Under the traditional structure described by the company, an intermediary takes the other side of the position and manages its exposure through hedging. The cost of short exposure consequently affects the price paid by investors seeking leveraged long exposure.
The company stated that the cost varies according to the depth of the hedging market rather than solely according to the risk characteristics of an asset.
Its stated ranges include:
- Large equity indices: approximately 4% to 5% annually
- Single stocks: approximately 8% to 86% annually
2factor stated that competition does not necessarily compress these costs because the pricing reflects the dealer’s hedging cost rather than the issuer’s margin.
The company’s model changes the source of leverage. Rather than sourcing it from investors willing to take short exposure, 2factor stated that it sources leverage from investors seeking stable yield.
According to the company, stable-yield capital is less expensive than short exposure, allowing the savings to be passed through to leveraged-position holders.
2factor stated that this structure produces an approximately 75% reduction in the all-in cost of holding a leveraged single-stock position.
AND GROWS ITS ADDRESSABLE MARKET BY 750 PERCENT
2factor stated that reducing financing costs alone does not solve the long-term effects of excessive leverage.
According to the company, volatility drag increases with the square of leverage, meaning that a 3x position can destroy capital over longer periods regardless of its financing cost.
The company therefore uses leverage targets intended for long-term holding periods, describing these as Kelly-optimal multiples that account for volatility drag.
For cbBTC, 2factor identifies an approximate target of 1.33x, compared with the 2x and 3x leverage levels commonly applied across leveraged products.
The company provided a historical Bitcoin example to illustrate the difference in leverage sizing:
- $1 in 3x Bitcoin over the past decade: went to zero
- $1 at 1.33x: grew to approximately $506
- $1 in spot Bitcoin: grew to approximately $281
2factor stated that equities have historically exhibited lower volatility than Bitcoin, creating a wider range in which moderate leverage can be useful for a listed stock.
The company connected its approach to portfolio theory, stating that more than half a century of portfolio theory has held that moderate leverage can maximize growth for long-duration capital. At current equity volatility levels, 2factor placed that range at approximately 1.5x to 2x.
The company stated that traditional finance has not lacked the theoretical framework for moderate long-duration leverage but has not been able to construct the corresponding instrument in the traditional market structure.
Long-Term Capital and Leverage
2factor stated that cheap financing combined with appropriate leverage sizing can create a leveraged position that can be held similarly to a spot position.
The company estimates that:
- Approximately 88% of investable capital is held by buy-and-hold investors.
- That represents approximately $112 trillion.
- Approximately $15 trillion trades on shorter horizons.
- Leverage designed for traders therefore serves a smaller portion of the estimated capital base.
- Leverage designed for longer-term holding can address both groups, which 2factor describes as a 750% increase in the capital that can use it.
Evan Kuo, co-founder of 2factor, described the intended use case for moderately leveraged positions.
“I want to own moderately leveraged Google for exactly the same reason I want to own moderately leveraged Bitcoin. I don’t know what path it will take, but I think the position will simply be worth more in five years,”
Kuo continued:
“That is not an exotic wish. It is the most ordinary thing an investor can want, and until now there was no way to act on it that survived a bad quarter.”
ON-CHAIN SOLUTIONS NOW OUTPERFORM THEIR TRADITIONAL ALTERNATIVES
2factor stated that its offering is not intended simply as an alternative for investors who lack access to traditional financial markets.
The company described the product as an onchain financial structure designed to compete with the traditional alternative on its stated characteristics. According to 2factor, for an investor with access to both markets, its structure is intended to provide a different instrument for holding leveraged single-stock exposure over multiple years.
The company identified several characteristics of onchain infrastructure that can now be applied to listed stocks:
- Programmable collateral
- Counterparties that do not need to meet directly
- Terms that can adjust without an administrator
- Composability with other onchain assets and protocols
2factor stated that these structures are now possible with a listed stock and characterized its launch as evidence that such structures can be constructed onchain.
Coinbase’s Tokenized Stocks on Base
The launch is built around Coinbase’s tokenized stocks on Base.
2factor stated that when Coinbase brought real equities onchain, the significance extended beyond simply making the assets available onchain. The company described the ability for developers to compose a listed stock with other assets and protocols built onchain as a significant part of what the tokenized-stock infrastructure enables.
According to 2factor, the possibilities created by that composability remain broad, with its own product representing an early application of the model.
Brian Armstrong, co-founder and CEO of Coinbase, described the role of tokenized stocks and the types of applications the infrastructure is intended to support.
“Listing the assets was the first step, but opening them was the more important one,”
Armstrong added:
“Putting a stock onchain is only interesting if it lets people do something they could not do before — otherwise we have rebuilt the same brokerage with extra steps. 2factor clears that bar, and it is exactly the kind of thing we opened these assets up for.”
2factor Launches on Base
2factor.finance announced its launch on Base for Coinbase’s tokenized stocks, bringing its leveraged-position structure into an onchain environment for listed equities.
The company stated that the launch provides long-term investors with access to moderate leverage that can be held indefinitely, with an intended carrying cost substantially below that associated with leveraged ETFs.
The company also characterized the launch as an example of an onchain financial product competing with a traditional counterpart based on its stated performance characteristics rather than simply on accessibility.
About 2factor
2factor.finance is an onchain financial technology company focused on building leveraged financial structures for long-term investors. Its launch on Base for Coinbase’s tokenized stocks combines leverage sourcing from investors seeking stable yield with leverage targets designed to account for volatility drag. The company stated that its approach is intended to reduce the carrying cost of leveraged single-stock positions while making moderate leverage suitable for longer holding periods.
Media Contact
For additional information, visit 2factor.finance.
Source Attribution
Source: Company announcement
