Q: What is leveraged token?
A: ETF leverage tokens, 3BBULL / 3BBEAR are ERC20 token, which represents a digital asset with its own leveraged position. It is a tool created to meet the needs of some trading strategies. It will track the performance of the underlying digital currency and generate 3 times return.
For example, 3BBULL is 3 times leverage to buy BTC. In contrast, 3BBEAR is 3 times short BTC. Within a day, leveraged tokens can achieve three times the return of the underlying asset. Take 3BBULL tokens as an example. Every time BTC rises 1%, 3BBULL rises 3%, and every BTC declines 1%, 3BBULL falls 3%.
Q: How to deposit or withdraw leveraged tokens?
A: The ETF leverage token is ERC20 token. Users can directly withdraw to any ETH wallet from the wallet page, and also can deposit money from any ETH wallet to the wallet page.
Q: Is the net value of leveraged tokens equal to its currency price?
A: The net value of ETF leveraged tokens is not exactly the same as the currency price. For example, 1 USDT can actually be exchanged for $ 1, but USDT may be traded at $ 1.01 or $ 0.97 in secondary market transactions. The supply and demand relationship in the secondary market affects the currency price, but in theory the currency price will be anchored to the net value of the token.
Q: What is a leveraged token rebalancing?
A: If the leverage ratio of 3BBULL at the beginning is +3 times, when BTC drops 10%, 3BBULL will no longer be +3 times the leverage, and its actual leverage ratio is about (3 * 0.9) / (1-3 * 0.1) = + 3.85 times. Conversely, if BTC rises by 10%, the actual leverage multiple of 3BBULL will become (3 * 1.1) / (1 + 3 * 0.1) = + 2.53 times.
This means that if you want to ensure that the actual leverage multiple of the leverage token is consistent with the target leverage multiple (+ 3x), 3BBULL needs to be rebalanced, it requires returning to the + 3x leverage of the leverage token by buying / selling the underlying BTC contract multiple.
At the same time, rebalancing also helps users to carry out risk control. When BTC fell 33%, a conventional 3x leveraged long position has been closed. The leveraged token avoids the risk of being liquidated by rebalancing. When the BTC price fell by 15% during the day, 3BBULL will temporarily rebalance to return it to 3 times the target leverage level.
Q: When is the rebalancing time?
A: The ETF leveraged token 3BBULL / 3BBEAR managed by BEE NETWORK FOUNDATION will be rebalanced at 0:00 UTC (8:00 Hong Kong time) every day.
Q: How many fluctuations triggered temporary rebalancing?
A: In the case of a big ups and downs, in order to prevent the contract behind hedging and bursting, the ETF leverage token will trigger a temporary rebalancing mechanism. The system will use the price fluctuation of 15% (including positive and negative) compared to the previous rebalancing spot as the temporary rebalancing threshold.
Q: Does the transfer (rebalance mechanism) increase or decrease the number of currency positions?
A: The adjustment of position adjustment is the contract position behind the product. The fund behind the ETF leveraged token is responsible for adjustment. The purpose is to maintain a 3x leverage ratio, and the number of currency positions will not change. Each time the rebalancing has ended, the calculation base of the net value will change.
- None of the above descriptions constitute investment advice. Leverage tokens are highly volatile and are high-risk products. Before trading, you need to thoroughly read the product information and understand the basic working principle of the product. The product may bring substantial gains or losses within a single day.
- Leverage tokens greatly reduce the risk of liquidation of liquidation, but cannot be completely avoided; please pay attention to the difference between net value and price to avoid losses.