What is a Leveraged Token?

A Leveraged Token is a derivatives product providing leveraged exposure to the underlying asset with no margin requirements, which may amplify profitability and has no liquidation risks.

Each Leveraged Token represents a basket of Perpetual Contract positions.

The net asset value (NAV) of a Leveraged Token moves in line with the price fluctuations in the Perpetual Contracts market.

Advantages of Leveraged Tokens

Leveraged exposure that may amplify profitability

No liquidation risks

High capital utilization

Trade with ease

FAQ

NAV, or net asset value, refers to the value of a Leveraged Token. The NAV of a Leveraged Token moves in line with the price fluctuations in the Perpetual Contracts market.

Using BTC as an example,

BTC3L refers to a Leveraged Token holding long positions of BTCUSDT Perpetual Contracts with 3x leverage.

BTC3S indicates a Leveraged Token holding short positions of BTCUSDT Perpetual Contracts with 3x leverage.

There are no liquidation risks.

Taking BTC3L as an example, the target leverage range is [2,4]. The rebalancing mechanism will automatically be triggered when the actual leverage ratio is ≥ 4x or ≤ 2x, to be adjusted to achieve the target leverage of 3x.

Note: Please be aware that the net asset value of a Leveraged Token could fall to zero, in which case it would be unrecoverable.

Rebalancing is a process to make sure that the Perpetual Contracts positions of the underlying asset will be dynamically adjusted to achieve the target leverage. The rebalancing mechanism will be automatically triggered when the actual leverage ratio falls outside the target leverage range.

For more information, please refer to SimpleCryptoInvestings Leveraged Tokens Rebalancing Mechanism.