LBank to Launch the first batch Leveraged ETF products — BTC and ETH
Dear LBank users:
LBank will launch the innovative financial derivative — Leveraged ETF at 16:00 on February 17, and the Leveraged ETF trading board will open at the same time on official website. Users can trade leveraged ETF products at [Website — Trading Floor — ETF].
The first batch underlying tokens including:
You can use the financial product to magnify your profit in the easiest ways ever by buying (long) or selling (short).
More Details: Guide for Leveraged ETF (Details)
Ⅰ. What is leveraged ETF?
Leveraged ETF is a very popular financial derivative in traditional financial market. It is a product that tracks the yield rate of underlying assets (for example BTC) with certain times (3 times). For example, if BTC gains 1%, the net value of corresponding 3 times ETF product will rise 3%, while the -3 times product will decrease -3%.
Leverage ETF is a perpetual product that there‘s no settlement day. Theoretically, its price will not completely approach zero, so there’s no liquidation risks. Investors are able to buy or sell it at the secondary market at any time with no need of margin.
The value of leveraged ETF product is calculated in USDT. Its trading is very similar to spot trading. Leveraged ETF, essentially, is a fund in shares that are pegged with the return rate of underlying asset with certain times. Investors are able to obtain yield times more than that of the underlying asset by trading leveraged ETF products. When the underlying assets fluctuate against the leveraged ETF you bought over a given threshold figure, the fund management party will rebalance the fund position to ensure the loss not exceeding a limited amount.
Simply put, investors are able to gain the yield of underlying assets with certain times by trading the corresponding leveraged ETF product which is free of liquidation risks via control measures taken by fund management agent.
LBank now support 3 times long leverage (3L) and 3 times short leverage (3S). Users can check the leveraged ETF products by [Official website — Trading Floor — ETF Board]
Ⅱ. Advantages of leveraged ETF
- Spot trading and no need of margin
Investors can trade leveraged ETF on LBank with the same process of spot trading. There is no margin required, so no liquidation problem. Take purchasing BTC3L (3x long of BTC) as an example. Users only need to check the net value, select the proper price, and enter purchase quantity to buy BTC3L.
- Compound-interest effect and risk limitation
The profit of the leveraged ETF product will be transferred to the principal automatically by the system. That is, if a user is gaining profit from the leveraged ETF he bought, the profit will be added to the principal in the next rebalance period (every day). As a result, the user’s position of the 3x leveraged ETF product will increase to gain compound-interest effect.
Besides, leveraged ETF brings in risk-control mechanism (refer to the details in the following part). For example, if BTC falls by 33%, the 3 times BTC long contract will be liquidated undoubtfully, while the leveraged ETF product BTC3L, through rebalance mechanism, will not approach zero. There will be some asset left.
Investment risk tips:
Leveraged ETF is a tradable product that tracks three times the daily profit of underlying assets. Users shall pay attention to the gap between the actual net value of the product and the latest price when placing an order. If you put the order in the opposite direction, there is a risk that the price will approach zero in extreme conditions. This product subjects to the derivative with high risk. Please watch out the risk in investment.
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