What is a Leveraged ETF Token？
Leveraged ETF Token is a margin product based on the underlying digital asset. Through leveraged ETF Tokens, the gains and losses can be magnified.
E.g. For every 1% increase in BTC price, "BTC BTC3L" - a 3x long BTC token will gain 3%. For every 1% drop in BTC Price, "BTC BTC3S" - a 3x short BTC token will decline by 3%.
Due to market volatility, the latest transacted price may deviate from the net value of the underlying asset. As such, we also publish both the net unit value of underlying asset and the latest transacted price concurrentlyto avoid losses for investors.
How does Leveraged ETF Tokens Work?
The leveraged ETF token track the price action of the underlying tokens. The modus operandi of leveraged ETF products is based on daily adjustment of trading book positions at fixed time intervals or when the leverage is greater than the threshold limits of 4x.
Similar to futures contract products, leveraged ETF token products are derivatives with leveraging effects. Investors' gains and losses can be amplified through the effect of leveraging. The calculation of the net equity value and adjustment of trading book position will take place daily at UTC 00:00.
In order to avoid liquidation, intra-day position adjustment will take effect if the trading book position exceed the leverage limits by 4X. It is important to note that the calculation of the position adjusting method above does not take into consideration the difference in underlying asset prices, fees, and rounding errors that may occur when the position adjusting is triggered and order executed.
Advantages of Leveraged ETF Tokens
Comparing Leverage ETF Token to 3X leveraged futures contracts:
If a user buy 1 leveraged ETF token and 3X leveraged futures /contracts and the underlying asset price increased by 10%, the floating profit for leveraged ETF token will be 0.3，0.69，1.197, and the floating profit for 3X leveraged futures contracts will be 0.3，0.63，0.993 respectively before fees.
LeveragedETF Token has a better rate of returns than leveraged futures products during trending market conditions. However, during volatile market conditions, leveraged futures products will yield better returns..
FAQ on Leveraged ETF Tokens
Q：How to calculate the Gains & Losses?
A: Please refer to below chart. In situation where intra-day position adjustment occur, the changes may not equate to 3 times the value of underlying asset.
Q: What is the underlying digital asset used on the Leveraged ETF product?
Q: What currency can I use to trade Leveraged ETF?
A: It depends on the specific trading pair. The current Leveraged ETF listed on Jubi was BTC3L/USDT and BTC3S/USDT, therefore USDT will be the based currency used in trading BTC3L and BTC3S.
Q: Is there a unique symbol for ETF Leveraged products?
A: BTC 3x Leverage Long, in short BTC3L. BTC 3x Short, in short BTC3S.
Q：Will liquidation occur for leveraged ETF products? Is margin needed for leveraged ETF products?
A：There is no liquidation as the trading position will be adjusteddaily at fixed time intervals or when the leverage is greater than the threshold limits of 4x.
Q：Why leveraged ETF productsdoes not have liquidation?
A：The net value of underlying asset will change when during daily adjustment or the intra-day position adjustment. As such, there will be no liquidation except fall in asset value due to high volatility market conditions.
Q：What are the trading fees for leveraged ETF tokens?
A： There are trading fee and position management fee.
Trading fee: ：taker :0.15%，maker: 0.08%
A 0.03% position management fee will be charged for overnight positions. This fee will be deducted from the net value of ETF tokens during daily trading book adjustment at UTC 00:00:00.
Risk Warning: Investing in cryptocurrency is akin to being a venture capital investor. Please do your own risk assessment when deciding how to invest in cryptocurrency and blockchain technology. Jubi attempts to screen all tokens before they come to market, however, even with the best due diligence, there are still risks when investing. Jubi is not liable for investment gains or losses.
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