What are Leveraged Tokens?

Each leveraged token token owns a position in futures contracts.  The price of the token will tend to track the price of the underlying positions it holds.

Our BULL tokens approximates 3x returns, and BEAR tokens approximate -3x returns.

 

How do I buy and sell them?

You can trade the leveraged tokens on FTX spot markets.  Go to the token page and click on 'trade' for the token you want.

You can also go to your wallet and click 'CONVERT'.  There is no fee on this, but the price will depend on market conditions.

 

How do I deposit and withdraw the tokens?

The tokens are ERC20 tokens.  You can deposit and withdraw them from the wallet page to any ETH wallet.

 

Rebalances and Returns

Leveraged tokens rebalance once per day and whenever they get 4x levered.

Because of the daily rebalancing, leveraged tokens will reduce risk when they lose and reinvest profits when they win.

Thus, each day a +3x BULL token will move about 3 times as much as the underlying.  Because of the rebalances, leveraged tokens will outperform the underlying over longer time periods if markets exhibit momentum (i.e. consecutive days have positive correlation), and underperform if markets exhibit mean reversion (i.e. consecutive days have negative correlation).

As an example, comparing BULL to 3x long BTC:

BTC daily prices BTC 3x BTC BTCBULL
10k, 11k, 10k 0% 0% -5.45%
10k, 11k, 12.1k 21%% 63% 69%
10k, 9.5k, 9k -10% -30% -28.4%

 

How do I create and redeem them?

You can use USD to create any of the tokens, and you can redeem any of the tokens back for USD.

The redemptions are 'cash'--instead of delivering the underlying futures positions, you receive USD equal to their market value.  Similarly you send USD equal to the market value of the positions the token owns to create rather than delivering futures positions themselves.

To create or redeem them, go to the leveraged token dashboard and click on the token you want to create/redeem.

 

What are their fees?

It costs 0.10% to create or redeem a token.  Tokens also charge a daily management fee of 0.03%. 

If you trade on the spot markets, instead you'll pay the same exchange fees as on all other markets.

 

What tokens does this platform have? 

It has leveraged tokens based on the futures listed on this platform.  It currently lists -1, -3, and +3 leveraged tokens on everything we have a future on.  For more information see here.

 

Could it be possible for BULL/BEAR to be moving in the same direction?

Yes, it could be both positive or negative depends on market volatility. More information with regard to its pricing mechanism could be found here. 

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Disclaimer: the content was authored by FTX