Definition of ETF leverage token
ETF (exchange trade fund) leverage token is an open-end fund which is listed on the exchange and has variable fund shares. It is a very mature financial derivative. It is a token issued by tracking a certain multiple (e.g. 3 times) of the daily yield of the target currency under the premise of anchoring the target currency (e.g. BTC). For example, when the BTC price increases by 1%, the net value of the corresponding triple ETF leverage token will increase by 3%; and the net value of the corresponding - Triple ETF leverage token will decrease by - 3%.
The principle of ETF leverage token
The principle of ETF leveraged tokens is that investors subscribe to the unit share of a fixed leverage base. The fund manager ensures that the base return anchors a fixed target multiple of the return of the target currency (such as BTC). Investors can trade The ETF leverages the token share to obtain a specified multiple of the target currency.
When the fluctuation range of the target currency (such as BTC) in the opposite direction exceeds a set threshold, the basic management will readjust the fund position by introducing a rebalancing mechanism to ensure that the fund's net worth loss will not exceed a certain limit. . This makes the price not completely zero, so there is no risk of liquidation.
Operation process of leverage ETF
Leverage ETF is a perpetual product issued by FTX platform, which is "due". Investors can buy or sell on the ZT platform at any time, without paying any margin, so as to achieve the purpose of trading leverage and support the full withdrawal of currency.
Leverage ETF is an emerging financial derivative, which is an emerging token issued by FTX. The above content does not constitute an investment proposal. Please pay attention to risk control.
Leverage ETF greatly reduces the risk of strong even liquidation, but there will be the risk of approaching to zero and liquidation in extreme market. Please pay attention to the difference between net value and price to avoid losses.