Leveraged tokens are similar to other ERC-20 tokens in the sense that they can be traded, held, or transferred the same as any other token. The main difference with leveraged tokens is that they provide leveraged exposure to crypto assets without having to worry about collateral, margin, liquidation prices, or anything else that you’d need to manage with regular margin trading.
How do leveraged tokens work?
Leveraged tokens provide a simplified way to get leveraged exposure to crypto assets. These tokens are issued and redeemed by FTX and can be traded on Poloniex.
Trading with Leveraged Tokens:
BULL, the 3X Long Bitcoin Token, represents a Bitcoin long position with 3x leverage. BULL tokens are created to track BTC movements by +3x. If BTC increases 1% in 24 hours, BULL is expected to increase 3%. If BTC decreases 1%, BULL is expected to decrease by 3%.
BEAR, the 3X Short Bitcoin Token, represents a Bitcoin short position with 3x leverage. BEAR tokens are created to track BTC movements by -3x. If BTC increases 1%, BEAR is expected to decrease by 3%. If BTC decreases 1%, BEAR is expected to increase by 3%.
Issuing and Redeeming Leveraged Tokens:
If you want to issue $1,000 of BULL, you would send $1,000 and the BULL account on FTX will buy $3,000 worth of BTC perpetual futures, making BULL now 3x long BTC.
You can also redeem leveraged tokens for the value they represent at a given time. To do so, you would send your $1,000 of BULL back to FTX and redeem it. This will destroy the token, causing the BULL account to sell back the $3,000 worth of futures, and credit your account with $1,000.
The issuance and redemption process is only recommended for advanced customers who fully understand all of the documentation on leveraged tokens.
What are the risks when trading leveraged tokens?
Leveraged tokens are higher risk than other spot markets and potentially more volatile. They may gain or lose large amounts of their value in a day. These tokens will perform differently than regular leveraged exposure. With their rebalancing process, the target leverage will be achieved each day but not necessarily sustained over the long-term. Please use caution when trading these assets and only trade them if you understand how they work. For more information, please see here.
Which leveraged tokens are available on Poloniex?
We have markets for four leveraged tokens: BULL/USDT, BEAR/USDT, TRXBULL/USDT, and TRXBEAR/USDT:
BULL: 3X Long Bitcoin Token
BEAR: 3X Short Bitcoin Token
TRXBULL: 3X Long TRX Token
TRXBEAR: 3X Short TRX Token
Who is the issuer of the leveraged tokens on Poloniex?
FTX is the issuer of these assets.
What blockchains do you support deposits and withdrawals for?
We currently support deposits and withdrawals for BULL, BEAR, TRXBULL, and TRXBEAR leveraged tokens on the Ethereum blockchain.
What fees are involved when trading leveraged tokens?
To traders buying and selling leveraged tokens in spot markets, the only fees that apply are our standard trading fees. You can check your fees here.
Where can I learn more about FTX leveraged tokens?
FTX has many resources available to learn more about their leveraged tokens. You can check out their Help Center article or watch their explainer video below.