Gate ETF Leveraged Tokens: A New Crypto Investment Choice with Zero Liquidation Risk

In traditional financial markets, exchange-traded funds (ETFs) provide investors with a convenient asset allocation tool. In the volatile world of cryptocurrencies, Gate combines this concept with leverage to launch ETF leveraged tokens—structured products designed to simplify operations and avoid forced liquidation risks.

Unlike traditional margin trading that requires constant monitoring of margin levels, Gate ETF leveraged tokens utilize an embedded auto-rebalancing mechanism to help investors chase amplified returns while managing downside risk.

01 Product Core

Gate ETF leveraged tokens are not traditional cryptocurrencies but financial derivatives. Their core objective is to track the price fluctuations of specific underlying assets (such as BTC, ETH) and provide a fixed leverage multiple, such as 3x or 5x.

These products operate based on a basket of perpetual contract positions. The platform’s professional fund managers manage these underlying positions, allowing users to gain leveraged exposure without needing to understand complex hedging mechanisms—simply buy and sell like regular spot tokens.

The name intuitively reveals the product’s attributes: for example, “BTC3L” indicates the underlying asset is Bitcoin (“BTC”), with 3x leverage, and “L” signifies a long position. Correspondingly, “BTC3S” represents a 3x short Bitcoin.

02 Core Mechanism: How Auto-Rebalancing Works

The fundamental difference between leveraged tokens and other leveraged tools like perpetual contracts lies in their automatic rebalancing mechanism. This mechanism is the core of the “zero liquidation risk” promise.

In unidirectional trending markets, this mechanism can create advantages. For example, in a sustained bullish market, the token automatically increases risk exposure through rebalancing, capturing more gains as the trend continues.

Its operation can be summarized as follows: when the actual leverage deviates from the target due to price fluctuations of the underlying asset, the system automatically adjusts the underlying contract positions to bring the leverage back to the preset 3x or 5x.

Specifically, Gate sets trigger conditions for periodic rebalancing (daily at UTC 16:00) and non-periodic rebalancing. For example, for a 3x long token, rebalancing is triggered when the actual leverage exceeds the range of 2.25x to 4.125x, or when the daily price change of the underlying exceeds 1%.

This process adjusts the positions behind the token’s contracts, not the number of tokens held by users. Users do not need to take any action; their asset risk exposure is automatically managed by the system.

03 Advantages: Why Choose Gate ETF Leveraged Tokens

Compared to mainstream leveraged trading methods, Gate ETF leveraged tokens offer differentiated value across multiple dimensions, especially suitable for investors who do not want to be troubled by complex risk control processes.

Compared to margin trading: traditional margin trading requires collateral assets, borrowing funds, and constantly faces forced liquidation risks due to adverse price movements. Leveraged tokens do not require collateral, eliminate liquidation risk, and delegate complex position management to algorithms.

Compared to perpetual contracts: in perpetual contracts, effective leverage fluctuates with position value. Leveraged tokens maintain a fixed leverage multiple through rebalancing, providing more stable risk exposure.

Additionally, Gate’s product matrix has significant platform advantages. As of recent upgrades, it supports over 348 tokens, setting an industry record for coverage breadth, offering users a highly diverse selection.

In terms of cost, Gate charges a daily management fee of 0.1%, which covers all costs including futures market fees and funding rates. Official information indicates this rate is highly competitive within the industry, with the platform itself sometimes absorbing part of the operational deficit.

04 Risk Perspective and Cost Structure

Any leveraged product is a “double-edged sword.” While the automatic rebalancing mechanism eliminates liquidation risk, it introduces another risk that must be understood: volatility decay.

In markets characterized by sharp price swings without clear trends (“monkey markets”), frequent rebalancing (reducing and then increasing positions, or vice versa) can cause the net asset value (NAV) to gradually erode, potentially underperforming holding spot assets or perpetual contracts over the long term.

Therefore, such products are not suitable for long-term holding. They are designed primarily for medium- to short-term trend-following strategies, maximizing utility in clear bullish or bearish markets.

Beyond market risk, investors should also be aware of the possibility of NAV premiums or discounts. Each leveraged token has an NAV, but secondary market prices may temporarily deviate from NAV. Gate displays both NAV and real-time market prices to remind users to avoid buying at significant premiums or selling at deep discounts.

05 Target Users and Trading Strategies

Gate ETF leveraged tokens are not suitable for everyone; they are precisely tailored for the following types of traders:

• Leverage users seeking simplified operations: those who do not want to deal with margin, borrowing, and liquidation complexities, and prefer a “one-stop” leveraged exposure.
• Short- to medium-term trend traders: those with a clear view of market direction, aiming to amplify volatility gains, and capable of actively managing their positions.
• Risk-averse leverage explorers: paradoxically, these users want to try leverage while setting a clear “maximum potential loss” (i.e., their invested principal), avoiding losses beyond their initial capital due to chain reactions of liquidation.

Effective use of these products depends on a deep understanding of their characteristics. The key is to identify and follow market trends, hold in trending markets, and set clear stop-loss and take-profit points to avoid unnecessary losses in choppy markets. Using leveraged tokens as part of a diversified portfolio, to express a strong view on a specific asset’s direction, is a more rational approach.

Future Outlook

When Bitcoin surges 10% within 24 hours, users holding BTC3L see their account NAV increase by nearly 30%, all without any collateral loans or manual rebalancing. When the market unexpectedly crashes, they won’t receive urgent margin calls because the system has automatically reduced underlying positions, protecting their principal from going to zero.

This is the transformation brought by Gate ETF leveraged tokens: encapsulating leverage’s power into a simple “token,” allowing complex risk hedging to run silently in the background. As Gate’s financial product leader states, in a market shifting towards simple products, they continue to optimize this classic tool to serve professional groups that value precise hedging and no forced liquidation risks.