Gate ETF Leveraged Token: An innovative tool that amplifies gains without margin

“When the spot rose before, the short-selling leveraged tokens I bought fell particularly sharply, but when the spot fell sharply recently, the leveraged tokens did not rise much.” An investor named Hehe (pseudonym) was once confused by the performance of leveraged tokens, reflecting the common doubts of many users who are new to such products.

Today, Gate offers a transparent and user-friendly solution to this problem through its unique ETF-leveraged token.

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01 New Leverage Solution: The Essence of Gate ETF Leveraged Tokens

Have you ever wondered why traditional leverage trading is so complex and risky? Gate simplifies complex leveraged trading into as simple as buying and selling regular tokens with its innovative ETF leveraged token.

Imagine that you could buy a “BTC3L” token directly, and when the price of Bitcoin increases by 1%, your token value will increase by about 3%, and vice versa.

This is fundamentally different from traditional margin trading and perpetual contracts. ETF leveraged tokens are essentially fund shares that track changes in the price of a specific asset.

Gate ETF leveraged tokens are backed by platform asset managers through futures contracts, allowing users to maintain a fixed leveraged portfolio without understanding the underlying mechanism.

02 Operation mechanism: The secret behind the risk of liquidation without liquidation

The leveraged token market heated up rapidly in 2020 when several exchanges listed it as a strategic-grade product. However, some investors have complained that the rise and fall of the leveraged tokens purchased are different from the multiples claimed by the product. Understanding how it works is crucial.

Gate ETF leveraged tokens achieve leverage returns through automatic rebalancing mechanism, without margin management and no risk of liquidation, making it easier to operate and suitable for stable investors.

The key lies in its unique rebalancing mechanism. Gate’s ETF leveraged tokens perform timed rebalancing daily at 16:00 (UTC) and also trigger irregular rebalancing under certain conditions.

This mechanism addresses the common risks of leveraged products. For example, a 3x long token will not be adjusted during a timed rebalancing period if the leverage remains in the range of 2.25x to 4.125x.

Irregular rebalancing monitors the real-time leverage to ensure that the leverage does not deviate excessively from the target level. This design allows leveraged tokens to be liquidated without margin and without forced liquidation.

03 Core Advantages: Why Choose Gate ETF Leveraged Tokens?

Why do Gate ETF leveraged tokens deserve your attention among the many leveraged trading instruments? The product has multiple advantages that make it stand out in the market.

Zero risk of liquidation, simple operation. Gate ETF leveraged tokens do not require margin management and are not subject to forced liquidation. Users can simply buy or sell tokens as if they were trading spot to gain leverage exposure.

Stable leverage. Unlike perpetual contracts, where the effective leverage changes with the position value, the Gate ETF leveraged token maintains a stable leverage ratio of 3x or 5x through regular rebalancing.

Cost efficient. Compared to other leveraged trading methods, Gate ETF leveraged tokens charge a daily management fee of 0.1%, which is relatively low in the industry. This fee covers all costs, including futures market fees, funding rates, and slippage.

The product matrix is rich. Gate has completed the upgrade of the ETF leveraged token product matrix, supporting 348 coins, making it one of the trading platforms with the widest coverage and the highest leverage (5x) in the entire industry.

04 Comprehensive Comparison: Gate ETF Leveraged Tokens vs. Traditional Leveraged Trading

Different trading instruments have their own characteristics and applicable scenarios. Understanding what sets Gate ETF leveraged tokens apart from other leveraged trading methods can help you make an informed choice:

05 Equity and Price: Understand the key metrics of ETF leveraged tokens

Unlike ordinary tokens, ETF leveraged tokens have a core concept – Net Asset Value (NAV), which represents the actual value behind each token.

Suppose you buy 300 BTC3L at a price of 1 USDT, then the 300 USDT of BTC3L you hold is not a spot BTC worth 300 USDT, but a fund share of the BTC3L ETF product.

The equity calculation follows a specific formula: ETF leveraged token equity = equity of the previous rebalancing point × (1 + change of the underlying coin × target leverage multiplier). Each rebalancing, the calculation base of the equity will change.

In addition, the secondary market transaction price may incur a slight premium or discount due to supply and demand. Therefore, Gate also lists the ETF leveraged token equity along with the latest transaction price to help investors identify potential opportunities.

06 Target Users: Who is Best for Using Gate ETF Leveraged Tokens?

Not all trading instruments are suitable for every investor. Understand your needs and risk appetite to find the most suitable trading method.

Suitable for: Investors seeking simplified leverage operations; Users who want to earn leverage gains but are unwilling to deal with complex margin management; traders who prefer structured products; Market participants looking to diversify their risk and look for alternative leverage tools.

Not applicable scenarios: long-term holding strategy (leveraged tokens are mainly suitable for short-term trading due to the rebalancing mechanism); Investors who are extremely averse to any fluctuations in net worth; Users who have no understanding of the working mechanism of leveraged products.

It is recommended that novice investors start with a small amount of money, gradually familiarize themselves with product characteristics and market reactions, and then adjust their investment strategies according to their own conditions.

Future Outlook

After experiencing market shocks, when the price of the underlying asset returns to its original point, the price of leveraged tokens may be difficult to return to its original point and may even suffer significant losses. This is exactly what Gate strives to solve with its unique rebalancing mechanism.

Today, the number of supported currencies of Gate ETF leveraged token products has reached 348, making it one of the trading platforms with the widest coverage and the highest leverage in the industry. Each rebalancing adjustment is made in a robust and transparent manner, making every decision to use leverage amplification clear and controllable.

When you browse tokens like BTC3L or ETH5S on the Gate platform, you’re choosing not just a trading code but a passport to a world of precision-engineered finance.