Learn how you can invest in ETF Leveraged Tokens on Gate.io.
ETF Leveraged Tokens
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What are ETF Leveraged Tokens?
- ETF Leveraged Tokens
- Gate.io leveraged ETF is a trading product with built-in leverage and an automatic position adjustment mechanism.
- Leverage properties
- The rise and fall is about three times or five times the underlying asset market, without any margin.
- Automatic rebalancing
- ETF products follow up profits and losses on a daily basis to adjust the leverage ratio back to the target leverage ratio.
- Suitable for unilateral market
- ETF is more suitable for short-term unilateral market investment, which can realize compound interest effect.
Leveraged tokens are in the same way as spot trading.
You only need to buy and sell to make long and short positions, and there is no need to perform operations such as liquidation and repayment.
Main features of ETF
Each leveraged ETF product corresponds to a contract position, which is managed by the platform fund manager.
When users purchase leveraged tokens, the platform will automatically perform position management operations in perpetual contracts, allowing you to easily build your own constant leverage portfolio without knowing the specific mechanism.
- Easy to use
- The transaction operation is consistent with the spot, no borrowing and repayment operations are required.
- High capital utilization efficiency
- Opening a position does not require any margin 0.1% daily management fee includes all costs.
- Automatic compounding
- When the purchase direction is correct, it can automatically increase the position to realize the effect of compound interest.
- Will not liquidate
- When the purchase direction is wrong, the position will be automatically reduced and the holding quantity will not change.
About the fees charged on ETF products
ETF products need to hedge risks in perpetual contracts, which is costly.
The 0.1% daily management of Gate.io’s ETF products has included all costs, including contract market handling fees and funding rates, and loss of opening order spreads, which is basically the lowest level in the entire network.
Since the start of operation, Gate.io’s ETF management fee still cannot cover the cost without calculating the spot transaction fee.
The loss part is borne by the platform and will not be deducted from the user’s net position value.
About the Rebalancing Mechanism on ETFs
In order to ensure that the ETF is always at the leverage ratio of the corresponding product, it is necessary to regularly adjust the position every day to readjust the underlying assets to the corresponding leverage ratio.
Platform fund managers will dynamically adjust futures positions so that leveraged ETF products can maintain a fixed leverage multiple for a certain period of time.
Leveraged ETF products will automatically increase their positions after rebalancing when they are profitable.
When a loss occurs, the position will be automatically reduced after the position is adjusted, so as to avoid the risk of being liquidated.
What is the difference between leveraged tokens and leveraged trading?
Leverage trading is to expand profits and losses by borrowing more than margin.
The leverage multiple is based on the number of currency holdings.
The leveraged trading is to expand the income by amplifying the rise and fall of the ratio, and the leverage multiple is reflected in the rise and fall.
Leverage ETF products do not need to pay margins, borrow currency operations, and there is no risk of liquidation.