Ultimate Guide to Trading Leverage Tokens at ProBit

Deposits: Available for deposits starting from July 3, 2020, 12:00 KST

Trading:  Available for trading starting from July 3, 2020, 18:00 KST

Trading Pairs: All tokens specified in the table below will be listed against USDT and KRW.

Reference:

For detailed usage and risk information on Leverage Tokens, refer to the FTX Guide below: https://help.ftx.com/hc/en-us/articles/360032509552-Leveraged-Token-Walkthrough-READ-THIS

What are Leveraged Tokens?

Leveraged tokens are innovative ERC20 assets that can give you leveraged exposure to cryptocurrency markets, without all the nuts and bolts of managing a leveraged position. They are introduced by FTX. By trading FTX leveraged tokens, you are declaring that you are aware that ProBit Exchange is merely the service platform where you may trade FTX leveraged tokens. The performance and value of these ERC20 assets known as FTX leveraged tokens are unilaterally dependent on FTX.

FTX tokens allow for a leveraged position without having to worry about collateral, margin, funding rates, or liquidation. FTX leverage tokens may lose significant value in a sideways or zig-zag market and are generally not intended for long term holding.

For example, take ETHBULL, a 3x long ETH token.  For every 1% ETH goes up in a day, ETHBULL goes up 3%; for every 1% ETH goes down, ETHBULL goes down 3%.

There are currently four leveraged tokens for every future on FTX: BULL (+3x), BEAR (-3x), HEDGE (-1x), and HALF.  Generally, if ETH goes up 1% during a day, then ETHBULL goes up 3%, ETHBEAR goes down 3% ETHHEDGE goes down 1%, and ETHHALF goes up 0.50%.  If ETH goes down 1% during a day, then ETHBULL goes down 3%, ETHBEAR goes up 3%, ETHHEDGE goes up 1%, and ETHHALF goes down 0.50%.

Some futures may have leveraged tokens with other margin ratios.

 How do FTX Leveraged Tokens Work?

Each leveraged token gets its price action by trading FTX perpetual futures.  For instance, say that you want to create $10,000 of ETHBULL.  To do so you send in $10,000, and the ETHBULL account on FTX buys $30,000 worth of ETH perpetual futures. Thus, ETHBULL is now 3x long ETH.

You can also redeem leveraged tokens for their net asset value.  To do that, you can send your $10,000 of ETHBULL back to FTX, and redeem it.  This will destroy the token; cause the ETHBULL account to sell back the $30,000 worth of futures; and credit your account with $10,000.

This creation and redemption mechanism is what ultimately enforces that the leveraged tokens are worth what they're supposed to be.

What are the Benefits of Leveraged Tokens?

 Managing Risk

BULL/BEAR/HEDGE tokens will automatically reinvest profits into the underlying asset; so if your leveraged token position makes money, the tokens will automatically put on 3x leveraged positions with that.

Conversely, BULL/BEAR/HEDGE tokens will automatically reduce risk if they lose money.  If you put on a 3x long ETH position and over the course of a month ETH falls 33%, your position will be liquidated and you will have nothing left.  But if you instead buy ETHBULL, the leveraged token will automatically sell off some of its ETH as markets go down--likely avoiding liquidation so that it still has assets left even after a 33% down move.

HALF tokens are the opposite.  Because they're only 1/2 leveraged, HALF tokens will sell off their underlying when it goes up and buy it back when it goes down.

Managing Margin 

You can buy leveraged tokens just like normal ERC20 tokens on a spot market.  No need to manage collateral, margin, liquidation prices, or anything like that; you just spend $10,000 on ETHBULL and have a 3x leveraged long coin.

ERC20 Tokens

Leveraged tokens are ERC20 tokens.  That means that--unlike margin positions--you can withdraw them from your account!  You go to your wallet and send leveraged tokens to any ETH wallet.  This means you can custody your own leveraged tokens; it also means you can send them to other platforms that list the leveraged tokens.

How do you Buy/Sell Leveraged Tokens at ProBit?

It is very easy to buy/sell a leveraged token at the spot market of ProBit. Simply go to the ProBit Exchange app, search for the name of the leveraged token you want to buy/sell and follow the procedure outlined in the guides below:

How to Buy a Token at ProBit

How to Sell a Token at ProBit