2024-01-24 08:57:25What is a Leveraged Token (LT)?
A Leveraged Token is a derivatives product with no margin or liquidation risks. It provides you with leveraged exposure to the underlying asset, and is suitable for short-term investments in a one-sided market.
What is a Leveraged Token on Bybit?
At Bybit, each Leveraged Token represents a basket of Perpetual Contract positions. This means that when you trade a Leveraged Token, you’re investing in a basket of contracts for the underlying asset.
As shown below, a basket of BTC3L consists of 17.772 BTC worth of BTCUSDT Perpetual Contracts positions (long).
What is net asset value (NAV)?
NAV, or net asset value, refers to the value of a Leveraged Token. The NAV of a Leveraged Token moves in line with the price fluctuations in the Perpetual Contracts market.
Taking BTC3L as an example, for every 1% increase in the BTCUSDT price, the NAV of BTC3L will rise by 3%.
Why is there a slight difference between the price of a Leveraged Token in the Spot market and its NAV?
The NAV of the Leveraged Token is calculated according to the price fluctuations of the underlying assets in the Perpetual Contracts market, while the price of the Leveraged Token in the Spot market reflects the result of buying and selling behavior in the Spot market. This causes the slight difference between the NAV and the price of the Leveraged Token.
What does the symbol for Leverage Tokens represent?
Using BTC as an example,
- BTC3L refers to a Leveraged Token holding long positions of BTCUSDT Perpetual Contracts with 3x leverage.
- BTC3S indicates a Leveraged Token holding short positions of BTCUSDT Perpetual Contracts with 3x leverage.
Which account do I use to trade Leveraged Tokens on Bybit?
Leveraged Token trading will be channeled directly through your Bybit Spot Account.
What’s the difference between Leveraged Token and Derivatives trading on Bybit?
Please refer to Differences Between Leveraged Tokens and Derivatives Trading.
What are the fees associated with a Leveraged Token?
Please refer to Bybit Leveraged Tokens: Fees Explained.
Will my Leveraged Token position be liquidated?
There are no liquidation risks.
Taking BTC3L as an example, the target leverage range is [2,4]. The rebalancing mechanism will automatically be triggered when the actual leverage ratio is ≥ 4x or ≤ 2x, to be adjusted to achieve the target leverage of 3x.
Note: Please be aware that the net asset value of a Leveraged Token could fall to zero, in which case it would be unrecoverable.
What is the rebalancing mechanism?
Rebalancing is a process to make sure that the Perpetual Contracts positions of the underlying asset will be dynamically adjusted to achieve the target leverage. The rebalancing mechanism will be automatically triggered when the actual leverage ratio falls outside the target leverage range.
For more information, please refer to the Bybit Leveraged Tokens Rebalancing Mechanism.
Can Leveraged Tokens be withdrawn?
Currently, withdrawals are not supported.
Do Bybit Leveraged Token products have a limited supply?
No. Since users are able to subscribe/redeem Leveraged Token tokens, which increases/decreases the issuance amount accordingly, there is no fixed supply.
Are there any price-setting limits for a buy/sell order in Leveraged Token trading?
For example, the limit is 10%, with Last Traded Price of 1 USDT the order price of your buy order cannot exceed 110% (1.1 USDT) of the Last Traded Price, while the order price of your sell order cannot be lower than 90% (0.9 USDT) of the Last Traded Price.
Are there any quantity/value limits for a subscription/redemption order in Leveraged Token trading?
Yes. For more information, please refer to Order Limits (Leveraged Token).
What’s the maximum price deviation between the net asset value (NAV) and the order price when placing a Leveraged Token order?
Note: Please note that order placement will also be restricted when the deviation between the NAV and the price of a Leveraged Token exceeds the above limit.
What is the maximum value of the leverage token I can hold?
The maximum value that can be held for each leverage token is displayed in the Position Limit tab on this page.
Notes:
- The maximum value of leveraged tokens that can be held is calculated separately for the Main Account and Subaccount. The calculation is as follows:
— Quota that can be held = Maximum Value Limit - (Limit Order Quantity x Order Price) - (Leveraged Token Held x Last Traded Price) - TP/SL Order Value
— TP/SL Limit Order Value = Order Quantity x Order Price
— TP/SL Market Order Value = Order Quantity x Execution Price
- After the leveraged token purchase, if the total market value of the token surpasses the specified maximum threshold, the quantity of tokens owned will remain unchanged, allowing users to retain the purchased amount of tokens. However, you will not be able to place any new buy orders.
Are there any limits on the order value setting of Bybit Leveraged Token products?
Yes. For more information, please refer to Order Limits (Leveraged Token).
Where can I view my Leveraged Token trading history?
Please click on Orders & Trades → Spot Order in the upper right corner of the page to enter the Order History page or you can click here to view.
Where can I view my Leveraged Token rebalancing history?
Click the Leverage icon next to the trading pair, then click on Read More → About This Leveraged Token. You can then view it in the Rebalancing History column.
Are there any KYC requirements for trading a Leveraged Token?
Yes, Individual KYC Lv. 1 or Business KYC is required. For more information on how to verify your account, please refer to How to Complete Individual KYC Verification.
To learn more about KYC verification, please refer to the following articles:
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