Knowledge

FAQ on Leveraged ETF Tokens

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1. How to calculate the Gains & Losses?

A: Please refer to the chart below.  In situations where intraday position adjustment occurs, the changes may not equate to 3 times the value of the underlying asset.

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2. What is the underlying digital asset used on the Leveraged ETF product?

ABTC.

3. What currency can I use to trade Leveraged ETF?

AIt depends on the specific trading pair. The current Leveraged ETF listed on 5ROI was BTC3L/USDT and BTC3S/USDT. Therefore, USDT will be the base currency used in trading BTC3L and BTC3S.

4. Is there a unique symbol for ETF Leveraged products?

ABTC 3x Leverage Long, in short BTC3L. BTC 3x Short, in short BTC3S.

5. Will liquidation occur for leveraged ETF products? Is margin needed for leveraged ETF products?

AThere is no liquidation as the trading position will be adjusteddaily at fixed time intervals or when the leverage is greater than the threshold limits of 4x. 

6. Why do leveraged ETF products not have liquidation?

AThe net value of the underlying asset will change during daily adjustment or the intra-day position adjustment. As such, there will be no liquidation except fall in asset value due to high volatility market conditions.

7. What fees are traders charged for leveraged ETF tokens?

ATraders are charged a trading fee and a position management fee.

Trading fee: Taker 0.1%, Maker: 0.1%

Traders with VIP status will get to enjoy the VIP preferential rates.

A 0.1% position management fee will be charged every 24 hours. This fee will be deducted directly from the net value of the ETF position at 00:00:00 (UTC).

8. What will happen when the price of a particular ETF drops close to zero? Would there be a forced liquidation or a shares merger?

AThe price of ETF products are based on the price of the underlying assets. When the price of the underlying assets rise/fall, the price of the ETF will follow suit but it will magnify by 3 times. We do not recommend traders to hold an ETF position for an extended period of time due to the volatility of the market and that may cause the price to drop close to zero.

In response to the possibility of the risk of ETF’s net value dropping to zero, we have designed a Shares Merger and Rebalance mechanism for our ETFs. The Shares Merger and Rebalance mechanism will be activated when the net value and price of the ETF position is lower than 5% of the original net value. All ETF positions held by traders at the time of shares merger will be changed to 1/N of the original share. The net value of the position will be revised to N times the original net value price. Currently, the shares merger parameter N is tentatively set at 20. 5ROI will announce the specific shares parameter in its announcement.

Note:

Leveraged Tokens are high risk products. Only trade them if you understand how they work.  They might gain or lose large amounts of their value in a day.

 Risk Disclaimer

Digital Asset Trading can be a challenging and potentially profitable opportunity for investors. Users are strongly encouraged to carefully consider their investment objectives, level of experience, and risk appetite. 5ROI Global will not be liable for losses due to uncontrollable risk factors. 

5ROI Global

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