Four new tokens by Amun will be listed on the Bitcoin.com Exchange this Thursday. Amun is a leading crypto technology company that builds tokens to make purchasing crypto more accessible, safe, and efficient. You have the chance to trade these tokens for free on the Bitcoin.com Exchange from Thursday, June 25th, 10 am UTC until Sunday, June 28th, 2020 23:59 UTC.
Amun is the world’s largest issuer of crypto exchange-traded products. Its suite of ETPs has simplified access to crypto for both institutional and retail investors in the traditional finance community.
The Bitcoin.com Exchange is integrating four tokens: BTC3L, BTC3S, ETH3L, ETH3S. These are Ethereum-based ERC-20 tokens created by Amun to give token holders easy access to leveraged long and short daily returns of crypto assets like Bitcoin and Ether.
BTC3L — Amun Long 3x Bitcoin Token
BTC3S — Amun Short 3x Bitcoin Token
ETH3L — Amun Long 3x Ether Token
ETH3S — Amun Short 3x Ether Token
What are leveraged tokens?
A leveraged token is a financial derivative that enables you to gain exposure to a leveraged trading position in a digital asset without having to deal with margin trade, liquidation, collateral, funding rates. Due to its simplicity, they have got a lot of attention since their appearance.
A leveraged token maintains notional exposure to -2x or -3x of the daily returns of a crypto asset like Bitcoin or Ethereum. It is done through the use of Amun’s Jasper platform which facilitates margin positions in the crypto assets in question both for long and short positions through the use of perpetual swaps, while also rebalancing on a daily basis in order to maintain daily notional leveraged exposure.
How do leveraged tokens work?
The BTC3XLONG tokens maintain notional exposure to 3x of the daily returns of Bitcoin and the ETH3XSHORT tokens maintain notional exposure to -3x of the daily returns of Ether. This means that if Bitcoin were to rise by 3% on a single day then BTC3XLONG would aim to rise by 9% on the same day. The use of these tokens greatly improves the user experience of maintaining leverage to crypto assets.
To showcase how leveraged tokens work, here is a very simple example: what would happen to the prices of BTC3L and Bitcoin 3x Daily Short (BTC3S) tokens if Bitcoin’s price over 3 days is as follows: Day 0 — $100, Day 1 — $103, Day 2 — $106.09, in other words, two days of Bitcoin increasing by 3%. It is assumed that Bitcoin, BTC3L, and BTC3S all begin day 0 at a price of $100.
As the table shows, both BTC3XLONG and BTC3XSHORT track 3x and -3x of Bitcoin’s returns over a single day. Please note that these tokens do not track 3x or -3x of Bitcoin’s returns over multiple days.
Benefits of leveraged tokens
Leveraged tokens can provide some peace of mind if a trader doesn’t want to worry about liquidation on positions. They are also much better during strong trending periods, due to the daily rebalancing and compounding effect, which would otherwise need to be done manually in order to achieve the same result. There are multiple aspects why traders should use leveraged tokens but the four main ones are highlighted below.
- Zero hassle: Traders don’t have to worry about managing funding rates, borrowing costs, and/or monitoring positions for risks of margin calls.
- Daily rebalancing: Each token rebalances daily to ensure constant leverage ratios of the underlying assets are always maintained. It prevents the token holder from getting liquidated as is the case when leverage is used for futures and perpetual swap contracts.
- Tradability: The tokens are listed on the leading crypto exchanges such as the Bitcoin.com Exchange, making it easier to enter and exit positions on the secondary market.
- Reduced Liquidation Risk: When losing money leveraged tokens reduce exposure, thus greatly reducing the chance of liquidation. It would require a 33% 24-hour change in price for liquidation to occur.
Why choose Amun’s tokens?
Amun’s leveraged tokens differ from similar types of tokens in the crypto space. The table below shows a comparison between Amun’s tokens and the other t leveraged token issuers: Binance and FTX.
The table shows that there are several differences between Amun’s tokens and the tokens issued by Binance. While Amun’s tokens operate in a similar manner to FTX, the primary difference between the two is that the pricing for FTX tokens comes from its exchange while Amun uses a VWAP pricing mechanism from a number of top derivative exchanges.
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