Leveraged tokens are ERC20 tokens that have leveraged exposure to crypto. You can find the list of leveraged tokens here.
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 three leveraged tokens for every future on FTX: BULL (+3x), BEAR (-3x), MOON (+10x), DOOM (-10x), and HEDGE (-1x). If ETH goes up 1%, then ETHBULL goes up 3%, ETHBEAR goes down 3%, ETHMOON goes up 10%, ETHDOOM goes down 10%, and ETHHEDGE goes down 1%. If ETH goes down 1%, then ETHBULL goes down 3%, ETHBEAR goes up 3%, ETHMOON goes down 10%, ETHDOOM goes up 10%, and ETHHEDGE goes up 1%.
- None of this is investment advice.
- Much of the below analysis ignores any difference between futures and spot prices, and ignores the effects of fees.
- Leveraged tokens greatly reduce the risk of liquidation but cannot make it fully impossible; if markets instantaneously gap down 50%, there is nothing that can stop a +3x leveraged position from getting liquidated.
- Leveraged tokens, like the rest of FTX, are not being offered to US users
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