FTX Leveraged Tokens - Bull Bear Token Mechanics

Chad
  • The Bull tokens are ERC20token with 3x long leverage. If ETH perpetual futures go up 10%, ETHBULL goes up 30%
  • The Bear tokens are tokens with 3x short leverage. So if ETH goes up 10%, your ETHBEAR goes down 30%
  • hedge tokens are 1x short. In case if ETH going up 10%, your ETHHEDGE goes down 10%
https://ftx.com/#a=1847531

Liquidation

Rent?

Acquire/sell

Compounding

Risk reduction

video introduction

Rebalance

  • FTX periodically monitors the leverage amounts of their leveraged tokens. If any token leverage goes above 4x in magnitude, it triggers a rebalance for that leveraged token.
  • FTX calculates the number of units of the underlying leveraged tokens needed to buy/sell to return to 3x leverage, marked to prices at that time.

Again?

  • Try to avoid liquidation: Leveraged tokens reduce your position when the price moves against you, so you won’t get liquidated.
  • Simplicity: It’s no headache to move a leverage slider, cross leverage. It’s as simple as spot buying.
  • Rebalance: rebalance your position to keep the desired leverage.

Leveraged ETFs

Holding longterm?

beta-slippage

Volatility

https://ftx.com/#a=1847531

Criticism?

Decay

source: CBS

Exploit/front-running

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derivatives trader

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