FAQs on AscendEX Leveraged Tokens

Please refer to the FAQs on AscendEX Leveraged Tokens if you have any problem.

1.     What Leveraged Tokens Are Available for Trading?

Six leveraged tokens are currently available on the platform, with a total of 20 trading pairs, including BTC3S, BTC3L, BTC5S, BTC5L, ETH3S, ETH3L, ETH5S, ETH5L, XRP3S, XRP3L, XRP5S, XRP5L, TRX3S, TRX3L, TRX5S, TRX5L, GMT3S, GMT3L, APE3S, APE3L. (Please note: L means long, meaning longing the market; S means short, meaning shorting the market; 3 and 5 means 3x and 5x leverage.) More trading pairs will be made available soon. Please navigate to the AscendEX Leveraged Token trading page to get more details about trading pairs.

2.     What Can Be Used to Buy Leveraged Tokens?

AscendEX Leveraged Tokens are calculated in USDT, so users can buy leveraged tokens using USDT.

3.     Is Additional Collateral Needed for Trading Leveraged Tokens?

No. Leveraged Token trading is similar to spot trading and users can directly trade leveraged tokens on AscendEX without having to put up additional collateral. Please navigate to the AscendEX Leveraged Token Trading page to trade.

4.     Are There Any Limitations on Leveraged Token Trading?

No. There are no limitations on leveraged token trading. If you have an AscendEX account, you can initiate leveraged token trading at any time.

5.     Are Sub-accounts Allowed to Trade Leveraged Tokens?

Yes. Sub-accounts can be used to trade leveraged tokens.

6.     What Is an Underlying Asset?

An underlying asset refers to the asset that gives value to the derivative in derivative trading, also known as the underlying asset. In the case of a leveraged token, the token pegged to the leveraged token is the underlying asset.

For example, if the underlying asset of BTC leveraged tokens (BTC3L, BTC3S, BTC5L, and BTC5S) is BTC, the underlying asset of ETH leveraged tokens (ETH3L, ETH3S, ETH5L, and ETH5S) is ETH.

7.     What Is Net Asset Value?

Net asset value is the current fair market value of the underlying asset based on its share. The price at which users buy a leveraged Token is not the underlying asset price, but the actual value of a unit’s share of the corresponding fund of the underlying asset.

8.     How to Check Your Current Leveraged Token Holdings?

In terms of checking you balance of leveraged tokens, the process is  like checking your spot trading account. You can enter your cash wallet to check your current leveraged token holdings.

9.     Are Leveraged tokens Supported for Withdrawal and Transfer?

No. Leveraged tokens are essentially a type of financial derivative, rather than a crypto spot trading asset. Therefore, leveraged Tokens are only supported for trading, not for deposit, withdrawal, transfer, investment, conversion, and other functions.

10.  Does Leveraged token Trading Require Fees?

Yes. Leveraged token trading works like spot trading. According to spot trading fee standard, the fee of trading leveraged tokens is Maker: 0.1000%/Taker: 0.1000%. AscendEX will also charge users the management fee for holding leveraged tokens. Details are as follows: 5x leveraged tokens: daily holding management fee: 0.5%, charged once every 8 hours, 3 times a day, and 0.167% per time[AS1] . 3x leveraged tokens: daily holding management fee:0.3%, charged once every 8 hours, 3 times a day, and 0.1% per time[AS2] .

11.  Why Are There Management Fees?

 A leveraged token is essentially a fund. Each leveraged token corresponds to a certain amount of perpetual contract positions. Fund operators leverage the dynamic adjustment of contract positions to ensure a fixed multiplier between the daily returns of a leveraged token and the spot returns of the corresponding underlying asset. In actual fund operations, transaction costs such as perpetual contract transaction fees, funding fees and open position loss would occur. The management fees the platform charges are used to pay for these costs.

12.  What Is the Rebalance Mechanism?

The rebalance mechanism is the core system of leveraged tokens that runs daily at a fixed time. It aims to ensure a fixed multiplier between the daily returns of a leveraged token and the spot returns of the corresponding underlying asset. AscendEX rebalances leveraged token positions daily at 2:30 a.m. UTC.

13.  What Is a Temporary Rebalance?

A temporary rebalance is a complement to the rebalance mechanism and was designed to deal with the risks associated with wild market fluctuations. If the market fluctuates sharply and the price swing range of the underlying asset exceeds the given range set at the previous rebalance point, the platform will make a temporary rebalance to reduce trading risks. The temporary rebalance only targets the products that suffer losses due to market fluctuations.

14.  Do Position Adjustments of the Rebalance Mechanism Mean Increasing or Decreasing Holdings?

No. The position adjustments of the rebalance mechanism refer to the fund operator’s dynamic adjustment of perpetual contract positions for maintaining a fixed leverage ratio of the leveraged token, which would not change the holdings of the leveraged token, but rather the base for calculating its net asset value.

15.  How to Check the Rebalance History of Leveraged tokens?

Please enter the leveraged token’s trading page and click on Rebalance History to check the rebalance details.

16.  What Is a Merge/Split?

In order to optimize the user experience, if the net asset value of a leveraged token after a rebalance is lower than a given range, the platform will perform merge operations for the leveraged ETH. Likewise, if the net asset value of a leveraged token after a rebalance is greater than a given range, the platform will perform split operations for the leveraged ETH.

17.  Can a Merge/Split Affect the Asset Amount of Leveraged token Holdings?

No. A merge/split is only aimed at optimizing user experience and would not change users’ assets being held. For example, with a merge, the net asset value of a leveraged token will be 10 times greater than that before the merge, while the amount of the leveraged token will be correspondingly scaled down to 10% of its original size. Overall, there will be no changes to users’ holding size.

18.  How to Check the Split/Merge History?

For any merge/split, AscendEX would make a timely announcement on the related details. Users can directly enter the trading page of the specific leveraged token, and click on Rebalance History – Merge/Split to check further.

19.  Why Are There No Liquidation Risks for Leveraged ETFs Trading?

The operators of leveraged tokens can make dynamic adjustments to futures positions through the rebalance mechanism, enabling leveraged tokens to maintain a fixed leverage ratio every day. Specifically, if a leveraged token makes a profit, a rebalance will be conducted to increase the positions of the leveraged token. If losses occur, a rebalance will also be made to automatically decrease the positions, avoiding liquidation. Collateral is not required for users who are trading leveraged tokens. Theoretically, there is no liquidation risk for a leveraged token if the leveraged token does not return to zero.

Please note: Theoretically, there is no liquidation risk for a leveraged token. However, with wrong trend predictions, there will be a risk that the net asset value of a leveraged token approaches 0 amid extreme market conditions. Please be cautious to reduce potential risks.

20.  Any Differences Between Leveraged tokens Trading and Spot Trading?

Spot trading means direct trading of crypto assets at their spot price. Even though leveraged token trading is essentially like spot trading, users actually trade fund shares, rather than crypto assets themselves.

21.  Are There Any Differences Between Leveraged token Trading and Margin Trading?

From the perspective of earnings, margin trading is designed to increase investors’ earnings by multiplying their collateral, with the leverage based on the amount of token held. Leveraged tokens are designed to amplify returns by amplifying the price movements of a token, with the leverage directly pegged to the returns of underlying assets.

From the perspective of trading, margin trading can only be enabled by providing collateral and loan borrowing, while leveraged token trading requires no collateral and loan borrowing.

From the perspective of risks, there are liquidation risks for margin trading, while there are no liquidation risks for leveraged token trading in theory.

22.  Are There Any Differences Between Leveraged token Trading and Futures Trading?

From the perspective of operations, futures trading requires traders to provide collateral, while leveraged token trading requires no collateral. From the perspective of leverage ratio, the actual leverage ratio of futures trading varies with the value of positions, while leveraged tokens are adjusted on a daily and regular basis to ensure a fixed leverage ratio. Regarding risk, there are liquidation risks for futures trading, while there are no liquidation risks for leveraged token trading in theory.