GJ.COM has now opened the leveraged ETF and will launch BTC3L / USDT and BTC3S / USDT trading pairs at 17:15, March 23, 2020.
At present, you can participate in ETF leveraged transactions with multiple returns on the web side.
I. What Is Leveraged Etf?
Leveraged ETF is an innovation of traditional ETF. Through the use of leveraged investment tools, it can track the yield rate of underlying assets with certain times (3 times, 5 times or 10 times). For example, if investment income changes by 1%, When the investment income changes by 1%, the change in fund net value can reach 3%, 5% or 10% as agreed in the contract.
GJ's leveraged ETF product is designed as a perpetual product with no settlement day. The value of leveraged ETF product is calculated in USDT. During the operation of the product, a professional team performs automatic rebalancing mechanism and risk management. The net value of the product will not approach zero and there is no liquidation risks, investors can buy or sell in the secondary market at any time, it is very convenient to achieve the purpose of leveraged transactions, and to obtain multiple times the return of the fluctuations of underlying assets.
II. Advantages of Leveraged ETF
What advantages does the GJ's leveraged ETF have over investing in the spot? Take 3 times long leverage BTC3 as an example:
(1) High multiple income
When the price trend of digital currencies is more obvious, buying leveraged ETF can achieve higher returns than buying spot. For example, the price of BTC has increased by 10%, and leveraged ETFs can achieve a 30% return.
(2) Compound-interest investment
GJ's leveraged ETF will maintain the user's leverage times at a fixed level. After the user generates a floating profit in the previous period, the ETF will automatically increase the position, so that the investment income in a unilateral market environment is more than 3 times the spot.
(3) Never approach zero,
GJ's leveraged ETF is managed by a professional team. During the operation of the ETF, risk control will always be performed. Traditional leverage will be liquidated when the price of the target falls by 33.33%, GJ’s leveraged ETF will reduce users' positions appropriately after floating losses. After the underlying assets drops by 33.33%, the price will not completely approach zero. The process of price rise will automatically increase the position, which makes the price never completely approach zero and the interests of ETF holders will always be protected.
Ⅲ. The Naming Rules of Leveraged ETF
Take BTC3L as an example, its English name is BTC 3X Long, abbreviated as BTC3L. For BTC3S, its English name is BTC 3X Short, abbreviated as BTC3S.
Ⅳ. The Subject Matter of Leveraged ETF
In the first issue, we will launch the leveraged ETF product to track the increase in BTC. In the later period, we will launch leveraged ETF in other popular currencies according to market conditions.
Ⅴ. Unit Net Value And The Price Mechanism of Leveraged ETF
As a fund product, each unit of leveraged ETF corresponds to the corresponding share of the fund. The dynamic actual value of this share is the unit net value of the leveraged ETF. Because the product is actively trading in the secondary trading market, the latest transaction price may deviate from the unit's net value. We also list the unit's net value and the latest transaction price at the same time. We hope investors can realize that the price you buy/sell should not be too far away from the unit net value, or you may suffer the corresponding losses. At the same time, when the net worth price is lower than a certain threshold (0.05U in the initial stage), the platform will perform a consolidation operation on the variety (change the net worth price to 10 times before the merger, but the corresponding quantity will also become 1/10 before the merger, The user's total assets will not be affected in any way) to improve the sensitivity of price changes and optimize the trading experience.
Here is the formula for calculating the net value:
Ⅵ. Rebalance Mechanism of Leveraged ETF
GJ’s leveraged ETF is managed by a professional team, real-time position rebalancing and risk control to ensure that the leverage ratio of the ETF is consistent with the agreed leverage ratio.
Take BTC3L (BTC 3x long product) as an example.
The net value of the ETF is 1, and each ETF holds BTC of 3-USDT value. After the BTC price increases by 1%, the net value of the ETF will change to 1.03, and the leverage factor will be less than 3. Each ETF will buy another 0.06-USDT value of BTC, the total value of BTC holding is 3.09, and the leverage to dynamically maintain the ETF is 3. Positions will also be dynamically reduced during the decline to ensure that the contract's net value will not return to zero. During the price rise of BTC, positions will be dynamically increased to fully capture market fluctuations.
Ⅶ. Trading Fee of Leveraged ETF
The trading fee rate of leverage ETF product is the same as spot trading fee rate, that is 0.2%, Besides, we will charge management fee for each times leverage every day (usually the fee rate is 0.1%, it may be adjusted based on the market performance) to pay the funding rate, trading fee and other necessary charges generated by the fund portfolios. The manage fee will be manifested on the changes of net value. It is only charged at 00:00. No fee will be charged if you do not hold Leveraged ETF product at the time point.
To sum up, the 3x leverage EFT is very suitable for the corresponding single trend market, and it is very convenient to make full use of funds to obtain investment income.
EFT is managed by a professional team with real-time dynamic position adjustment, and the price will never approach zero.
It is necessary to make a correct judgment on the market price trend, set a stop-profit and stop-loss, timely risk control, and grasp market opportunities.
Risk Warning: Leveraged ETF is an emerging financial product. The content above does not constitute investment advice. Please watch out investment risks. Leveraged ETF reduces the risks of liquidation, but in extreme conditions there’s possibility that the price will approach zero and be liquidated. Please pay attention to the difference between order price and net value, to avoid losses.
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GJ Global Team