Binance recently added its own leveraged tokens, just weeks after removing similar FTX products from its exchange.
Binance has launched new leveraged tokens, giving customers greater price swing accessibility.
“Leverage Tokens are a tradable asset that gives users leveraged exposure to the underlying asset without the need of maintaining collaterals, margin maintenance and liquidation risk,” Binance said in a question and answer document provided to Cointelegraph, adding:
Each leverage token represents a basket of perpetual futures positions. The price of the tokens tracks the changes in notional value of its underlying positions and its level of leverage.”
At the end of March, Binance announced the delisting of FTX leveraged tokens, saying the products confused customers. Binance addressed this point in the Q&A on its new products, once again referring back to user confusion as the source of FTX token delisting.
Binance explained customers held the FTX leveraged tokens for extended periods of time, instead of trading them in the short term, as their design called for. “So, we are addressing the crucial problems with the existing leveraged tokens in the industry and launching Binance Leveraged Tokens,” Binance said, citing customer demand in the market for such products.
Binance claimed its new line of leverage tokens incur smaller fees, tout less risk, and give enhanced protection compared with competing products. The tokens span 1.5x to 3x leverage, and do not house forced rebalancing outside of necessity. This is compared to other products that frequently rebalance their leverage, Binance said.
The exchange noted it will always host liquidity for these products. “Binance guarantees that Binance Leveraged Tokens are always available for sale or purchase within 10% of the NAV (Net Asset of Value),” the company said.
Although Binance said its leveraged tokens were made for quick trading, the exchange claimed the tokens function better than the competition if customers choose to hold longer term as well, but these products are not meant to function in place of futures or spot trading.
Binance plans to provide information for user education, adding:
We have addressed the crucial problems with other existing leveraged tokens in the industry and created an improved product that provides better protection for our users. We believe users will see the differences and improvements as soon as they trade it.”
Upon their May 14 launch, Binance will host only Bitcoin-related leveraged tokens.
A major player in the crypto space, Binance has expanded in a number of ways so far in 2020, including its CoinMarketCap acquisition, and continued staff hiring.
