Question 1

What are KuCoin Leveraged Tokens?

Accepted Answer

KuCoin Leveraged Tokens are tradable assets in the KuCoin spot market that leverage profits by going long/short on the underlying asset. For example, when price of BTC rises by 1%, the price of BTC3L will rise by 3% and the price of BTC3S will drop by 3%. Unlike margin trading or futures trading, no collateral or margin maintenance is required to hold leveraged tokens, and there are no liquidation risks. Note that leveraged tokens may experience high price volatility. Traders should be prudent with their investments.

Question 2

How do KuCoin Leveraged Tokens work?

Accepted Answer

Each KuCoin Leveraged Token is a unit share of a leveraged fund. The fund manager ensures that the fund returns are based on a specific multiple of the underlying asset and that traders can gain that specific multiple of profits of the underlying asset. When the price volatility on the opposite side exceeds the threshold, a rebalancing mechanism is used to hedge risks to control the net loss.

Question 3

When should I hold KuCoin Leveraged Tokens?

Accepted Answer

The rebalancing mechanism makes KuCoin Leveraged Tokens a good choice for one-sided market moves but a poor choice for fluctuating markets. When there is high volatility, there may be higher intraday losses. Traders should be cautious when investing.

Question 4

Where can I trade KuCoin Leveraged Tokens?

Accepted Answer

i. The KuCoin Spot market (recommended)You can trade the leveraged tokens in the KuCoin spot market. Go to the page of leveraged tokens and search for your preferred ones, click “Trade” to buy or sell.ii. Subscription/RedemptionKuCoin processes subscription and redemption requests at 08:00,16:00,00:00(UTC+8) each day. Prices of subscription/redemption are determined by the results of execution, meaning there are uncertainties over the time and price. Traders should be cautious when investing.

Question 5

What fees are involved with KuCoin Leveraged Tokens?

Accepted Answer

The fees involved with KuCoin Leveraged Tokens are as follows:

i. Trading Fees: Charged when buying/selling the leveraged tokens on the spot market. The fee level is the same as that of spot trading.

ii. Subscription Fee: Charged when subscribing to a leveraged token. The fee is currently 0.1% of each subscription.

iii. Redemption Fee: Charged when redeeming a leveraged token. The fee is currently 0.1% of each redemption.

iv. Management Fee: Charged at 07:45 (UTC+8) each day at a rate of 0.05%. The fee is incorporated into the net asset value of the leveraged tokens and will not affect your holdings. As management fees are charged automatically on a daily basis, traders should be cautious of holding leveraged tokens in the long term.

Question 6

What are the risks of holding KuCoin Leveraged Tokens?

Accepted Answer

i. Compared with the spot market, the market of leveraged tokens has higher risks and uncertainties. Holding leveraged tokens may result in numerous intraday gains and losses.

ii. The rebalancing mechanism and management fees mean that the longer you hold a leveraged token, the more fees you need to pay. Traders should be cautious of holding leveraged tokens in the long term.