Binance Leveraged Tokens (BLVT) offer leveraged exposure to the price of a cryptocurrency without the stress of managing a leveraged position. Learn more on BLVTs here ⬇️
. These leveraged gains amount to between 1.25x and 4x. We’ll discuss why this is the case and how they target this leverage in the next chapter., and you won’t be able to withdraw them to your own wallet. Please note that Binance Leveraged Tokens aren’t issued on-chain.is that BLVTs don’t try to maintain constant leverage. Instead, they aim for a target range of. In the case of BTCUP and BTCDOWN, this is a range between 1.25x and 4x, which acts as a perpetual leverage target for the tokens.
This target leverage isn’t constant, and it isn’t publicly visible. Why is that? The main goal is to prevent front-running. If these tokens rebalance at predefined intervals, there could be ways for other traders to take advantage of this known event. Since the target leverage isn’t constant, the tokens aren’t forced to rebalance unless the market conditions deem it necessary. So hiding the target leverage mitigates these strategies because traders can't anticipate the rebalancing events..
You’ll see a term on the leveraged token’s page called Net Asset Value . This refers to the value of your leveraged tokens denominated in USDT. When you redeem your tokens, the USDT you’ll get will be determined by the NAV.One of the main sources of confusion around leveraged tokens is thanks to a concept called. In simple terms, volatility drag is the detrimental effect that volatility has over your investment over time.
Leveraged tokens generally perform as you’d expect when there’s a strong trend, and market momentum is high. However, the same isn’t true in a sideways market. Binance created the variable leverage as a solution to this problem. BLVTs only rebalance during times of extremely high volatility and aren’t forced to periodically rebalance otherwise. While this doesn’t mitigate the problem completely, it greatly reduces the long-term effects of volatility drag on the performance of BLVTs.
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