Welcome to this video, where we are going to see how leveraged tokens work and what they are, and everything you need to know before you start using them.
What are leveraged tokens?
Binance leveraged tokens (BLVTs) are spot market tradable assets that allow leveraged exposure to a cryptocurrency without the risk of liquidation. Binance leveraged tokens eliminate the complexities of managing a conventional leveraged position, as users are not required to have collateral or risk being liquidated.
Binance’s first pair of leveraged tokens is BTCUP and BTCDOWN. BTCUP allows you to generate leveraged profits when Bitcoin goes up. On the other hand, BTCDOWN allows you to generate leveraged profits when Bitcoin goes down. Currently there are many other cryptocurrencies with the option to up and down them, so you can make money when it goes up and when it goes down in value.
Each leveraged token represents a basket of perpetual contract positions. The net asset value (NAV) refers to the price of a leveraged token. The price of the leveraged tokens tracks the evolution of the notional amount of the perpetual contract positions in the basket and the changes in the multiples of the leverage level. Simply put, the price of a token is driven by the performance of the underlying fund and its associated leverage.
Unlike conventional leveraged tokens (not managed by Binance), leveraged tokens do not maintain constant leverage. Instead, leveraged tokens attempt to maintain a variable target leverage range between 1.25x and 4x. This would maximize profitability on upside and minimize losses to avoid liquidation. However, keep in mind that the actual leverage can fluctuate beyond the target range on extreme market moves.
In order to access this option, the first thing we need to do is to log in to our binance account.
If you do not have an account with binance, you will be able to create one by clicking on the link below.
Platform: Binance
Min. deposit: $10
License: Cysec
Very low commissions
Exchange with more cryptocurrencies
How to buy leveraged tokens
 Once inside, go to derivatives and leveraged tokens. Here, you will see the different pairs that are in their up and down version. With the value it has, the level of leverage, which as we have commented above is moving between 1.25 and 4%, the last price and the change in the last 24 hours of the asset.
Next to each one, you will see three buttons, trading, to trade that pair with respect to usdt. Binance uses the spot account, so you should have the usdt in spot and not in futures with this type of asset, as they are bought and sold in the same way as other normal cryptocurrencies in spot. The only difference is the leverage.
Then we have subscribe, which allows us to directly indicate an amount of usdt we want to use to buy that token, and buy it without going to the usual spot panel. Indicate the amount and click on confirm subscription and you will have it ready.
The same, but the other way around with redeem. Where you can exchange your tokens for USDT again. Indicate the amount you want to exchange, and click on confirm redemption.
Under my tokens, you will see the different leveraged tokens you have, so you don’t have to search through all the ones above. This is where you will be able to see your tokens once you have subscribed or purchased them in the spot panel. Also, you will be able to see all the movements of your leveraged tokens in the subscription and redemption history. You can see how much you have subscribed and redeemed at any time you want.
 To trade, we will look for the pair we are interested in buying and click on trading. Before you can trade with leveraged tokens or subscribe to buy them, you will see a video and you will have to answer a test. If you really want to understand well the leveraged tokens, I recommend you to watch the video, because they explain very clearly how they work and you can understand aspects such as the price that have different assets in up and down, or why the leverage % are varying.
Once you have passed the test, you will be able to trade with the tokens. As you can see, it is a very similar format to the spot, where we have limit and market orders, if we want it to be executed instantly. The usdt available are the ones we have in the spot account. So if you want to buy leveraged tokens, you will have to transfer your usdt in spot if you had it for example in the futures part.
Once you indicate the amount of usdt you want to use, click on buy and you are ready to go. You can go back to the previous panel, and my tokens to see it. To sell it, you can go back to the same panel and go to the sell part. Remember that if you click on up, and you go to sell, you will be able to sell the up token, you will not be able to buy the down token. To buy the down token of any cryptocurrency, you will have to go to the down pair with usdt.
They currently have between 15 and 20 cryptocurrencies available as leveraged tokens, but they will probably be adding more soon. The best part of these tokens, is being able to trade with leverage without the fear of being liquidated. Although the asset can also fall a lot in price. It is important to understand the risks before trading with this type of financial products, when using leverage.
I hope this video has helped you to learn more about leveraged tokens, and if you don’t have an account with binance, you will be able to create one with the link below.
Platform: Binance
Min. deposit: $10
License: Cysec
Very low commissions
Exchange with more cryptocurrencies
