3x Leveraged Physical Coins

[elianite]

Ok, these don't exist yet.. but, Binance recently listed ERC-20 tokens that are effectively leveraged positions in BTC, ETH, XRP, or EOS. This means that for every 1%, 10%, and 100% that a coin goes up, these tokens will increase in value by 3%, 30%, and 300%. Effectively they are like a margin position, but with everything 'built-in'.

So because funded physical coins are effectively used as long-term cold storage, I think that embedding some with these long positions is an exciting, even extraordinary idea.

So compare;
A funded BTC1 coin ... if BTC goes from 10k to 20k, the coin is worth BTC1 and thus $20,000 (+100%).
A funded 0.05 BULL coin ($1000 / 0.1 BTC will buy you about 0.05 BULL today), if BTC goes up 100% to 20k, will be worth $40,000 (+300%).

Pretty wild! And similar coins can be made for ETH, EOS, and XRP.

https://www.binance.com/en/support/articles/360038933471

Who wants an Infinity Coin with a BULL private key?     That said, This probably calls for a new series entirely; maybe even a fancy 'stock certificate' type. I think this is the start of something very interesting. Feel free to PM if you have ideas.
Thoughts?

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[andulolika]

I kinda like the idea, I wonder, the coin would automaticaly be emptied out if the margin defaults? That means your key isn't that safe right?

[elianite]

I kinda like the idea, I wonder, the coin would automaticaly be emptied out if the margin defaults? That means your key isn't that safe right?

My understanding is that this is built in a way that it cannot 'default', but simply follows price movement on a 3x magnification in real-time. In theory, this means they would never get liquidated, only lose most of their value if say the market fell 50%.. only to regain again upon rebound. Basically extreme hodling.

[andulolika]

I kinda like the idea, I wonder, the coin would automaticaly be emptied out if the margin defaults? That means your key isn't that safe right?

My understanding is that this is built in a way that it cannot 'default', but simply follows price movement on a 3x magnification in real-time. In theory, this means they would never get liquidated, only lose most of their value if say the market fell 50%.. only to regain again upon rebound. Basically extreme hodling.

I basicaly don't understand how you have your key and still be able to have it as collateral on the margin. or how it would work, im pretty tired anyhow.

Edit: never thought we talking tokens but btc/xmr/eth our sacred trinity, I stay away of tokens in exception of two really nice things.

[shadallion]

Possible extraordinary,  for sure.

The chief concern that would need to be fully vetted out and proven trustworthy for me to buy is this:   is the FTX token redeemable even if Binance and every other exchange ceased to exist?  Would the smart contract still be honored and could the token still be turned into actual bitcoin if the coin was peeled, no matter what?

I’m not a leverage trader, so this concern may actually be totally moot and already provably resolved.

[elianite]

It's not margin, but it 'feels' like a margin position from the perspective of a holder. This explains it:
https://help.ftx.com/hc/en-us/articles/360032509552-Leveraged-Token-Walkthrough

I'm not by any means saying these tokens are perfect or can't fail, but I do see an interesting opportunity for some experimentation.
I have not yet looked into the deeper details of the smart contract, nor am I qualified to. From my initial understanding, these aren't officially created by Binance, they simply listed them. Browsing the above link briefly, it does appear that they can be 'redeemed':

"Creation/Redemption
Finally, you can create or redeem leveraged tokens.  This is not recommended unless you have read through all of the documentation on leveraged tokens.  Creating or redeeming leveraged tokens will have market impact and you won't know what price you ultimately get until after you've created or redeemed.  We recommend using the spot markets instead.

You can create or redeem a leveraged token by going to the tokens page and clicking 'more info'.  If you create $10,000 of ETHBULL, this will send a market order to buy $30,000 of ETH-PERP, calculate the price paid, and then charge you that amount of money; it'll then credit your account with the corresponding amount of ETHBULL."

Also it looks like they can technically get liquidated, but only in rather extreme situations and that's somewhat theoretical.

[peonminer]

This is a really cool idea. I could see this going well with collectors and investors alike. I would be interested. Do you have any ideas on design? It would be interesting to see the runs in series that reflect major bull events in Bitcoin history. My only concern is the ability for liquidation. Although only 3x leverage seems theoretically fairly safe in this region. Thanks for sharing.

[rxalts]

I suppose my concern is on the opposite side of liquidation and rather redemption. Since the token creates a “market buy” order, then theoretically you would have to redeem a large amount almost knowing there is a huge sell wall which would almost make it just more beneficial to sell coins loaded with higher spot values IMO like a 10 ETH coin vs 1 ETH coin, no?

[ChiBitCTy]

There’s a reason why the US does not allow these, and that’s telling considering the US was the first to sell regulated BTC futures on the options/futures exchanges.

For this to be worth your investment you’d need to deposit a decent amount and for something far more volatile than say a leveraged stock fund which is meant for short term trading, a long term hold on something meant to be short term and on 3 coins that are quite frankly poor investments (i.e.  shitcoins)..not sure this would end well for anyone. Not to mention the rules are convoluted as all hell and made me dizzy just trying to half way understand them, and studying investment principles is what I do for a living.

[iBitcoinHongKong8]

I think this is a bad idea for many reasons some of which have been listed above and then some. I think we'd all just appreciate it far more if you could just finish the new upcoming version of the physical collectibles book as we've all been waiting for this for a long time now. I appreciate your desire to bring something unique and cool to the community, but you just finishing the next version of the book would be a far greater contribution to us all. Cheers and just my 2 bits!

iBHK8