Differences Between Leveraged Tokens and Derivatives

Different Trading Methods

In Leveraged Tokens, leveraged tokens are buy/sell, while in derivatives, they are buy long/sell short.

Different Fees

Leveraged Tokens have a transaction fee of 0.2%, while Perpetual Contracts have a taker fee of 0.06% and a maker fee of 0.02%.

However, Leveraged Tokens have a management fee of 0.03% (not deducted but reflected in net asset value), while Perpetual Contracts have funding fees that are generated every 8 hours.

Related Article: Transaction Fee Calculation

Different Investment Scenarios

Due to the commodity characteristics of Leveraged Tokens, they are generally considered more suitable for one-way markets and short-term operations, while derivatives are considered more suitable for back-and-forth operations in oscillating markets.

Different Leverage Methods

Currently, the Leveraged Token products provided by BYDFi has a 3x leverage, which is fixed daily through the rebalancing mechanism. The leverage range offered by derivatives trading varies depending on the product. For details, please refer to: USDT-M Perpetual Contracts Trading Rules

Different Amount Requirements

The minimum amount for purchasing Leveraged Tokens is 10 USDT. For derivatives, the minimum required amount varies depending on the product category. For Perpetual Contracts, it depends on the product, which can be viewed by clicking on the upper right corner of the product trading page.

Risk Bearing

The risk of liquidation for Leveraged Tokens tends to be zero, while derivatives have the risk of liquidation.

To minimize trading risks, it is important to understand the different characteristics of the products and choose the ones that suit your needs before trading.