You should always carefully consider whether Binance Leveraged Tokens are consistent with your risk tolerance, investment objectives, investment experience or sophistication, financial condition, financial needs and personal circumstances and other considerations that may be relevant to you.
You should keep yourself informed and be aware of investment risks generally, and in particular, the following:
A. Binance Leveraged Tokens are an investment with RISK
Investing/trading in Leveraged Tokens is a risky endeavour. Although Binance Leveraged Tokens generally have lower risks and costs compared to derivatives and conventional leveraged tokens (managed by other than Binance), they are not a risk-free investment. As a trader, you acknowledge and agree that you shall access and use Binance Leveraged Tokens at your own risk. You should fully understand the risks associated with Binance Leveraged Tokens and be solely responsible and liable for any and all trading and non-trading activity on your Binance account. Do not enter into a transaction or invest using funds that are beyond your financial means.
B. Binance Leveraged Tokens are not a long term investment
Investors or traders with longer-term investment horizons shall purchase and hold the Binance Leveraged Tokens at their own risk. There is a possibility that the value of Binance Leveraged Tokens can become zero (0) and cannot not be recovered due to inherent market risks, high fees, slippage, rebalance algorithm frontrunning and any other perceived unknown risks associated with Binance Leveraged Tokens.
C. Binance Leveraged Tokens rebalance on an as-needed basis only
Binance Leveraged Tokens are designed to be unpredictable in rebalance to reduce the vulnerability of being attacked by algorithms on market. Unlike conventional leveraged tokens (not managed by Binance), Binance Leveraged Tokens do not maintain a constant leverage ratio. Hence, Binance Leveraged Tokens only rebalance during extreme market movements. The rebalancing of positions of Binance Leveraged Tokens is governed by Binance’s proprietary algorithms with the aim to maximize correlation between Binance Leveraged Tokens and the underlying margin-leverage position without a profit-guarantee.
D. Commissions, fees and charges associated with Binance Leveraged Tokens
Before you invest or trade Binance Leveraged Tokens, you should obtain a clear explanation of all commissions, fees and other charges for which you will be liable. These fees will affect your expected returns.
ii. Redemption Fees: Redemption fees are charged when users choose to redeem tokens, which is currently set at 0.1% per redemption;
iii. Management Fees: A daily management fee of 0.01% will be charged at 00:00 UTC and reflected directly in the net asset value of the Leveraged Tokens;
iv. Funding Fees: Funding fees are paid (or paid to) the underlying fund based on the funding rate and reflected directly in the net asset value of the Leveraged Tokens. Binance takes no fees for funding rate transfers; these are directly between traders.
Binance reserves the right to modify or change the fees mentioned above at any time and at its sole discretion. Any such updated fees will apply prospectively to any trades or other transactions that take place following the effective date of such updated fees. You authorize Binance to remove any amounts from your account for any applicable fees owed by you under these Terms.
E. Liquidity and pricing risks associated with Binance Leveraged Tokens
Due to the nature of Binance Leveraged Tokens’ centralized creation and market liquidity, Binance strives to provide adequate market liquidity and to make Binance Leveraged Tokens available at a fair price. Binance shall take reasonable steps, including, but not limited to, capital injection, additional tokens creation and selling tokens in the secondary market to minimize the risks mentioned above. The daily total redemption limit of each Leveraged Token is capped at 100,000 tokens. Users may redeem each leveraged token up to the daily cap of 1,000 tokens per account, although this will generally be more expensive than selling them on the spot market, and is not recommended during normal trading times.