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How To Trade Leveraged Tokens on Binance Exchange

Binance exchange provides a remarkable experience with leveraged tokens. Here are the vital insights.

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Margin trading is a risky business where profit margins are paper-thin. That’s a fact. While hundreds of thousands of people have dabbled into the market, be it via forex or cryptocurrencies, the truth still remains: Making a living out of regular margin trading can be extremely difficult, if not impossible. Moreover, a single mistake can completely destroy your position, sending you back weeks or months.

Due to the extremely thin profit margins, leverage trading is also a common practice: In this model, a user receives an amount of money for trading that’s several times higher (Usually 5x or 10x, though in some cases much larger) than the amount of money they have. They are then allowed to trade with that money, with the caveat that if they lose an amount of money equal to their initial amount (their leverage) they must immediately liquidate their position and pay back the loan.

Leveraged tokens are an attempt to help with this complicated process. Instead of having to ask for leverage and then invest using it, you just buy leveraged tokens. Leveraged tokens have their value semi-pegged to that of another crypto token… except their value changes at 2-3x the rate.

In other words, if you want to try leverage trading, using leveraged tokens make the process much easier by getting rid of the middleman and allowing you to multiply your gains (or losses) automatically.

How do Leveraged Tokens on Binance work?

First of all, not every token that’s traded on Binance works as a leveraged token. Not all tokens have a leveraged equivalent, either. As with other Binance programs, like pegged tokens, leveraged tokens are only offered for a handful of cryptocurrencies – naturally, the ones that see leverage trading more often, and thus where there’s a market.

An important thing to note is that a leveraged token isn’t equivalent to the actual token. A Binance Leveraged Bitcoin, for example, can’t be used to make Bitcoin purchases. They’re essentially a separate token, whose value is pegged to that of Bitcoin.

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Knowing that, the process is simple: You can buy or trade leveraged tokens on Binance in almost the same way you can buy or trade the actual tokens, with the only difference being that the leveraged token’s daily change will be steeper. For example, if the price of a Bitcoin goes up by $1,000 during a trading session, the price of a Bitcoin-based BLVT will go up by $2,000-$3,000.

Sounds like easy money… Where’s the catch?

There isn’t much of a catch in the sense that there’s no small print that will make you lose your money. However, one thing you’ll have to know is that leveraged trading tokens are rebalance every day to make sure the relative value to the base token holds.

What does this mean? Well, it’s simple. Say, a BTC leveraged token (we’ll call it BTCL) releases today, with the initial exchange being 1BCT = 1BTCL. At the end of the first day, BTC gains 10% of its value. Since BTCL was set to 3x leverage, that means that at the end of that day 1.3BTC = 1BTCL.

That works for a single day. However, as more days go on, problems start arising: First, because maintaining the same ratio over many trading sessions can get difficult – what started as a 3x leverage can easily balloon into much higher values after successive positive sessions, for example. But more importantly, because the exchange needs to have liquidity so they can perform token payouts.

This directly affects the value of the token, as one would expect. In many cases, this will make earnings somewhat smaller over a longer period than the actual accumulative. It can also make losses smaller over a longer period in the same way. Due to how the market and rebalancing works, it can also create losses even when the original token’s price variation evens out to 0% (that is, if price goes up, then down, over two separate sessions.)

Rebalancing is important to maintain liquidity and keep the reference existing, but you need to look into how your exchange does it to know exactly what to expect. For more information, see the “Volatility decay” section in Binance’s own website.

Alright. What else is there? Why should I trade on Binance and not elsewhere?

Your choice of trading company is entirely yours, and people tend to have vastly different preferences depending on their goals. However, Binance does offer a few things to their leverage traders that might sway your opinion:

Tiny trading fees. Binance leveraged tokens exist in Binance’s own blockchain – and, as usual for Binance operations, its own intra-blockchain trades have much smaller fees than extra-blockchain ones. Obtaining Binance Leveraged Tokens will result in a much lower fee than obtaining the tokens themselves, on top of the extra earnings.

Constant leverage rebalance. While other exchanges only rebalance the token value, Binance also changes the leverage for each trading session depending on how the token has been faring. Generally, this means the leverage will flow between 20 and 30% depending on the current market, but it can also go higher or lower at times.

High Market Liquidity. Binance is one of the crypto exchanges with the highest liquidity in the world – and thus they have enough crypto in storage to weather almost any market swings. This is important when the market is particularly volatile, since smaller exchanges with lower liquidity could run into issues if prices vary widely in an unexpected manner. For Binance, this shouldn’t be a problem.

Conclusion

The market depth of cryptocurrencies is improving and there are more ways to trade and explore digital currencies.

With Binance LVT, you can take more positions and reap rewards. As exciting as the crypto market might be, never forget that it is high risk, and only invest what you can lose and still be able to get a good night rest.

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How Celsius Has Outperformed Bitcoin In 2020

The CEO of Celsius recently reported that the digital asset has outperformed Bitcoin so far this year up to tune of 2,000 percent. Here are the facts.

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Crypto lending is fast becoming a trend in the crypto space with diverse platforms taking off in 2020. With already over $8 billion in value, the crypto lending market is expected to experience continual and somewhat steady growth.

The idea is to replace greedy intermediaries while also ensuring that users substantially earn passive income per week on their crypto holdings, especially in comparison to interest rates of fiat-based savings scheme. This birthed the slogan “Banking is an essential need of the world, but banks in itself are not needed.”

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According to expert, crypto loans and Bitcoin are championing the surge towards the massive adoption of cryptos due to the simplicity of investment. Several crypto start-ups such as Celsius are spearheading novel monetary policies in the digital asset space, with over $8.2 billion in processed loans.

Celsius Network (CEL) – A Quick Overview

Celsius is a democratized cryptocurrency savings platform that operates on the blockchain and offers lending and borrowing services “just like the big banks do with traditional assets,” but in a more structured manner, without holding on to all of the generated profits.  The entirety of the Celsius network is based on its CEL token, which can be used to take loans, send money P2P, get interests or even HODL if you like.

The Celsius network supports a wide range of cryptos, including Bitcoin (BTC), Ethereum (ETH), Litecoin (LTC) and other altcoins like Dash (DASH), Bitcoin Gold (BTG), EOS and Zcash (ZEC). In February 2020, the company began offering its liquidity providers compounding interest on cryptos deposited in its digital wallet.

Despite the instability and economic uncertainty induced by the COVID-19 pandemic, Alex Masinsky, the network’s CEO, has said that the use case of the digital asset has experienced massive growth and has continued so.

Celsius Performance Spurred by Decentralized Finance Protocols

Since the introduction of the Celsius token – CEL – in 2018, the crypto has experienced substantial soar in price and has leveraged on decentralized finance (DeFi) protocols to expand its userbase, most notably in the past few months in 2020.

The ripple effect of the DeFi integration has now seen CEL shoot more than 9 times its price in January 2020 and has continued on this path with a surge of over 1700% since the crypto market flash crash in March.

Currently, CEL is valued at over $1.35 per unit and hold its place among the top 50 crypto assets ranking 42 with a market cap of over $330 million, which is a 227% increase from what was recorded at the start of September 2020 (just over $100 million). 

Bitcoin Performance in 2020 So Far..

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The crypto flash crash of 2020Q1 spared no digital asset, not even Bitcoin (BTC). During the start of the year, Bitcoin took off at about $7,200, with a market cap of over $130 billion.

By the end of March, the market value of the world’s top-ranking digital asset had dropped to about $6,400 and a market cap of about $117.8 billion. The 11% drop in price and about 9.4% drop in market cap is attributable to the Coronavirus pandemic.

At the moment, BTC is valued at over $13,500 per unit, with a market cap of over $250 billion, and hold its place as world’s no. 1 crypto asset. Doing the mathematics, this leaves BTC at about 1.9x its price at the start of the year, and a surge of over 110% since the flash crash of March 2020. At the start of September 2020, BTC was valued at over $11,600, when juxtaposed with its current price, that’s about a 16% increase in market price.

What Is Driving the Performance of the Celsius Network?

The impressive growth experienced by the Celsius Network in the past few months of 2020 is attributable to the company’s policies and product offerings. Unlike banks which offer meagre interest rates to its users, Celsius distributes 80% of its rake-ins. 

Another important performance driver is the security architecture adopted by the company regarding its wallet. Celsius wallet is provided by PrimeTrust and FireBlocks, both with a crypto-insurance scheme that covers insider theft, external hacking and loss of private keys.

Who wouldn’t large interest rates and a multi-secured crypto lending platform, even in the middle of a pandemic! Thus far, it is reflected in the magic of DeFi

Final Thoughts

Although it is common knowledge that BTC is the world’s most accepted and recognized crypto asset, but it has been outclassed in terms of performance by several other assets such as the Celsius (CEL) Network. Based on the prices and market cap changes observed within the period of comparison, Celsius has clearly outperformed BTC by over 1000% in previous months, which is a remarkable achievement.

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How Cryptocurrency Investment Works With Grayscale Trust

Grayscale Trust made the headlines recently when it emerged that the firm was selling its ETH investment higher than the market price of retail ETH. Yes, it was for a good reason. Its trust has a ROI that beats the market. Here are more insights.

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How to invest in Grayscale Trust Crypto

The Grayscale Crypto Trust is the world’s largest and fastest-growing crypto and digital asset investment product, with $7.5 billion in managed assets as at the end of September 2020.

Grayscale offers investment exposures and well-researched market insights into developing crypto assets that enthusiasts and individual investors can purchase and sell off on their brokerage account.

The Grayscale Crypto trust portfolio offers several crypto products, with its Bitcoin Trust being the largest selected investment by far, accompanied by its Ethereum Trust. Other products include Litecoin Trust, Bitcoin Cash (BCH) Trust, Stellar Lumens Trust, ZCash Trust, Ethereum Classic Trust, Horizen Trust, XRP Trust, and Digital Large Cap Fund (holds multiple digital assets in one portfolio).

What does Grayscale Trust Crypto offer?

It is a portfolio of cryptos that provides alternate means of investment to specific investors, intending to secure their investments from market uncertainties, while precipitating positive yields regardless of market bias.

To better understand this subject, let’s take a quick look at Grayscale’s Investment Services. These services are categorized into Single-Asset and Diversified Products.

Single-Asset Grayscale Products

  1. Grayscale BTC Trust: This is a flagship product, and it’s symbolized as GBTC. It is exclusively invested in Bitcoin (BTC), and it lets investors gain insight into the price mechanics of BTC while eliminating the challenges associated with directly purchasing, storing and securing BTC.  
  2. Grayscale BCH Trust: Offers an alternative and effective approach for E-cash.
  3. Grayscale ETH Trust: Decentralized platform powered by smart contracts.
  4. Grayscale ETH Classic Trust: Flexible Currency for IOTs.
  5. Grayscale Horizen Trust: This product is a private and secure platform for media, messages and money.
  6. Grayscale Litecoin Trust: Crypto for quick low-cost payments.
  7. Grayscale Stellar Lumens Trust: This product connects people, banks and payment systems.
  8. Grayscale XRP Trust: Crypto for efficient worldwide enterprise payments.
  9. Grayscale Zcash Trust: A currency for the new age with enhanced privacy protocols.

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Diversified Products

Grayscale Digital Large Cap Fund: Open-ended and private investment vehicle that offers diversified insight and exposure to the leading digital assets via a cap-weighted market portfolio.

All investment products constitute about 80% of the total digital asset market cap, and they offer a holistic business solution for enthusiasts. Now, why should you invest in Grayscale Investment Vehicles?

Grayscale Investment Products – Why Invest!

Here are some of the benefits of investing in Grayscale’s Investment Products:

Titled Securities: Grayscale Trust Crypto share are titled securities, and are more or less like the common bonds and stock owned by investors. Titled securities are easily transferrable to beneficiaries and are well known by tax and financial advisors.

IRA-Eligible: Grayscale Trust Crypto Shares can be held certain 401ks, IRAs, and other investment and brokerage accounts.

Inherent Security and Storage systems: The underlying assets of each investment product is safeguarded by a robust security protocol that includes cold storage, 2FA, encrypted key shards, usernames and passwords.

Audited Financials: The financial statements of each investment product is audited yearly by Friedman LLP.

Stress-free Investment Model: Individuals and investors seeking to trade cryptos and other digital assets on their own will often have to transact through unregulated or insecure intermediates and unfamiliar exchanges. This puts the digital assets at additional risk as their private keys become susceptible to theft, thereby exposing an investor to total or partial loss.

With Grayscale Trust Crypto, investors do not have to worry about buying, storing or transferring digital assets, instead, Grayscale and each investment product service provider carries the burden without compromising investor’s exposure to the performance of assets. 

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Seasoned Manager & Sponsor

Having considered why to subscribe to Grayscale’s investment vehicles, let’s delve into the “How”.

How to invest in Grayscale Trust Crypto

First, Grayscale Trust Crypto investment placements are only accessible by accredited and verified investors. In this case, an accredited investor will earn over $200K per year or $300K with spousal equivalents, possess a Series 7, 65 or 82 professional certification, and have over $1M in net worth as a standalone investor or with spousal equivalent.

Likewise, entities could also be considered as accredited investors if they have over $5M in liquid assets, or if each member of the entities is an accredited investor.

Secondly, you can either invest in-kind or through cash subscriptions. The amount of investment contributions you can make will fall in the following range:

  1. Less the $25K
  2. Between $25K – $100K
  3. Between $100K – $1M
  4. Between $1M – $5M
  5. Between $5M – $15M
  6. $15M upwards

Conclusion

In summary, to subscribe to Grayscale Trust Crypto, you’ll have to complete an e-form that will require you to answer a few questions to verify your eligibility.

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Leading Reward Tokens That Rule The Crypto Space In 2020

Reward tokens are awarded in the crypto space by platforms as an incentive to patrons. Here is how the market leaders have fared so far in 2020

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Crypto Reward Tokens: Which platforms perform best?

The advent of DeFi automated exchanges has brought new ways to invest and earn money with cryptocurrencies. Being already interested in investments of the sort, many crypto adopters have rushed to these – particularly those programs where money can be earned by just parking your crypto in a particular exchange and  in return, you earn a reward.

These tokens, often thought of as crypto reward tokens, are currently being advertised as great investments, since they’re low-risk propositions. They’re also helping to build the backbone of a global working blockchain economy that could eventually rival, or even replace, our current, banking-based economy.

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How do they work?

As stated above, crypto reward tokens work in much the same way fixed-term deposits and savings accounts work with traditional banking. You give the bank (or in this case the DeFi exchange) your crypto tokens, it is to fund loans, and you get a percentage of the interest back after some time. There are no fixed terms, so your crypto isn’t stuck there – however, the longer it remains there, the higher the earnings you get in return.

That sounds good. Can I do this with any tokens?

Not with just any token, since you’ll have to use tokens that are supported by your platform of choice. While in most cases this means Ethereum-based tokens and stablecoins, some platforms do allow external tokens.

Still, there’s nothing keeping you from participating using one token and then converting the earnings to another, so if it’s plain earnings you’re looking for, then the lack of support for your token of choice shouldn’t be a problem.

Which ones are the best performers currently?

While there are dozens of possible offerings, each with its own pros and cons, and while it’s impossible for there to be a single one that’s best for everyone, we have reduced our list to three main tokens you should look out for and consider: Nexo, Celsius, and Crypto.com. The reasoning for our choice is as follows:

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Core Features

The more features and services an exchange offers, the more likely it is to succeed in the long run. For reward tokens, this means more users, which leads to higher, more regular earnings.

Out of these three, Nexo is the one closest to a standard banking operation – as it is both licensed and regulated. It is backed by Deloitte, giving it the much-needed industry approval. Its main offering as a platform for customers is both savings accounts (that net you rewards) and a loaning platform. Interests are given daily and all transactions are insured. Nexo supports fiat currencies, and a few other exchanges do. same

Celsius offers much the same as Nexo, although it isn’t as tightly regulated. Celsius also offers their loans without requiring credit checks, which expands its audience at no risk to you, as all loans are insured. Interests from Celsius are awarded weekly.

Crypto .com also offers savings accounts and loans. However, their main draws are support for a large range of currencies and, more importantly, its crypto-backed debit cards that allow you to make purchases using your saved cryptocurrencies without having to go through exchanges.

Safety Features

Wherever money is handled, safety is paramount. While all three of these exchanges are considered safe, their features vary.

Nexo insures all wallets for up to $100m. Moreover, deposits are kept in cold storage under a third-party custodian, as per EU/UK regulations. Its security and management systems have been heavily audited and are considered top-of-the-line.

Celsius, like Nexo, has all wallets insured and kept in cold storage by a custodian – BitGo, the same one behind Nexo. Its mobile app offers two-step authentication. There’s no web app to speak of.

Unlike its other two competitors, Crypto.com doesn’t list third-party insurance or custodians among its features. However, the company and its holdings are insured by the FDIC and all user deposits are kept in cold storage.

Ease of Use

This is the point where there’s more variation among all three companies. Although ease of use and access should be paramount, it’s common for crypto-based companies to sometimes falter in this regard.

While Nexo offers both web presence and a mobile app, there’s no way to buy or exchange cryptocurrencies from it – with the app serving mostly as a tool to check what you already have there. It is generally simple to use and has support for different types of accounts, including business ones.

Celsius has no web presence whatsoever. It also only offers its highest interest rates if you choose to be paid using its own cryptocurrency, which can be problematic for some users.

Crypto.com, for all of its available services, has one flaw: Not all territories are supported. Most particularly, the crypto exchange and credit lines aren’t available for US residents (however, the crypto-backed debit cards are.)

Recent Performance

Since it’s not uncommon for exchanges to offer their best rates if you allow them to pay you using their native cryptocurrencies, the recent performance of said tokens is an important metric to consider.

Nexo’s performance on this regard has had its highs this year, and few lows. While the price of the NEXO token is only 30% higher than back in January, over the year it has seen peaks that have led it to over 100% ROI vs January. It also hasn’t seen huge lows – meaning it’s a relatively low risk currency.

Celsius is easily the biggest performer among these three. The CEL token has gone from $0.14 at the beginning of the year to an all-time high of $1.43 as of this writing – reporting a 1000% price increase. It’s hard to argue against a performance like this.

Crypto.com’s performance is close to that of Nexo, in that it’s had a few highs (none as high as Celsius’) and few lows. The MCO token did have a sharp price drop during March, but it recovered quickly in a bull run that had the token go from roughly $2.5 to $5.5 within a month. Its price as of this writing sits roughly 30% higher than in January.

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The Attraction of Polkadot Blockchain And Here Is How It Is Making A Difference

Polkadot is making a difference in the blockchain landscape with its enhanced processes. Here are all the fine points to take note of.

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Polkadot and its parachains: All you need to know

Polkadot is one of those sudden, not too many unexpected developments that break into the blockchain scene. Back in September 2020, it gathered a lot of press after jumping into CoinMarketCap’s top 10 cryptocurrencies list by market capitalization, leading many to wonder if we were witnessing the next big thing.

All of this wondering was followed by puzzlement, as many people struggled to understand exactly what polkadot is, what a parachain is, and why it became so hugely popular – in other words, why is this particular new blockchain important?

Joining Blockchains Together

It has long been a goal in the blockchain community to attain blockchain interoperability – in other words, to allow blockchains to contact and interact with each other. This would make token exchanges much easier, by no longer needing an intermediary – if somebody wanted to exchange ETH to BTC, the blockchains themselves would perform the currency exchange.

There are other reasons to desire interoperability, though, and Polkadot aims for this too. While a blockchain supporting other, smaller blockchains in its system is nothing new (the Ethereum blockchain has done this for a long time,) allowing them to interact with each other in complex manners is still difficult. Polkadot, and its parachain services, hopes to allow for this.

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What is a Parachain?

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Parachain is the name the Polkadot network has given its set of blockchains running in parallel. This means exactly what it sounds like – Polkadot aims to become a blockchain of blockchains by the intelligent use of Parachains.

Parallel and Distributed programming is nothing new in the IT world – in fact, parallel programming is one of the reasons why computer CPUs like to show off having as many cores as possible. It allows computers to run several tasks at the same time, rather than having to wait in line.

A parallel blockchain is akin to, and much like a parallel CPU. Blockchains run operations of many types at the same time, often lumping them all together even when the consensus mechanisms that work for a type of operation might not work for another – for example, different operations might require heightened layers of security that come at a higher cost.

If all operations are lumped together, then they all have to be ran at this higher security, leading to an excess workload.

By running blockchains in parallel, Polkadot can create different rules to govern each of them, effectively tuning each blockchain for a specific task… and then joining them all together in a parachain, creating a single, large blockchain.

What about external blockchains?

Polkadot’s aspirations don’t stop there. Understanding that blockchain interoperability is a huge goal these days, one of Polkadot’s offerings is to allow the blockchain to interact with other blockchains, like Bitcoin or Ethereum. This would allow specialized processes running in said chains to be out-sourced to the Polkadot blockchain, where they might be easier to optimize.

There are other benefits to the parachains. In several occasions, existing blockchains have required changes to their structure that have, due to system limitations, led to forking the chain. This has most famously happened with both Bitcoin and Ethereum chains, but the problem has affected many more.

By operating via parachains, a blockchain can make changes to its own inner systems without ever needing a full fork – at most, just adding an extra chain to the system should fix most problems-as long as the contention is about approach and not governance structures.

How will this change the blockchain environment?

Polkadot and its parachains environments would be useless if they were limited to the main blockchain. Instead, Polkadot aims to compete directly with Ethereum by allowing users to create their own blockchains inside Polkadot, adding them to the parachain.

But there’s more. These blockchains would be parachains themselves, allowing them to run their own private, distributed processes. That way ,the main Polkadot blockchain would host blockchains that in turn could host their own blockchains to optimize their processes. This is a feature that didn’t exist so far in the Blockchain scene, and the main reason Polkadot rose to prominence so quickly.

What about the Polkadot token, the DOT?

The DOT token, in its base, works just like the tokens for most cryptocurrencies – it can be used for financial transactions and staking. There are two differences, however, that make it stand out:

First, DOT tokens are effectively stakes in the blockchain, and as such, those holding tokens have a say in the blockchain governance. Second, DOT tokens are set up to be the de-facto currency for interactions among parachains, and can also be used to create new parachains.

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Is Polkadot unique? Will it become the next big blockchain?

It’s hard to tell. Polkadot’s approach is certainly unique, and it could lead to great developments on the blockchain scene. Still, it’s too early to tell – and getting sustained attention can be difficult, even for revolutionary projects.

Moreover, there are other projects that could be competing with Polkadot for attention on the distributed blockchain front. Cosmos allows some, but not all, of Polkadot’s features, while Ethereum 2.0 is probably the largest threat. This is because, while Ethereum 2.0 won’t offer all features of Polkadot, it’s an upgrade to what is already the largest blockchain in the world – and thus, it might hinder adoption for a new one.

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