Tokens leveraged on Binance are a kind of derivative that provides you with leveraged exposure to the underlying asset.
Leveraged tokens, like other coins, can be bought and sold on the open market.
Each leveraged token is a collection of perpetual contractual holdings.
The price level of a leveraged token fluctuates up and down in tandem with price fluctuations in the perpetual contract market.
Before you can start trading Binance leveraged tokens, you need to pass the leveraged token quiz.
The quiz contains 11 questions of varying difficulty.
Get started on Binance here: https://www.binance.com/en/register?ref=73583477 or use “73583477” as your reference code.
Table of Contents:
1. What is Binance Leveraged Tokens?
Choices:
- Binance Leveraged Tokens is a financial derivative of a similar nature to traditional leveraged ETFs. Their net asset value can be significantly worn out by short-term market fluctuations. Long-term holding of Binance Leveraged Tokens is risky, and users should minimize losses by selling the leveraged tokens from time to time.
- Binance Leveraged Tokens is a cryptocurrency that you can withdraw tokens at any time.
- Binance Leveraged Tokens is a futures contract that adjusts the leverage level from time to time.
Answer: Binance Leveraged Tokens is a financial derivative of a similar nature to traditional leveraged ETFs. Their net asset value can be significantly worn out by short-term market fluctuations. Long-term holding of Binance Leveraged Tokens is risky, and users should minimize losses by selling the leveraged tokens from time to time.
2. What is the leverage multiplier for Binance Leveraged Tokens?
Choices:
- The system maintains a target leverage range of 1.25x to 4x.
- It’s always 4x.
- It is always 1.25x.
Answer: The system maintains a target leverage range of 1.25x to 4x.
3. When do I rebalance Binance Leveraged Tokens?
Choices:
- Every 8 hours.
- Every day.
- When the market is volatile or the actual leverage multiplier is out of the target leverage range.
Answer: When the market is volatile or the actual leverage multiplier is out of the target leverage range.
4. What is the worst-case scenario of holding Binance Leveraged Tokens for the long term?
Choices:
- Binance Leveraged Tokens is a good store of value and the value will increase over time.
- Users can receive active interest to hold long-term Leveraged Binance Tokens.
- The value of Binance leveraged tokens can become zero (0) and cannot be recovered due to inherent market risks, high fees, slippage, rebalancing algorithm frontrunning, and any other perceived unknown risk associated with Binance leveraged tokens.
Answer: The value of binance leveraged tokens can become zero (0) and cannot be recovered due to inherent market risks, high fees, slippage, rebalancing algorithm frontrunning, and any other perceived unknown risk associated with binance leveraged tokens.
5. Which of these fees is NOT associated with binance leveraged tokens?
Choices:
- Costs of custody of assets.
- Trading fees.
- Subscription and redemption fees.
Answer: Costs of custody of assets.
6. Which of these is NOT a cost associated with holding Binance leveraged tokens?
Choices:
- Daily management fees reflected directly in the net asset value of Binance leveraged tokens.
- Funding fees for basket positions and reflected directly in the net asset value of binance leveraged tokens.
- Profit sharing fees.
Answer: Profit sharing fees.
7. When trading Tokens with Binance leverage, you don’t need to maintain margin maintenance and worry about liquidation risk. However, Binance Leveraged Tokens is not completely risk-free. Which of these is NOT a risk associated with holding Long-term Binance leveraged tokens?
Choices:
- Management fees and financing fees continue to be charged.
- Net asset value (NAV) erosion due to rebalancing and volatility decay when there is no noticeable trend in the market.
- Receipt of interest payment.
Answer: Receipt of interest payment.
8. Why is subscribing to and redeeming Binance leveraged tokens not recommended during the normal trading period?
Choices:
- Subscription and redemption fees are higher than trading fees, and there is a limit to the number of leveraged tokens that users can subscribe to or redeem daily.
- Binance Leveraged Tokens is a cryptocurrency that you can withdraw tokens at any time.
Answer: Subscription and redemption fees are higher than trading fees, and there is a limit to the number of leveraged tokens that users can subscribe to or redeem daily.
9. Which of these actions is NOT required to complete before trading binance leveraged tokens?
Choices:
- Opening a margin account.
- By completing the Binance Leveraged Token questionnaire and agreeing to the terms and conditions in the Binance Leveraged Token Risk Disclosure.
Answer: Opening a margin account.
10. What would a responsible trader likely do if he incurred consecutive losses?
Choices:
- Keep trading until they regain their capital.
- Reduce losses in a timely manner and control risk exposure.
Answer: Reduce losses in a timely manner and control risk exposure.
11. As a leveraged token trader, you should fully understand the risks associated with trading leveraged tokens and be solely responsible and responsible for any losses associated with trading activities on your account.
Choices:
- Yes, I agree.
- No, I disagree
Answer: Yes, I agree.
Conclusion
Once you pass the Binance Leverage token quiz, you will be able to start trading tokens with leverage on Binance.
Keep in mind that leveraged tokens are not withdrawable.
You can only store them on your Binance account.
There are also fees that come with trading leveraged tokens.
This includes a 0.1% fee per subscription, a 0.1% fee per redemption, and a 0.01% daily management fee.
The trading fee is identical to the spot trading fee.
