Gate ETF Leveraged Token FAQ for Beginners

Gate ETF leverage tokens, as an innovative product, allow traders to easily gain 3x or 5x market exposure by buying and selling spot tokens.

Unlike directly trading leveraged contracts, it eliminates the complexities and pressures of managing margin and facing forced liquidation, providing another option for investors seeking to improve capital efficiency.

01 Product Core: What is Gate ETF Leverage Token?

Gate ETF leverage tokens are derivative products with built-in leverage in the form of funds. Essentially, users acquire a token representing a specific strategy, indirectly holding perpetual contract positions managed by a professional team.

In simple terms, it’s a product that “packages” leverage into a spot token. For example, BTC3L signifies a token that offers 3x long Bitcoin. When Bitcoin’s price increases by 1%, BTC3L’s net asset value aims to increase by 3%; conversely, a short token like BTC3S benefits from Bitcoin’s decline with amplified gains.

Their naming convention is straightforward: “Underlying Asset + Leverage Multiple + Direction.” For example, ETH5L indicates a 5x long Ethereum.

02 Mechanism: How to achieve “no liquidation” leverage?

The core advantage of leverage ETF tokens is that they leave the complex contract operations to the professional management team behind the scenes, while users only need to perform simple spot trading.

Their operation relies on two key mechanisms: perpetual contract hedging and daily rebalancing. Each ETF token corresponds to a contract position, which establishes the leverage basis.

To maintain a fixed target leverage (e.g., 3x), the system rebalances daily based on market fluctuations. For example, when prices increase and actual leverage falls below 3x, the system automatically adds positions to restore leverage; when prices decline, it reduces positions.

Because users do not directly hold or manage these contract positions, they do not face forced liquidation risks due to margin shortages. The maximum loss is limited to the invested principal.

03 Trading Practice: How to buy and operate?

Trading Gate ETF leverage tokens is exactly the same process as buying and selling regular spot cryptocurrencies, with very low barriers and no need to open a separate contract account.

Web platform operation steps:

First, visit the official Gate website, click on “Trading” in the top navigation bar, and select “Leverage ETF” from the dropdown menu to enter the dedicated trading page.

Second, search for or filter the target token (e.g., BTC3L) in the coin list, then click the “Trade” button on the right.

Finally, in the pop-up trading interface, enter your desired purchase price and quantity, then click “Buy” to complete the order. After execution, assets will appear in your spot wallet.

Mobile app operation is similarly convenient: tap “Spot” at the bottom of the app, then select the top “ETF” tab to find all tradable leverage tokens and trade them.

04 Costs and Fees: Besides the spread, what else?

The main cost of trading leverage ETF tokens is not the traditional funding rate of contracts but a daily management fee.

Currently, Gate charges a daily management fee rate of 0.1% for this product. This fee covers costs incurred by the team for hedging, rebalancing in the perpetual contract market, transaction fees, funding rates, and slippage.

The management fee is directly deducted from the fund’s net asset value and does not appear separately or as an additional charge in each user’s transaction. The platform claims this rate is relatively low in the industry and partly covers related costs.

05 Applicable Scenarios: Is it suitable for me?

Leverage ETF tokens are distinctive tools with specific optimal use cases. They are mainly suitable for the following two types of investors:

The first is short-term trend traders seeking simplified operations. When the market exhibits a clear one-way trend, this tool can efficiently amplify returns without requiring constant monitoring of margin management.

The second is leverage seekers aiming to avoid liquidation risk. For users who dislike the forced liquidation mechanism in contract trading, this product provides an alternative way to participate in leverage trading.

The core differences between traditional contract trading and Gate leverage ETF tokens are summarized in the table below:

06 Risk Explanation: Challenges behind high returns

As with all leverage products, high returns come with high risks. When using leverage ETF tokens, you must clearly understand the following core risks:

The primary risk is volatility decay. This refers to the decline in net value due to frequent rebalancing during market oscillations without a clear trend. Even if the underlying asset’s price returns to the original level, the leverage token’s net asset value may suffer significant losses. Therefore, it is not suitable for long-term investment.

Second is the double-edged effect of leverage. While it amplifies potential gains, it also proportionally increases losses. If the underlying asset moves unfavorably, your loss rate will be much faster than holding spot.

Finally, although it avoids liquidation, the risk of principal loss still exists. In extreme market conditions, a significant decline in net value is possible.

Future Outlook

Visit Gate’s ETF trading page, where 3x and 5x long and short tokens for mainstream assets like Bitcoin and Ethereum are displayed side by side. Behind these codes are countless meticulously calibrated perpetual contract positions, silently tracking and magnifying every market pulse.

Markets will never only trend upward. When a trend arrives, these tokens are sharp tools; during consolidation, their net value becomes a function of time and volatility, experiencing decay quietly.