Synthetix Docs
  • User Docs
  • Synthetix Exchange
  • Leveraged Tokens
  • For Developers
  • Welcome to Synthetix Leverage
  • BASICS
    • Leveraged Tokens
    • How Leveraged Tokens Work
      • Synthetix Perps Engine
      • Rebalancing
      • Keepers
      • ERC-20 compliance
      • Effects of rebalancing
    • Fees
    • Guides
      • Minting
      • Redeeming
      • Sequential redeeming
  • MORE
    • Official Links
    • Deployed Contracts
    • Risks & Security
    • FAQ
Powered by GitBook
On this page
  1. MORE

FAQ

How are leveraged tokens different to perpetual futures?

The primary differentiator to perpetual futures is that leveraged tokens maintain their leverage factor within a target range. They achieve this by reactively rebalancing the amount of borrowed funds.

Why would I use leveraged tokens?

One use case of leverage tokens is to minimize the necessity for margin management, i.e. monitoring the margin-to-notional ratio and adjusting the leverage to prevent liquidation.

Can leveraged tokens liquidate in extreme cases?

Yes, in theory, leveraged tokens can face liquidation if keepers cannot rebalance a position quickly enough in response to sudden, large price movements. In the case of a liquidation, the value of a leveraged token would become zero, and a new leveraged token contract would be deployed.

Why was my ROI lower than I expected it to be?

The Return on Investment (ROI) might be lower than expected due to factors such as volatility decay, rebalancing costs, or Perps fees, such as a high funding rate.

How can I get a referral link?

Referral program has been deprecated.

Can I trade leveraged tokens on secondaries instead of redeeming them?

Yes, leveraged tokens, being built on the ERC-20 token standard, are tradable on secondary marketplaces. However, this is dependent upon sufficient liquidity in the respective Decentralized Exchange (DEX).

PreviousRisks & Security

Last updated 5 months ago