As the crypto industry evolves, new investment options pertaining to this space are also on the rise. The crypto space is known for its volatility, and it is quite common that those trading these assets like taking risks. This affinity towards risk has resulted in multiple trading high-risk trading products like leverage trading and the newer FTX leveraged tokens.
Leveraged tokens are ERC20 tokens launched by FTX crypto derivatives exchange that have leveraged exposure to crypto. There are three types of leveraged token for every future on FTX; BULL (+3x), BEAR (-3x), and HEDGE (-1x). Considering ETHBULL, a 3x long ETH token, for every 1% ETH goes up, ETHBULL goes up 3% and vice versa.
Major crypto exchange Binance had listed two FTX leveraged tokens on March 11. Customers were able to trade these assets against USDT and BUSD, Binance’s own stablecoin. The exchange soon made several other bull and bear pairings like EOS, ETH and XRP, as well as a simple “Bull” and “Bear” option available, paired against USDT and BUSD.
Now, less than a month later, the exchange has announced that it is set to delist the leveraged tokens, stating that customers are unable to understand how these assets function.
In an announcement on March 28, Binance stated that it would stop all further deposits and withdrawals for these assets starting March 31 at 8 a.m. UTC, with a stoppage in trading at 10 a.m. on the same day. The announcement reads:
“Due to lack of understanding of how leveraged tokens work by many of our users, Binance has decided to delist all existing FTX leveraged tokens and corresponding trading pairs.”
Binance is set to remove “BULL, BEAR, ETHBULL, ETHBEAR, EOSBULL, EOSBEAR, BNBBULL, BNBBEAR, XRPBULL and XRPBEAR.”
Protecting its users
In a series on tweets, Binance CEO Changpeng Zhao, further clarified that these assets have brought in a significant amount of volume to the exchange it would be “bad for business to delist them.” He added:
“Protecting users comes first. Seeing from comments in earlier posts, I expect some complaints still. If you dislike our decision for this delisting, check back on the prices of these tokens in a month time, and let us know if you still complain then.”
However, not everyone was happy with this decision. A significant portion of the community lashed back at Zhao. One trader wrote:
“Most of the people will continue to have problem with whatever is done. Leveraged tokens were pretty nice for those who like limited leverage, no liquidation and were true traders. I still believe people can be educated about it. It’s not for everyone though.. maybe a different tab?”
Another trader questioned Binance’s decision of listing these assets in the first place, saying that:
“No need for the explanation, if you were already aware about this then why Binance listed these tokens?”