In December 2017, Binance, one of the world’s largest cryptocurrency exchanges, launched its own token, the Binance Coin (BNB). Binance used part of the proceeds from the sale of BNB to buy back and destroy BNB tokens, with a goal of reducing the circulating supply and ultimately increasing the value of remaining tokens.

In addition to this “burn” strategy, Binance has also implemented a quarterly token buyback program to further increase the value of BNB.

Now, nearly two years later, Binance has launched its own Leveraged Tokens (BLVT) on the Binance Chain. BLVT are ERC-20 tokens that represent a leveraged exposure to underlying assets, similar to products offered by BitMEX and other exchanges.

Unlike traditional leveraged products, however, BLVT can be traded on any exchange that supports the Binance Chain.

The launch of BLVT is significant for a few reasons. First, it represents another use case for the Binance Chain beyond simple token trading.

Second, it brings leverage products to a much wider audience beyond those who trade on BitMEX and other exchanges. And third, it could potentially increase demand for BNB and other Binance Chain-based assets.

The question now is: at what price are BLVT subscribe and redeemed?

As with any leveraged product, there is always risk involved. The biggest risk with BLVT is that the price of the underlying asset falls sharply and/or quickly reverses direction.

This can lead to losses that exceed your initial investment (known as a margin call).

For this reason, it is important to understand howBLVT work before investing any money. Fortunately, the team at Binance has put together a helpful video that explains everything you need to know:

[https://www.youtube.com/watch?v=I-sF2YIeRbg&feature=youtu.be]

In short, when you subscribe for BLVT, you are essentially borrowing money from Binance at a fixed interest rate. The interest rate depends on the leverage ratio you choose (2x or 3x) and the length of time you hold the tokens (7 days or 14 days). For example, if you subscribe for 3x leverage on BTC/USDT for 7 days, you will pay an interest rate of 0.

07% per day. This interest is paid in BNB and deducted from your account balance each day.

If at any point during the 7 days your account value falls below 110% of your initial investment (a so-called margin call), your position will be automatically liquidated and you will lose all of your money.

On the other hand, if the price of BTC goes up during this time period, your account value will increase and you will make money (assuming you close your position before it hits a margin call).

Assuming you don’t get margin called, at the end of 7 days you will have to repay the borrowed funds plus interest. You can do this by either selling BLVT on an exchange or redeeming them directly with Binance (at a slightly higher price).

So what’s the catch? Why would anyone want to take on this risk? The answer is simple: Leverage allows you to amplify your gains (or losses) compared to if you had simply bought the underlying asset outright. For example, if BTC goes up 10% over 7 days, your 3x leverage position will increase by 30%.

Conversely, if BTC falls 10%, your position will lose 30%.

Of course, leverage also amplifies your losses if things go against you. This is why it is so important to understand how these products work before investing any money!.