Below are some of the reasons why leveraged tokens are very popular among the crypto community.
- Zero hassle: Traders don't have to worry about managing funding rates, borrowing costs or monitoring positions for risks of margin calls.
- Daily rebalancing: Each token rebalances daily to ensure constant leverage ratios of the underlying assets are always maintained. This prevents the token holder from getting liquidated as is the case when leverage is used for futures and perpetual swap contracts.
- ERC20 Protocol: Unlike other leveraged tokens in this space, you are free to withdraw these tokens to any ERC20-compatible wallet of your choosing and own the private keys of your positions.
- Reduced Liquidation Risk: When losing money leveraged tokens reduce exposure, thus greatly reducing the chance of liquidation. It would require a 33% 24 hour change in price for a liquidation to occur.