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Gate.io Cryptopedia: What is A Dual Currency Product
Gate.io Cryptopedia: What is A Dual Currency Product
2021-03-29 08:31:05 UTC
46730 Read
What is a Dual Currency Product?
A “Dual currency product” is a floating-income non-principal-protected wealth management product. To put it simply, it is the same investment product with dual income models, regardless of any ups and downs. The settlement currency at maturity will be affected by the pegged price and settlement price. Dual currency products are suitable for users who prefer medium risk or long term investment.
After your purchase of a product on Gate.io Dual Currency, the funds will be automatically transferred from your spot account to your Dual Currency account, principal and returns will be automatically returned to your spot account at maturity.
Dual Currency Product Running Model
Using Gate.io dual currency product as an example, it is composed of four main elements.
-Currency: includes investment currency and settlement currency. Investment currency refers to the selected e currency according to products’ pegged price in the currency section on Gate.io. Currently, Gate.io has two main options: BTC and ETH. While the settlement currency is the currency that is based on the principle of maximum return on the maturity day. The specific currency to be settled depends on the comparison between the settlement price and the pegged price on the expiration date.
-Pegged Reference Price: the pegged reference price is a benchmark price that will be compared with the price of the pegged currency on the expiration date to determine the currency and quantity of the principal and return, for example, the BTC zone is pegged to the BTC/USDT price. The linked reference price varies from product to product, so you can choose the product that suits your needs based on your expectations of the market.
-Expiration: the date when the investment product ends, the product will be settled at 16:00 on the maturity date, and the proceeds as well as the principal refund will be automatically issued to the spot account after the maturity settlement.
-APR (Annualized return rate): The annualized yield will change in real time with the market, the actual annualized yield needs to be based on a successful purchase; annualized yield = yield / position duration * 365 * 100%; position duration = maturity date - purchase date.
In general, the closer to maturity, the lower the yield to maturity is; the higher the linked price, the lower the yield to maturity is. You can choose according to your own needs. Gate.io Dual Coin allows you to gain income even when the market is volatile, while meeting your needs for digital asset risk management.
How to Calculate the Return of Dual Currency Product
Take the investment in BTC/USDT dual currency financial products as an example, the settlement currency you may receive at the time of settlement is BTC or USDT. If the expiration date:
Settlement price < pegged price, settlement currency is BTC, settlement amount = (1 + return rate) * amount of purchases.
Settlement price > pegged price, settlement currency is USDT, settlement amount = (1 +return rate) * pegged price * amount of purchases.
Example of specific calculation:
Take the BTC subion BTC/USDT as an example:
When settlement is made on the expiration date.
-When the settlement price is <52,000 USDT, BTC will be used as the settlement currency for the payback; the payback amount = 1 BTC*[(84.7% ÷ 365*7) + 1] ≈ 1.016 BTC
-If the settlement price is ≥ 52,000 USDT, USDT will be used as the settlement currency; the payback amount = 1 BTC*52,000*[(84.7%÷365*7)+1]≈52844.68 USDT
Using the USDT subion for BTC/USDT as an example.
When settlement is made on the approach of the expiration date.
-When the settlement price is ≤ $20,000, BTC will be used as the settlement currency; the refund amount = 21,000 USDT ÷ 20,000 * (1 + 84.7% ÷ 365 * 7) ≈ 1.067 BTC
-If the settlement price > $20,000, USDT will be used as the settlement currency; the amount of refund = 21,000 USDT*(1+84.7%÷365*7) ≈ 21341.12 USDT
When is it ideal to Invest in Dual Currency Products in the Market?
Bull market:
If you believe the future market is bullish, but cannot accurately predict the top price and only expect a further pullback trend in the future, you can perform a take-profit operation through Gate.io dual currency products.
When the currency price rises, if you buy a fiat currency-based dual currency product (such as: BTC to subscribe BTC/USDT), the settlement will be made in USDT as the settlement currency and the product yield will be overlaid for repayment for the reason that the price of BTC is higher than the pegged price on the expiration date.
Bear market:
If you think the future market is bearish, but cannot accurately predict the floor price and only expect a further upward trend in the future, you can perform a take-profit operation through Gate.io dual currency products.
When the currency price falls, if you buy a coin-based dual currency treasure product (such as USDT subion BTC/USDT), because the price of BTC on the expiration date is lower than the pegged price, you will use BTC as the settlement currency for repayment at settlement. You can not only get a financial yield, but also get more BTC, and the coins in your hands will continue to increase in value when the coin price goes back up.
The BTC dual currency financial product is a good hedging tool for BTC holders. It operates on the principle that when the BTC price is higher than the ution price, the user gets a return in the form of USDT, which is equivalent to selling BTC at a higher price than the market. When the BTC price is lower than the ution price, the user gets the BTC principal as well as the initial lock-in proceeds.
What Kinds of Users are Suitable to Invest in Dual Currency Products?
Users who want to take a bottom/stop profit
As mentioned above, when you have your own judgment about the future market, you can choose a fiat currency-based or currency-based Gate.io Dual Currency product according to your judgment (up/down).
Long-term investors
Long-term investors can choose some of the Gate.io Dual Currency products with higher peg prices. Since it is difficult for the currency price to reach the peg price in the short term, you can keep increasing the number of coins you hold in this way to earn coins when the price falls and make money when the price rises.
Sophisticated investors
The Gate.io Dual Currency is an investment portfolio for sophisticated investors who want to invest in a combination of stable income products, currency hoarding, futures contracts, etc. Gate.io Dual Currency is ideal for sophisticated investors who want to reduce their overall investment risk by using it as part of their investment portfolio in response to different expectations of market direction.
Advantages of Gate.io Dual Currency Products
1. Fixed rate of return
The return of the product is clear and fixed at the time of purchase, only the settlement currency at the time of return is uncertain.
2. Not dependant on market volatility
You can always get appreciation of one of the two currencies.
3. Flexible term options
The term of the financial product is from a few days to 30 days.
Risk warning: dual currency financial product is a floating income non-principal-protected wealth management product, and the final settlement will be determined by the settlement price and the linked price. Therefore, the risk mainly lies in the high volatility of the market price. Users are advised to invest carefully after understanding the risk. Generally speaking, the shorter the settlement date maturity, the lower the annualized return; in addition, if the linked price is higher, the annualized return is relatively lower. You can choose different products according to your risk appetite.
Gate.io is an established exchange that holds integrity, transparency, and fairness to a very high standard. We charge zero listing fees and only choose quality and promising projects. Our exchange consists only of 100% real trading volume. Thanks to everyone who has joined us in our journey. We always intend to improve and innovate to reward our users for their continuous support.
Gate.io Team
March 29, 2021
Get 40% of all referees' trading fees in the affiliate program at https://www.gate.io/referral
Click to Sign up ：https://www.gate.io/m#/register
Download it now at: https://www.gate.io/mobileapp
Follow us on social
Facebook: https://facebook.com/gateioglobal
Twitter: https://twitter.com/gate_io
Telegram：https://t.me/gateio
Instagram：https://www.instagram.com/gateioglobal
Medium：https://medium.com/@gateio
A “Dual currency product” is a floating-income non-principal-protected wealth management product. To put it simply, it is the same investment product with dual income models, regardless of any ups and downs. The settlement currency at maturity will be affected by the pegged price and settlement price. Dual currency products are suitable for users who prefer medium risk or long term investment.
After your purchase of a product on Gate.io Dual Currency, the funds will be automatically transferred from your spot account to your Dual Currency account, principal and returns will be automatically returned to your spot account at maturity.
Dual Currency Product Running Model
Using Gate.io dual currency product as an example, it is composed of four main elements.
-Currency: includes investment currency and settlement currency. Investment currency refers to the selected e currency according to products’ pegged price in the currency section on Gate.io. Currently, Gate.io has two main options: BTC and ETH. While the settlement currency is the currency that is based on the principle of maximum return on the maturity day. The specific currency to be settled depends on the comparison between the settlement price and the pegged price on the expiration date.
-Pegged Reference Price: the pegged reference price is a benchmark price that will be compared with the price of the pegged currency on the expiration date to determine the currency and quantity of the principal and return, for example, the BTC zone is pegged to the BTC/USDT price. The linked reference price varies from product to product, so you can choose the product that suits your needs based on your expectations of the market.
-Expiration: the date when the investment product ends, the product will be settled at 16:00 on the maturity date, and the proceeds as well as the principal refund will be automatically issued to the spot account after the maturity settlement.
-APR (Annualized return rate): The annualized yield will change in real time with the market, the actual annualized yield needs to be based on a successful purchase; annualized yield = yield / position duration * 365 * 100%; position duration = maturity date - purchase date.
In general, the closer to maturity, the lower the yield to maturity is; the higher the linked price, the lower the yield to maturity is. You can choose according to your own needs. Gate.io Dual Coin allows you to gain income even when the market is volatile, while meeting your needs for digital asset risk management.
How to Calculate the Return of Dual Currency Product
Take the investment in BTC/USDT dual currency financial products as an example, the settlement currency you may receive at the time of settlement is BTC or USDT. If the expiration date:
Settlement price < pegged price, settlement currency is BTC, settlement amount = (1 + return rate) * amount of purchases.
Settlement price > pegged price, settlement currency is USDT, settlement amount = (1 +return rate) * pegged price * amount of purchases.
Example of specific calculation:
Take the BTC subion BTC/USDT as an example:
When settlement is made on the expiration date.
-When the settlement price is <52,000 USDT, BTC will be used as the settlement currency for the payback; the payback amount = 1 BTC*[(84.7% ÷ 365*7) + 1] ≈ 1.016 BTC
-If the settlement price is ≥ 52,000 USDT, USDT will be used as the settlement currency; the payback amount = 1 BTC*52,000*[(84.7%÷365*7)+1]≈52844.68 USDT
Using the USDT subion for BTC/USDT as an example.
When settlement is made on the approach of the expiration date.
-When the settlement price is ≤ $20,000, BTC will be used as the settlement currency; the refund amount = 21,000 USDT ÷ 20,000 * (1 + 84.7% ÷ 365 * 7) ≈ 1.067 BTC
-If the settlement price > $20,000, USDT will be used as the settlement currency; the amount of refund = 21,000 USDT*(1+84.7%÷365*7) ≈ 21341.12 USDT
When is it ideal to Invest in Dual Currency Products in the Market?
Bull market:
If you believe the future market is bullish, but cannot accurately predict the top price and only expect a further pullback trend in the future, you can perform a take-profit operation through Gate.io dual currency products.
When the currency price rises, if you buy a fiat currency-based dual currency product (such as: BTC to subscribe BTC/USDT), the settlement will be made in USDT as the settlement currency and the product yield will be overlaid for repayment for the reason that the price of BTC is higher than the pegged price on the expiration date.
Bear market:
If you think the future market is bearish, but cannot accurately predict the floor price and only expect a further upward trend in the future, you can perform a take-profit operation through Gate.io dual currency products.
When the currency price falls, if you buy a coin-based dual currency treasure product (such as USDT subion BTC/USDT), because the price of BTC on the expiration date is lower than the pegged price, you will use BTC as the settlement currency for repayment at settlement. You can not only get a financial yield, but also get more BTC, and the coins in your hands will continue to increase in value when the coin price goes back up.
The BTC dual currency financial product is a good hedging tool for BTC holders. It operates on the principle that when the BTC price is higher than the ution price, the user gets a return in the form of USDT, which is equivalent to selling BTC at a higher price than the market. When the BTC price is lower than the ution price, the user gets the BTC principal as well as the initial lock-in proceeds.
What Kinds of Users are Suitable to Invest in Dual Currency Products?
Users who want to take a bottom/stop profit
As mentioned above, when you have your own judgment about the future market, you can choose a fiat currency-based or currency-based Gate.io Dual Currency product according to your judgment (up/down).
Long-term investors
Long-term investors can choose some of the Gate.io Dual Currency products with higher peg prices. Since it is difficult for the currency price to reach the peg price in the short term, you can keep increasing the number of coins you hold in this way to earn coins when the price falls and make money when the price rises.
Sophisticated investors
The Gate.io Dual Currency is an investment portfolio for sophisticated investors who want to invest in a combination of stable income products, currency hoarding, futures contracts, etc. Gate.io Dual Currency is ideal for sophisticated investors who want to reduce their overall investment risk by using it as part of their investment portfolio in response to different expectations of market direction.
Advantages of Gate.io Dual Currency Products
1. Fixed rate of return
The return of the product is clear and fixed at the time of purchase, only the settlement currency at the time of return is uncertain.
2. Not dependant on market volatility
You can always get appreciation of one of the two currencies.
3. Flexible term options
The term of the financial product is from a few days to 30 days.
Risk warning: dual currency financial product is a floating income non-principal-protected wealth management product, and the final settlement will be determined by the settlement price and the linked price. Therefore, the risk mainly lies in the high volatility of the market price. Users are advised to invest carefully after understanding the risk. Generally speaking, the shorter the settlement date maturity, the lower the annualized return; in addition, if the linked price is higher, the annualized return is relatively lower. You can choose different products according to your risk appetite.
Gate.io is an established exchange that holds integrity, transparency, and fairness to a very high standard. We charge zero listing fees and only choose quality and promising projects. Our exchange consists only of 100% real trading volume. Thanks to everyone who has joined us in our journey. We always intend to improve and innovate to reward our users for their continuous support.
Gate.io Team
March 29, 2021
Get 40% of all referees' trading fees in the affiliate program at https://www.gate.io/referral
Click to Sign up ：https://www.gate.io/m#/register
Download it now at: https://www.gate.io/mobileapp
Follow us on social
Facebook: https://facebook.com/gateioglobal
Twitter: https://twitter.com/gate_io
Telegram：https://t.me/gateio
Instagram：https://www.instagram.com/gateioglobal
Medium：https://medium.com/@gateio
