Gate.io SharkFin products are a type of capital-guaranteed structured product. It is called SharkFin because the yield curve resembles that of a shark's fin sticking out of the water. It is essentially an option derivative, also known as knock-out options. When SharkFin is listed, product parameters such as the target currency, subscription limit, and lock-up period will be determined according to the market. What is fixed is only the final interest. The interest earned depends on whether the price of the target currency goes beyond (falls below/rises above) the price range during the investment period. If it does, investors can get a higher annualized income, and if it does not, investors can still obtain a guaranteed return.
Gate.io currently has listed Daily SharkFin, Bullish SharkFin, and Bearish SharkFin products.
What's Bearish SharkFin?
Gate.io's Bearish SharkFin is a type of capital-protected product. Investors can subscribe to the product based on the supported underlying currencies. The APR at maturity is determined based on the comparison between the observed price of the target currency and the price range. Interest is calculated, and the principal and interest will be settled and redeemed at maturity. Early redemption is not supported.
Gate.io's Bearish SharkFin product has 3 return models. Investors are very likely to obtain high returns. Bearish SharkFin product return mode: Within a certain period of time, if the price always stays within the lower and upper price limits, investors can obtain a high yield rate; if a knockout happens during the period, investors will have a chance to earn a medium rate of return and will at least get a guaranteed yield. The profit mode, opposite to that of the Bullish SharkFin product, is suitable for a bearish market.
Profit modes of Bearish SharkFin
There are 3 ways to make money:
- During the observation period, if the prices of the target asset always stay within the per-specified price range (i.e., the hit range), users can earn a higher annualized income (the guaranteed yield rate ＜ the final yield rate ≤ the maximum yield rate); At settlement, the closer the prices of the target asset are to the lower limit of the price range, the higher the annualized return.
- During the observation period, if the prices of the target asset have fallen below the lower limit of the price range and continuously stayed below it (i.e., knock-down range), investors can obtain a medium yield.
- During the observation period, once the prices of the target asset have risen above the upper limit of the price range (i.e., knock-up range), the user can obtain a guaranteed yield rate.
How to Calculate Your Return (Example)
If a bearish shark fin product under BTC/USDT perpetual contract offers an annualized yield of 5%~30%, a medium yield of 10%, and an 8-day lockup term, and its price range is $27,000-$32,000 and the settlement price is $30,000 on settlement day, the yield will be calculated as follows:
- The price hits the range and the annualized rate of return is 5% - 30%.
If, during the observation period, the price is $27000 ≤ BTC price＜ $32000, the final yield will be = 5% + (the upper limit price - the settlement price) / (the upper limit price - the lower limit price) * (30% - 5%) = 5% + (32,000 - 30,000)/(32,000 - 27,000)*(30% - 5%) = 15%
The rate of return = principal * annualized rate of return at maturity / 365 * investment terms
- The price fails to hit the range and users finally get a medium yield of 10%.
If, during the observation period, BTC price＜$27000 & BTC price is always＜$32000, the rate of return will be = principal * 10% / 365 * investment terms
- The price fails to hit the range and users can finally obtain a 4% guaranteed yield.
During the observation period, once the BTC price was ≥ 32000, the rate of return would be = principal * 5% / 365 * investment terms
1. What’s the difference between Bearish SharkFin products and other SharkFin products?
The difference is that their price ranges are different. The price range of Bearish SharkFin is suitable for a bear market. Therefore, if the price of the underlying asset falls, investors will have a greater chance to obtain high returns. In addition, compared with Daily SharkFins, Bearish SharkFin provides more profit modes and a higher probability of obtaining high returns. It is better to subscribe to a Bearish SharkFin in a bear market.
2. How to calculate interest with the known annualized yield?
If the annualized yield rate is A, then the interest is = A / 365 * lock-up days
3. Will the determined price range be adjusted during the period?
A: If the market fluctuates drastically before the observation period starts, we will adjust the price range to maximize investors’ returns. During the observation period, we will no longer make price adjustments.
4. During the observation period, if the price has not only fallen below the lower limit of the price range but also risen above the upper limit of the price range, how will the return be calculated?
A: During the period, if the price has fallen below the lower limit of the price range, the return will be calculated according to a medium yield rate; if the price has risen above the upper limit of the price range, investors will gain a guaranteed return; if the price has not only fallen below the lower limit but also risen above the upper limit of the price range, investors can obtain a guaranteed return.