By using this site, you agree to the Privacy Policy and Terms of Use.
Accept
CoinworldstoryCoinworldstoryCoinworldstory
  • HOME
  • CRYPTO
    • AI
    • BOTS
    • ICO
    • AIRDROP
      • Featured Airdrops
    • Price Prediction
    • EXCHANGE
      • Best Centralized Exchange List 2025
      • Best Decentralized Exchange List 2025
    • ALTCOIN
    • Alt Coin Signal
    • Crypto Analysis
    • Bitcoin Loan
    • Bitcoin Mining
    • WALLETPRO
  • PR
    PR
    If You Looking For Submit Cryptocurrency Press Releases Than Coinworldstory Is Best Choice For Crypto Press Release Submission
    Show More
    Top News
    Bybit Private Wealth Management's Standout USDT Yield Strategy
    Bybit Private Wealth Management’s Standout USDT Yield Strategy Set New Bar in July
    1 week ago
    InFocus launches digital ventures strategy with Mythos Group to push into Blockchain, AI and Bitcoin
    2 months ago
    ETH heading to $5,000 with Fleet Mining Cloud Mining turning out to be the smart hedge for passive crypto income
    ETH heading to $5,000 with Fleet Mining Cloud Mining turning out to be the smart hedge for passive crypto income
    1 month ago
    Latest News
    Phemex Upgrades Rewards Hub with $15,000 Package And Mystery Box System
    10 hours ago
    Alps Blockchain Announces Corporate Rebranding to Alps
    10 hours ago
    Beyond Holding: Ushering in the Era of Intelligent Bitcoin Yielding with OAKMining
    13 hours ago
    Bombastic Casino Unveils New Design and Enhanced Features
    1 day ago
  • NEWS
    • Mining
    • Altcoins
    • Ban
    • BANKING/FINANCE NEWS
    • Bitcoin
    • Blockchain
    • CRYPTO CRIME
    • Ethereum
    • Exchange News
    • Government News
    NEWSShow More
    10 Best Crypto Volume Trackers for Accurate Market Insights
    10 Best Crypto Volume Trackers for Accurate Market Insights
    7 hours ago
    10 Best Crypto Trading Courses on YouTube
    10 Best Crypto Trading Courses on YouTube
    16 hours ago
    10 Best Dog Meme Coins To Buy In 2025 For Crypto Fans
    9 Best Dog Meme Coins To Buy In 2025 For Crypto Fans
    2 days ago
    10 Best Snake Tokens 2025: Top Meme & Crypto Snake Coins
    10 Best Snake Tokens 2025: Top Meme & Crypto Snake Coins
    5 days ago
    10 Crypto APIs for Developers In 2025
    10 Crypto APIs for Developers In 2025
    2 weeks ago
  • MORE
    • Guide
    • Only Best
    • Off Topic
    • Best Affiliate Marketing
    • Best Affiliate Programs
    • BOTS
    • Trusted Currency Exchanger Platform
    • Blockchain Games
    • Metaverse Review : Best Metaverse Program Review
    • Online Survey
    • Payment Platform
  • VPN
  • Contact Us
Reading: Binance Explains Decline In The Price Of Tokens
Share
Notification Show More
Font ResizerAa
CoinworldstoryCoinworldstory
Font ResizerAa
  • ADVERTISEMENT
  • SUBMIT PR
  • CONTACT
  • GUEST POST
  • ABOUT US
  • DMCA
  • SITEMAP
  • DISCLAIMER
  • PRIVACY POLICY
Search
  • HOME
  • CRYPTO
    • AI
    • BOTS
    • ICO
    • AIRDROP
    • Price Prediction
    • EXCHANGE
    • ALTCOIN
    • Alt Coin Signal
    • Crypto Analysis
    • Bitcoin Loan
    • Bitcoin Mining
    • WALLETPRO
  • PR
  • NEWS
    • Mining
    • Altcoins
    • Ban
    • BANKING/FINANCE NEWS
    • Bitcoin
    • Blockchain
    • CRYPTO CRIME
    • Ethereum
    • Exchange News
    • Government News
  • MORE
    • Guide
    • Only Best
    • Off Topic
    • Best Affiliate Marketing
    • Best Affiliate Programs
    • BOTS
    • Trusted Currency Exchanger Platform
    • Blockchain Games
    • Metaverse Review : Best Metaverse Program Review
    • Online Survey
    • Payment Platform
  • VPN
  • Contact Us
Have an existing account? Sign In
Follow US
© 2022 Foxiz News Network. Ruby Design Company. All Rights Reserved.
Home » Blog » Binance Explains Decline In The Price Of Tokens
Exchange News

Binance Explains Decline In The Price Of Tokens

How To Find Local Experiences – Travel Like a Local Anywhere
Last updated: 31/12/2022 3:50 PM
Coinworldstory
4 years ago
Share
Disclosure: We are not a registered broker-dealer or an investment advisor. The services and information we offer are for sophisticated investors, and do not constitute personal investment advice, which of necessity must be tailored to your particular means and needs. !
Binance Explains Decline In The Price Of Tokens Of Short Positions In A Falling Market
SHARE

Traders Lost Money On Margin Tokens Of The Binance Exchange, Although They Expected To Make A Profit, Writes Coindesk . Binance Confirmed That Some Customers Suffered Losses On Down Tokens, Which Are Meant To Capitalize On Market Declines While The Market Was Actually Falling.

The Exchange Explains What Happened By The Actions Of The Algorithm, Which Behaved In Full Accordance With The Established Model During The Market Crash. She Also Notes That The Risks Of Margin Tokens Were Disclosed In Advance.

The Largest Number Of Complaints Is Associated With The Events Of May 19, When The Price Of Bitcoin Dropped From $ 43,500 To $ 30,000. A Number Of Users Saw This As An Opportunity To Earn Money And Purchased Inverse Margin Tokens Btcdown And Ethdown. However, Instead Of Rising During A Market Decline, Such Tokens In Some Cases Also Went Down, And Their Supply Increased Sharply.

According To Binance, Along With The Rise In The Price Of Such Tokens, Their Large Volumes Were Redeemed By Traders In A Short Time. This, In Turn, Led To A Sharp Decrease In The Volume Of Capital Allocated To Provide Them. As A Result, The Leverage Exceeded The Acceptable Values, And The Algorithm Took Measures To Restore It. His Actions Led To An Unexpected Drop In The Price Of Tokens.

- Advertisement -

This Is How Binance Explains It:

Let’s say there is a DOWN token with $ 100M in equity and $ 180M in futures position. The real leverage in this case is 1.8x.

When the DOWNUSDT perpetual futures price drops by 5%, the value of the futures position increases by $ 9 million to $ 189 million. The DOWN token brought in $ 9 million, and the available capital is now $ 109 million. The real leverage is 1.73x.

Now suppose the DOWNUSDT perpetual futures price drops another 120%. The futures position will increase by $ 226.8 million to $ 415.8 million, and available capital by $ 226.8 million to $ 335.8 million. Real leverage has decreased to 1.238x.

Since the real leverage is now outside the target range of 1.25 – 4x, a rebalancing is triggered and the algorithm adds a futures position to increase the real leverage to stay within the target range. For example, if the algorithm decides to rebalance from 1.238x to 1.7x, it will add a $ 155.06 million futures position, increasing the total futures position to $ 570.86 million, which is 1.7x equity.

- Advertisement -

As the algorithm gains futures positions, the DOWNUSDT perpetual futures price declines due to the large number of short positions. Now, suppose users have redeemed a large volume of DOWN tokens, reducing the available capital from $ 335.8 million to $ 130 million, which means that the leverage is now 4.39x.

Since the leverage is out of the target range, the algorithm should close short positions at a disadvantageous rate by buying long positions in a volatile and illiquid market, leading to a reduction in net worth. It may sound counterintuitive, but a reduction in futures positions can lead to further leverage in extreme market conditions.

This is why, despite our best efforts, there is no way to lower leverage until the subscription and redemption of tokens is stopped.

- Advertisement -

On Its Website, Binance Says It Does Not Publicly Disclose Leverage Targets Or Rebalancing Timing, As Traders Could Take Advantage Of This Information To Gain An Unfair Advantage. Variable Leverage Is What Differentiates Binance’s Margin Tokens From Similar Offerings From Other Exchanges. Thus, When Trading Them, Users Need To Take Into Account Not Only The Directions Of The Market Movement, But Also Other, Non-obvious Factors.

The Exchange Also Denied Claims Of Unreasonable Issuance Of New Tokens. “we Only Issue Tokens Based On User Demand. We Have No Control Over The Offer. Everything Is Determined By Demand, ”the Company Said.

Bitget Expands RLUSD Trading With New Crypto Pairs Amid Growing Demand
Over $84M in Crypto Set to Flood the Market Next Week – PYTH Leads Shocking Insider Unlock Wave
Over $5 Billion Set to Hit FTX Creditors’ Wallets Starting May 30 – See Who’s Getting Paid and How Much
Coinbase Acquires Deribit in $2.9 Billion Bid to Dominate Crypto Derivatives Market.
Binance Issues KYC Re-verification Alert to Indian Users Amid Regulatory Scrutiny
Share This Article
Facebook Email Print
How To Find Local Experiences – Travel Like a Local Anywhere
ByCoinworldstory
Coinworldstory.com Provide Latest Review From, ICO,, Bitcoin, Paid To Click, Blockchain Technology, Affiliate Marketing, Mlm, Etc.Our Team Expert In This Field And Provide Latest Information To Our Users. Thanks For Visiting Coinworldstory.com
Previous Article RunNode Airdrop Review: You will get an Equal Share RunNode Airdrop Review: You will get an Equal Share
Next Article Billionaire Carl Icahn Spoke About Plans To Invest Up To $ 1.5 Billion In The Cryptocurrency Market Billionaire Carl Icahn Spoke About Plans To Invest Up To $ 1.5 Billion
10 Best lenders For Real Estate Investors
10 Best lenders For Real Estate Investors
Only Best
10 Best Crypto Volume Trackers for Accurate Market Insights
10 Best Crypto Volume Trackers for Accurate Market Insights
Altcoins
Phemex Upgrades Rewards Hub with $15,000 Package And Mystery Box System
Press Releases
Alps Blockchain Announces Corporate Rebranding to Alps
Press Releases

Latest Published

BlockDAG Reach $600 Million

Google Apologizes: Pledges Ethical AI Reform amid Criticism

2 years ago
JPMorgan Urges U.S. to Maintain Oversight on Tether Amid Regulatory Uncertainty

JPMorgan Urges U.S. to Maintain Oversight on Tether Amid Regulatory Uncertainty

2 years ago
Bitcoin's Bull Run Is Here to Stay

Bitcoin’s Bull Run Is Here to Stay

2 years ago
Institutional Investors Commit $86.5M to Crypto: Paradigm Shift Unveils

Institutional Investors Commit $86.5M to Crypto: Paradigm Shift Unveils

2 years ago
  • ADVERTISEMENT
  • SUBMIT PR
  • CONTACT
  • GUEST POST
  • ABOUT US
  • DMCA
  • SITEMAP
  • DISCLAIMER
  • PRIVACY POLICY
What Is Solana? A Complete Guide to the Fast and Scalable Blockchain
What Is Solana? A Complete Guide to the Fast and Scalable Blockchain
Trending
10 Best Shoes For Bunions – Comfort, Support & Pain Relief
10 Best Shoes For Bunions – Comfort, Support & Pain Relief
Trending
10 Best Macroeconomics Books-for Students and Professionals
10 Best Macroeconomics Books-for Students and Professionals
Trending
CoinworldstoryCoinworldstory
Follow US
© Coinworldstory News Network. Cws Design Company. All Rights Reserved.
  • ADVERTISEMENT
  • SUBMIT PR
  • CONTACT
  • GUEST POST
  • ABOUT US
  • DMCA
  • SITEMAP
  • DISCLAIMER
  • PRIVACY POLICY
coinworldstory logo coinworldstory logo
Welcome Back!

Sign in to your account

Username or Email Address
Password

Lost your password?