Navigating Bull and Bear Markets: Efficient Profit Strategies with Gate ETF Leveraged Tokens

As of January 2026, according to data from the Gate ETF leveraged token trading page, the current Gate platform supports 256 leveraged tokens, with a 24-hour trading volume reaching $101 million.

Leveraged tokens are essentially ERC-20 token products that aim to track a target asset’s specific multiple returns. Unlike traditional leveraged contracts, leveraged tokens simplify the operation process, allowing users to avoid managing margins or worrying about liquidation prices, making them an ideal choice for investors seeking leveraged gains without professional risk management skills.

01 Core of Leveraged Tokens: Operating Principles and Market Mechanisms

Leveraged tokens achieve leverage effects by using spot leverage or futures contracts underlyingly. This means each leveraged token purchased by users represents a certain proportion of leverage or contract share.

The main difference from direct contract trading lies in their built-in automatic rebalancing mechanism. This mechanism periodically or conditionally adjusts positions to maintain the target leverage ratio.

For example, a 3x long token, when the underlying asset’s price drops sharply, the margin value shrinks, potentially causing the actual leverage to exceed 3x, increasing the risk of liquidation. The system will automatically sell part of the position to bring the leverage back to 3x.

This rebalancing is a double-edged sword: it may cause net value loss in volatile markets, but in trending markets, correct directional choices can amplify returns.

02 Why Choose Gate: Unique Advantages of Leveraged Tokens

Among many exchanges offering leveraged tokens, Gate provides unique advantages through its product design and platform features. As ERC-20 tokens, leveraged tokens can be deposited and withdrawn at any time like regular digital currencies, and can even be transferred to other platforms supporting leveraged tokens.

For investors, this means greater asset control and flexibility. Leveraged tokens have clear advantages in risk management.

Traditional 3x leveraged ETH long contracts, if ETH drops by 33%, the position will be forcibly liquidated, risking total loss. In contrast, ETHBULL leveraged tokens automatically reduce their position during market declines, so even if ETH drops 33%, the token may still retain some net value.

03 Platform Features: Gate’s Competitive Edge and Trading Environment

As a leading global cryptocurrency exchange, Gate is known for its wide selection of tokens and rapid listing capabilities. The platform offers over 3,800 crypto assets, covering mainstream coins and many emerging altcoins.

In the leveraged token space, Gate provides a highly competitive trading environment. Users can buy and sell leveraged tokens directly on the spot market, with operations similar to trading regular cryptocurrencies. Gate also supports subscription and redemption of leveraged tokens, offering more options for advanced users.

Regarding trading costs, Gate charges a daily ETF management fee of 0.1%, deducted directly from the ETF’s net asset value. While this slightly impacts long-term holding performance, many investors find this cost acceptable compared to the potential liquidation risks in traditional leveraged trading.

04 Key Differences Between Leveraged Tokens and Contract Trading

Understanding the core differences between leveraged tokens and traditional contract trading is crucial for developing effective trading strategies. The table below summarizes the main distinctions:

This comparison shows that leveraged tokens simplify leverage trading operations, making them especially suitable for investors who want leveraged exposure without spending much time managing positions.

05 Practical Trading of Leveraged Tokens: Operation Guide on Gate

Trading leveraged tokens on Gate can be done mainly in three ways. The simplest method is to buy directly on the spot market. Users can go to the relevant trading pair (e.g., ETHBULL/USD) and trade as they would with regular digital currencies.

For users seeking more direct control, Gate also offers a conversion feature. On the wallet page, select “Convert,” and users can directly exchange other tokens on the platform for leveraged tokens.

Gate also supports subscription and redemption mechanisms for leveraged tokens. When users subscribe to a certain value of leveraged tokens, the system automatically establishes the corresponding leveraged position in the market and allocates the generated tokens to the user’s account. For most users, spot market trading remains the most straightforward and easy-to-operate option.

06 Risk Management: Potential Risks and Mitigation of Leveraged Tokens

Although leveraged tokens reduce liquidation risk, they are not entirely risk-free. In extreme market conditions, for example, a sudden 50% drop in price, even 3x leveraged tokens may face liquidation.

The rebalancing mechanism introduces net value loss risk. In volatile markets, even if the underlying asset’s price eventually returns to the original point, the value of leveraged tokens may significantly shrink due to frequent rebalancing.

Different exchanges have varying rebalancing mechanisms; some rebalance at fixed intervals, others trigger rebalancing based on market volatility. These differences can lead to different performance of leveraged tokens for the same underlying asset across platforms.

Investors should avoid viewing leveraged tokens as long-term investment tools. They are more suitable as short-term tactical allocations. Also, do not over-concentrate just because leveraged tokens are “not going to explode,” and always follow proper risk management principles.

Future Outlook

In highly volatile cryptocurrency markets, leveraged tokens on Gate reduce forced liquidation risks through their automatic rebalancing mechanisms. When ETH drops 33%, traditional leveraged positions may be wiped out, but leveraged tokens can still retain some net value.

The dual nature of leveraged tokens makes them a special tool in the market: amplifying gains in trending markets, but potentially incurring losses due to rebalancing in volatile conditions.

Leveraged tokens are not万能的. As markets evolve, they need to be tested over time and adapted within investors’ strategies, just like other digital assets.