FTX provides financial services to people interested in cryptocurrency. They do this through their many features that allow cryptocurrency holders to earn more crypto.
FTX is known for introducing leveraged tokens to the crypto market. These tokens are assets that provide users with leveraged exposure to crypto markets. Although they can be issued and redeemed on the platform, they can also be traded on other exchanges as any other token as well.
The leverage exposure of these tokens can also be long and short. The options available to choose from are -1X, -3X, 0.5X, 1X, and 3X. For example, let's say that you choose a 3X exposure for a crypto. If the price of that crypto goes up by 1%, your leveraged tokens will go up by 3%. If the price of that crypto goes down by 1%, your leveraged tokens will go down by 3%.
Here’s how the process works. For example, if you want to issue $50 worth for a leveraged token that represents a 3X long exposure of a crypto, the account that represents the token will open a $150 position on the perpetual futures market on FTX for that cryptocurrency. If you decide to get your money back, the account will close that position and you will get your $50 back.
This process can be a bit confusing for most people, so only experienced traders issue and redeem leveraged tokend. Most users treat them as any other cryptocurrency, and simply buy and sell them on exchanges.