Gate ETF Token FAQ for Beginners

For beginners who want to amplify their cryptocurrency investment returns but are deterred by complex contract trading, Gate Exchange’s ETF leveraged tokens offer a noteworthy option. They simplify leveraged trading to the ease of buying and selling spot assets while eliminating the daunting risk of liquidation.

This article will answer common questions about this innovative product, helping beginners quickly understand its core mechanisms and usage methods. Information is updated to December 2025.

Core Concepts

1. What is a Gate ETF Leveraged Token?

A Gate ETF Leveraged Token is an innovative financial product that introduces the concept of leveraged ETFs from traditional finance into the cryptocurrency space. Its core goal is to track the price movement of a given underlying asset (such as BTC, ETH) at a specific multiple (e.g., 3x or 5x).

Unlike traditional leveraged or contract trading that requires collateral and risk management, you only need to buy and sell these tokens like regular spot assets to achieve leverage effects. The leveraged position behind it is established and professionally maintained by the platform through perpetual contracts.

2. How is it fundamentally different from direct contract trading or leveraged trading?

This is the most critical question for beginners to clarify. The core difference lies in risk management and operational complexity.

3. What do “3L” and “3S” in the token names mean?

This is key to identifying the token’s direction:

• “3L”: Represents 3x long. For example, BTC3L means a token tracking Bitcoin’s price increase at 3 times the rate.
• “3S”: Represents 3x short. For example, BTC3S means the token aims to achieve a 3-fold decline in value when Bitcoin’s price drops.
• Similarly, there are 5x leverage long (e.g., BTC5L) and short tokens.

Operation and Fees

4. What is “rebalancing”? Why does it prevent products from liquidation?

Rebalancing (also called re-hedging) is the core mechanism to maintain the target leverage multiple. The system periodically (at fixed daily times) or based on market volatility (triggering ad-hoc rebalancing) automatically adjusts the underlying contract positions.

• When profitable: The system automatically increases the position size, using profits to compound, achieving a compounding effect.
• When losing: The system automatically reduces the position size to lower risk exposure, preventing forced liquidation.

This entire process is automated, and the number of tokens you hold does not change because of rebalancing.

5. What are the costs associated with trading Gate ETF Leveraged Tokens?

The main cost is a daily management fee, currently at 0.1%. This fee covers the platform’s costs for rebalancing operations, including contract fees, funding rates, and operational expenses, which are automatically deducted from the net asset value daily.

Compared to traditional leverage trading, where funding rates can fluctuate, this is a fixed, transparent cost. Note that due to the rebalancing mechanism and daily management fee, this product is not suitable for long-term holding, as it may incur a “drag” effect over time.

Risks and Strategies

6. Since it cannot be liquidated, does that mean there is no risk?

Absolutely not. Eliminating liquidation risk does not mean there are no risks; leverage amplifies all market fluctuations.

• Amplified volatility risk: Both gains and losses are magnified by the leverage multiple. Small movements in the underlying asset can cause significant changes in your position value.
• Drag effect risk: In sideways or choppy markets without clear trends, frequent rebalancing may gradually erode principal, leading to “wear and tear.” Therefore, it is considered a high-risk product.
• Direction judgment risk: Leverage also amplifies the consequences of incorrect market direction predictions. If your market judgment is wrong, losses can accelerate.

7. How should beginners formulate trading strategies?

For beginners, following these points can help use this tool more safely:

1. Clarify suitable scenarios: Best for short-term holding in strong trending markets (hours to days) for trend-following. Avoid using in choppy markets, and never hold long-term positions.
2. Strict position control: It is recommended to invest no more than 5% of total funds per trade. Never over-leverage just because it seems “simple.”
3. Set stop-loss rules: Although the product cannot be liquidated, you should set clear stop-loss points (e.g., 2%-5% below entry price) to actively control maximum losses.
4. Understand naming conventions: Before trading, confirm the token name (e.g., BTC3L) to ensure its underlying asset and long/short direction align with your judgment.

Trading and Operations

8. How to trade on Gate?

The process is very simple, identical to spot trading:

1. Log in to the Gate official website or app.
2. Navigate to the “Leverage ETF” section.
3. In the section’s search box, enter the token name you want to trade (e.g., BTC3L) and select.
4. On the trading interface, input your purchase price and quantity, then click “Buy.”

9. Can I deposit or withdraw these leveraged tokens to other wallets?

No. ETF leveraged tokens are proprietary financial derivatives on the Gate platform and do not support deposit or withdrawal functions. You can only buy and sell within the Gate platform, and all positions are only displayed and managed within the platform.