1.When will rebalancing take place?

Under normal circumstances, the position will be rebalanced at 0 o'clock (UTC+8) every day to ensure that the combined leverage ratio does not deviate too much from the agreed ratio.

 Why do leveraged tokens need the rebalancing mechanism?

The rebalancing mechanism aims to adjust the position of the contract of the leveraged tokens, therefore to maintain the leverage rate.

E.g.: If user A buys BTC3L with $100, it can be seen that a long BTC position with 3x leverage (the underlying value is $300) has been opened. The next day, if the BTC price falls by 1%, then BTC3L will fall by 3%, user A then loses $3 (the underlying value is $297). Now the leverage rate is 3.06 (=297/97). In order to maintain the leverage rate at around 3, there then arises the need to adjust positions every day for the rebalancing of the underlying assets.

However, when facing sharp fluctuations,  if, compared with the last rebalancing, the change of the underlying asset exceeds the given threshold (initially set to 15% for 3 times long and short), Gate.io will rebalance positions to control the risks.

Note: When under market volatility, there will be loss of net value due to the rebalancing mechanism.