A Quick Guide to Binance Dual Investment

23/04/2022 By Author

[ad_1]

TL;DR

If you’ve been involved in the world of crypto for a while, you’ll know that crypto-assets can be extremely volatile. The total value of your portfolio can experience large swings, leaving you holding on to dear life in the front seat of a wild roller coaster.

Binance Dual Investment is a great way to earn passive income no matter which direction the market goes. You have the chance to hedge a fixed price but also profit from the relative price distances of two cryptocurrencies.

What can you do to hedge your crypto’s price while still generating yield? Binance Earn offers many convenient ways to earn passive income, with varying levels of risk and rewards. The option to use more volatile cryptocurrencies to generate income is enticing, but they are directly related to market conditions.

You can also use stablecoins, such as BUSD or USDT, but Binance Dual Investment takes this concept to the next level. You have the opportunity to enjoy yield no matter which direction the market goes. Let’s see how it works.

Binance Dual Investment lets you deposit a cryptocurrency and earn an enhanced yield based on two assets. You can decide whether you want to sell your cryptocurrency for a higher price or buy it at a lower price in the future by trying to predict the direction of the market. Regardless of your position, you’ll earn an enhanced yield.

The currency you will get back is dependent on the outcome of your investment at the settlement date. If you choose to sell higher and if the market price on the settlement date reaches your target price, your investment will be sold for the alternate currency (BUSD) at the target price. If the market price doesn’t reach the target price, you’ll still earn a yield on your deposited cryptocurrency.

If you choose to buy lower and if the market price does not meet the target price on the settlement date, you’ll get your deposited crypto back plus yield. If the market price reaches the target price, your investment will be converted for the alternate currency at the target price, along with your interest.

Before we get into how these products work, let’s clear up some of the terms you’ll need to know.

Settlement date – This is when you can redeem your crypto with the interest that you earned.
Target price – The price threshold that determines which settlement currency you’ll get paid in. This price is fixed at a predetermined level upon entering a Dual Investment product.
Settlement price – An average of the market price in the last 30 minutes before 08:00 (UTC) on the settlement date. Settlement price and target price determine whether you manage to buy low or sell high.
Annual percentage yield (APY) – The interest you’d earn if you’d lock your crypto in a Dual Investment product for a year, including compounded interest. For example, if your APY is 36.5%, then an estimation of your daily effective return is 36.5% / 365 days = 0.1%.
Deposit currency – The currency you have used to subscribe to a Dual Investment product.
Alternate currency – The currency you will be receiving if the target price is reached.

The BTC Sell High product lets BTC holders sell their bitcoin holdings at the desired price. Sell High products give users a chance to sell the underlying asset with interest at a relatively high price at the time of settlement.

With a Sell High product, if the settlement price is higher than the target price, the product is settled in BUSD and is considered “sold”. On the other hand, if the settlement price is lower than the target price, the product is settled in BTC.

Buy Low products work the opposite way. If the settlement price is lower than the target price, you buy BTC at the target price. If the settlement price is higher than the target price, the product is settled in BUSD.

So how are the interest rates calculated for this product? The APYs displayed fluctuate and are based on the target price, remaining days, and price volatility. However, your APY will lock in once you’ve subscribed to a Dual Investment product.

How does this work in practice? Let’s say you have 1 BTC, and the current BTC price is $37,123. You want to subscribe to the top Sell High Dual Investment product outlined below. The target price is set to $39,000 with a 148.86% APY.

After clicking the [Subscribe] button, you’ll see more details on the product and your possible returns. If you type in 1 BTC, the outcomes are displayed underneath.

16 days later, one of two things will happen:

If the BTC final settlement price is above or equal to $43,000, your 1 BTC is paid out at $43,000 plus the extra interest. You now have $43,752.50 BUSD.
If the BTC final settlement price is below $43,000, you’ll get your 1 BTC back plus interest worth 0.0175 BTC. You now have 1.0175 BTC.

The stablecoin-based Dual Investment Buy Low products give users a chance to purchase the underlying asset with interest at a relatively low price at the time of settlement.

Let’s say you have 10,000 USDT and the current price of 1 BTC is $43,123. You subscribe to a 16-day Buy Low Dual Investment product with a 94.75% APY. The target price is set to $39,000.

After clicking the [Subscribe] button, you can see the details of the Buy Low product and the outcomes.

16 days later, one of two things will happen:

If the final settlement price of BTC is above $37,000, you get your 10,000 BUSD back plus interest worth 323 BUSD. You now have 10,323 BUSD.
If BTC is below or equal to $37,000, your 10,000 BUSD is paid out in BTC at a price of $37,000 plus extra interest. You now have 0.279 BTC.

The returns you receive are based on whether your Dual Investment product settlement price is higher or lower than the target price. With Sell High, your subscription amount and interest income are sold at the target price when the settlement price ≥ target price. If the settlement price < target price, then it is not sold and you’ll receive your subscription amount with interest income in the same currency. For Buy Low investments, the conditions are the other way round.

Using Binance Dual Investment is quite easy if you’re familiar with how the product works. You’ll find the available Dual Investment products on the Binance Earn page, or by clicking on the link in the first step below.

2. Select the product you’d like to subscribe to.

3. Input the amount you would like to invest.

4. Click on [Subscribe].

5. You’re done! Your funds will be settled after the settlement date. You can check your previous orders on the Dual Investment Order page.

Binance Dual Investment allows you to earn passive income no matter which direction the market goes. If you’re an investor or trader that wants to do more than stake or lend your HODLed coins, you can monetize your market view and try to hedge market-beating prices with added interest. As always, make sure you do your own research on the topic before investing your funds.

[ad_2]

Source link