Almost every major Centralized Exchanger (CEX) offer this feature. But what is actually Dual Investment? Or some exchanger calls it Dual Asset, or some even calls it Dual Win.
What is Dual Investment?
Dual investment is a crypto staking program but usually short term. Around 1-5 days only. In investment world, dual investment is not new actually. The traditional staking usually involves longer period if time.
Why CEX needs to offer Dual investment to users?
Because this involves asset staking even though short period of time, it gives them liquidity.
What are the risks?
Of course there are risks involved, there is no such thing as 100% perfect strategy. If the coin/token price dropped, u could still lose money, but the effect can be lesser depends on the asset you staking, whether its stablecoins or cryptocurrency token/coin.
How much are the rewards/profits?
Generally speaking, the shorter the staking duration, the higher the rewards.
The closer the strike price to current price, the higher the rewards.
Example:
1-day staking = possible return of 1% profit (in 1 day)
5-day staking = possible return 3% profit (but in 5 days)
Current price: 1.00 USD / Strike price: 1.01 USD = possible return of 1% profit (in 1 day)
Current price: 1.00 USD / Strike price: 1.05 USD = possible return of 0.5% profit (per day)
*You can choose which contract that you like, any contract has pros and cons. If you choose shorter contract, u might need to renew your staking everyday. A little bit extra work of course.
How does it work?
Let me use ARB / USDT as an example. You can either stake ARB coin, or stake USDT. Up to you to choose depending on asset you have. You can stake both assets on the same time if u want. Below are the examples.
Staking USDT
You put 100 USDT into dual investment for 1-day staking. The current price for ARB is 1.00 USD. The strike price for ARB is also 1.00 USD.
If tomorrow the price is more 1.00 USD, you will get back 101 USDT. (extra 1 USDT)
If tomorrow the price is less 1.00 USD, you will get back 101 ARB. (extra 1 ARB with the money u could buy ARB yesterday when the price was 1 ARB = 1 USD).
Staking ARB
You put 100 ARB (worth 100 USDT) into dual investment for 1-day staking. The current price for ARB is 1.00 USD. The strike price for ARB is also 1.00 USD.
If tomorrow the price is more 1.00 USD, you will get back 101 USDT. (extra 1 USDT with the money of value ARB you had yesterday)
If tomorrow the price is less 1.00 USD, you will get back 101 ARB. (extra 1 ARB).
** Seems like win-win situation, right? Either way, u end up with more asset. But hold on, let me explain further.
So what's the catch?
Ok, like i said, the reward that u will get is around 1% after 1 day. You can win either way if the price move slightly above/below (but not more than 1%) the strike price.
A. Good scenario 1:
You stake 100 USDT, the strike price ARB is 1.00 USDT. Tomorrow the ARB price is 1.005 USDT.
If u had 100 ARB today in your possession (for the price of 1.00 USD), and sell it tomorrow (for the price of 1.005 USD), u would get 100.50 USDT.
But because u had staked them 100 USDT in dual investment program, tomorrow u will get 101 USDT (that's extra 0.5 USDT).
B. Good Scenario 2:
You stake 100 ARB (worth 100USDT today), the strike price ARB is 1.00 USDT. Tomorrow the ARB price is 0.995 USDT.
If u had 100 USDT today in your possession, and buy ARB tomorrow (with the price of 0.995 USD) u would get 99.5 ARB.
But because u had staked them 100 ARB in dual investment program, tomorrow u will get 101 ARB that worth 100.495 USDT (that's extra 0.495 USDT)
C. Less Good Scenario:
You stake 100 USDT, the strike price ARB is 1.00 USDT. Tomorrow the ARB price is 1.05 USDT (that's more than 1% increase).
If u had purchased100 ARB today (for the price of 1.00 USD), and sell it tomorrow, u could have profited 5 USDT. You could.... if..
But because u had staked them 100 USDT in dual investment program, tomorrow u will get only 101 USDT (that's only 1 USDT in profit). Nevertheless, profit is still profit, just lesser.
D. Worst Scenario (price drop more than 1%)
You stake 100 USDT, the strike price ARB is 1.00 USDT. Tomorrow the ARB price is 0.95 USDT (that's 5% drop).
If u had stay in cash with 100USDT today, and buy ARB tomorrow (at price 0.95 USD), u could get 105.26 ARB. You could.... if..
But because u had staked them 100 USDT in dual investment program, tomorrow u will only get 101 ARB (that's lesser by about 4 ARB coin) worth 95.95 USDT (loss 4.05 USDT).
*pretty much same goes if u stake in ARB coin.
E. Even Worst Scenario (price drop while u are not staking)
You have 100 USDT today, u buy 100 ARB today, with the price 1 ARB = 1.00 USDT.
Tomorrow, price drop to 0.95 USD, and u ended up with 100 ARB coins that worth 95.00 USD (loss 5 USDT)
Conclusion
Dual investment works best if the market sideways or have very little movement, that means it does not sway far from the strike price (ie. less than 1% movement in 1 day).
If the price movement goes up too far: you profit less.
If the price movement goes down too far: you still lose, but lose less.
Comments
Post a Comment