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One-click Hedging Fund Insurance
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2021-04-21 03:30

1. What’s one-click hedging?

Hedging is arbitrage by holding the spot, holding the blank order and earning the fund fee of the blank order. In general, when the market becomes bullish, it will continue to maintain a positive cost of funds (the cost of holding a blank order to earn funds), and a stable income can be earned in this way.

 

2. Essence of hedging

Hedging mainly consists of two parts of profit.

1) Fund arbitrage

Take the BTCUSD trading pair as an example, invest in 1000USDT.

Step 1: 1000USDT, buy 0.02BTC spot (if the current BTC price is 50,000USDT);

Step 2: transfer 0.02BTC from currency account to contract account;

Step 3: choose BTCUSD currency standard contract and issue 0.02BTC blank order.

After completing the above three steps, the fund fee can be charged three times at 8:00, 16:00 and 24:00 respectively every day.

 

2) Arbitrage of price difference

Take the BTCUSD trading pair as an example, purchase] 1000USDT.

If the current spot price is 50000 USDT and the contract price has premiered to 51000 USDT, and the futures and spot prices are consistent at the end of the closing arbitrage, there will be an extra arbitrage of price difference when closing the position, arbitrage = (51000-50000) * 0.02=20USDT (service fee excluded).

 

3. Major risk points of hedging

1) Spread betting, there is a loss of spread caused by the depth when buying the spot and opening the contract. It is recommended to open hedging when the depth of the platform in a stable condition.

2) Before hedging is completed, there are losses caused by sharp price fluctuations. For example, when buyingBTC at 51000, transferring it into the contract account, the price of BTC has then reached 50, 000, which will result in a price loss of 1000U. It is recommended to open hedging when the market fluctuation is small.

3) The loss caused by the negative premium of the contract, for example, the spot purchase price is 50000 USDT and the current contract price is 49,000USDT, then hedging will be opened at this time, and the 1BTC position will result in a price premium loss of 1000U. It is recommended to open hedging when the contract is at a positive premium and avoid hedging at a negative premium.

4) Losses caused by currency trading, contract suspension or quantitative procedures caused by other reasons or force majeure, resulting in outstanding positions or inability to sell.

5) ADL occurred in the hedging position, which caused the blank order to be closed and the slippage loss in the process of reopening the position.

 

4. What is fund insurance?

Fund insurance is to ensure the security of users' hedging funds. When the risk of clause No.3 occurs and losses occur during the operation of the hedging procedure, the fund pool with fund insurance will be compensated for 100% of the loss.

 

5.How to charge for fund guarantee insurance?

Fund insurance will charge 10% of the total income of one-click hedging as an insurance fund to compensate for possible losses in the hedging process. It will be charged when the user withdraws one-click hedging income or closes one-click hedging.

In principle, Bibox official website will not compensate users who have not participated in the one-click hedging fund insurance for asset losses caused by the above problems. Bibox reserves the final right of interpretation of the terms above.

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