In bear or volatile markets, a prudent strategy often involves less trading and more focus on wealth management products. Among the various options available, structured financial products offered by exchanges like OKX have gained attention for their unique risk-return profiles. This article delves into three such products: SharkFin, Dual Currency, and Snowball, explaining their mechanics, benefits, and risks.
Structured financial products are complex instruments that combine underlying assets like cryptocurrencies, derivatives, or stablecoins to create customized investment outcomes. They are designed to meet specific risk-return objectives, often incorporating elements of options or other derivatives to enhance yields or provide protection.
OKX Structured Products Overview
OKX offers three primary structured financial products: SharkFin, Dual Currency, and Snowball. Each caters to different investor preferences, from conservative to aggressive, and varies in terms of participation门槛, potential returns, and risk exposure.
SharkFin Product
SharkFin is characterized by its principal protection, potential for high returns, short investment cycles, and low entry barrier. It is ideal for investors seeking stability with upside potential.
Principal Protection with Guaranteed Yield
SharkFin products invest a portion of funds in low-risk assets to generate a stable, guaranteed return. For example, a 3-day SharkFin product might offer a minimum annualized yield of 3.5%, meaning investors receive at least this return regardless of market movements. This makes it more than just principal-protected—it ensures a baseline profit.
High-Yield Opportunity Through Options
The potential for higher returns comes from embedded "European barrier options." For a BTC call SharkFin, there is a knock-in price (lower bound) and a knock-out price (upper bound). If BTC’s price at expiry is within this range, the yield increases proportionally.
- Call SharkFin Example: With a knock-in at $25,800 and knock-out at $29,600, if BTC expires at $29,000, the annualized yield might be calculated as follows:
Yield = [(29,000 - 25,800) / (29,600 - 25,800)] × (8.38% - 3.5%) + 3.5% ≈ 7.61%. - Put SharkFin Example: For a put product with a knock-in at $25,600 and knock-out at $21,800, if BTC expires at $22,000, the yield could be:
Yield = [(25,600 - 22,000) / (25,600 - 21,800)] × (8.38% - 3.5%) + 3.5% ≈ 8.12%.
Short Cycles and Flexibility
SharkFin products come in 3-day and 7-day durations, with weekly offerings. The 7-day product supports auto-renewal, allowing investors to compound returns seamlessly. This short-term flexibility is perfect for managing idle funds without long commitments.
Low Participation Threshold
The minimum investment is 10 USDT, making it accessible to most investors. Weekly limits per account go up to 1,500,000 USDT, accommodating both small and large participants.
Dual Currency Product
Dual Currency products involve "high-sell" or "low-buy" strategies, offering higher yields but with increased complexity and risk. They function similarly to writing options contracts.
High-Sell and Low-Buy Mechanisms
- High-Sell: Investors use the native token (e.g., BTC) to participate. If the token’s price is below the target at expiry, they earn yield in the token; if above, they receive USDT at the target price.
- Low-Buy: Investors use USDT. If the token’s price is above the target, they earn yield in USDT; if below, they receive the token at the target price.
Example: High-Sell ARB
- Target: $0.95, yield 1.52% (22.55% annualized).
- If ARB expires below $0.95, repayment = 1,000 × (1 + 1.52%) = 1,015.2 ARB.
- If ARB expires above $0.95, repayment = 1,000 × 0.95 × (1 + 1.52%) = 964.44 USDT.
Example: Low-Buy ARB
- Target: $0.85, yield 1.7% (25.31% annualized).
- If ARB expires above $0.85, repayment = 1,000 × (1 + 1.7%) = 1,017 USDT.
- If ARB expires below $0.85, repayment = (1,000 / 0.85) × (1 + 1.7%) ≈ 1,196.47 ARB.
Comparison with Other Strategies
- Vs. Leveraged Futures: Dual Currency ignores interim price fluctuations, reducing liquidation risks associated with leverage.
- Vs. Limit Orders: Unlike limit orders, Dual Currency executes only at expiry and offers yield instead of charging fees.
Risks Involved
Dual Currency is not principal-guaranteed. Investors might face losses if prices move adversely. For instance, in a high-sell BTC product, if BTC rises significantly above the target, the investor might receive fewer USDT than the market value, resulting in a loss.
Snowball Product
Snowball is an American-style option with knock-in and knock-out barriers, suitable for high-net-worth investors due to its high entry threshold (e.g., 100,000 USDT or 5 BTC).
Call Snowball (USDT-Based)
- Knock-in: Far below initial price.
- Knock-out: Slightly above initial price.
Outcomes:
- Neither barrier hit: Highest yield.
- Knock-out hit: Yield proportional to holding days.
- Knock-in hit, expiry above initial: Principal returned in USDT.
- Knock-in hit, expiry below initial: Principal converted to BTC at initial price, potential loss.
Put Snowball (BTC-Based)
- Knock-in: Far above initial price.
- Knock-out: Slightly below initial price.
- Outcomes: Similar to call but with inversed conditions and payouts in BTC or USDT.
Product Comparison and Strategy
- Simple Earn and Chain Earn: Better for altcoins but lower yields for BTC/ETH/stablecoins.
- Dual Currency Earn: Liquidity mining with limited pairs, lower yields, and higher risks.
- Snowball: For large investors seeking structured outcomes.
- Dual Currency Win: Higher yields and complexity, akin to options trading.
- SharkFin: Low risk, principal protection, flexible terms, and upside potential—ideal for current markets.
Hedge with SharkFin
Investors can hedge by participating in both call and put SharkFin products. For example, with BTC at $25,750:
- Call SharkFin range: $25,800–$29,700, yield 3.5%–8.38%.
- Put SharkFin range: $21,800–$25,700, yield 3.5%–8.38%.
By splitting funds, investors ensure at least the guaranteed yield from one side while capturing higher returns if volatility occurs within the specified range. This strategy minimizes risk while maintaining profit potential.
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Frequently Asked Questions
What is the minimum investment for SharkFin?
The minimum is 10 USDT, making it accessible for most investors. The maximum weekly limit is 1,500,000 USDT per account.
Are Dual Currency products principal-guaranteed?
No, they are not. Returns depend on market conditions at expiry, and investors might incur losses if prices move against their positions.
How does SharkFin achieve principal protection?
Funds are partially allocated to low-risk assets generating stable returns, ensuring a baseline yield regardless of market performance.
Can I auto-renew SharkFin products?
Yes, the 7-day SharkFin supports auto-renewal, allowing continuous investment without manual intervention.
What happens if a knock-in or knock-out is triggered in Snowball?
Payouts vary: if knock-out is hit, investors earn proportional yields; if only knock-in is triggered, principal may be returned or converted, potentially at a loss.
Is Dual Currency suitable for beginners?
It involves complex mechanics and higher risks. Beginners should start with SharkFin or Simple Earn products to understand structured investments better.
Structured products like SharkFin, Dual Currency, and Snowball offer diverse ways to enhance yields while managing risk. By understanding their mechanics, investors can choose products aligned with their goals and market outlook. Always assess personal risk tolerance and market conditions before investing.