Structured investment products offer a unique way to potentially earn returns in various market conditions. Among these, SharkFin products stand out for their capital protection and opportunity for enhanced yields. This guide explains how these products function and how they might fit into a broader investment strategy.
What is a SharkFin Product?
A SharkFin is a type of structured product designed to protect your principal while offering a chance to earn returns. It is ideal for markets with high volatility and uncertainty. Investors are attracted to SharkFin products for several key reasons:
- Capitalize on Bull or Bear Markets: These products allow you to potentially earn a return regardless of the market's direction—whether it's rising (bullish) or falling (bearish). You always receive a base yield, with the potential for a higher gain if your market prediction is correct.
- Principal Protection: Your initial investment is safeguarded against market downturns. Even during periods of significant volatility, your principal amount is secure.
- Low Barrier to Entry and No Hidden Fees: You can start with a minimal amount, and there are typically no management or service fees deducted from your investment.
- Short Investment Terms: These products often have flexible and short durations, such as 1, 3, or 7 days, allowing for quick access to your funds and returns upon maturity.
How Does a Bullish SharkFin Work?
The Annual Percentage Yield (APY) of a SharkFin product is not fixed. It depends on the relationship between the asset's price at maturity and a predefined price range set at the purchase time. The potential outcomes can be broken down into three scenarios:
- Scenario 1: Price Finishes Below the Range
If the final price is below the lower bound of the price corridor, you receive the guaranteed base APY. - Scenario 2: Price Finishes Within the Range
If the final price lands within the predefined range, you earn an enhanced APY. This yield is typically calculated on a sliding scale, offering higher returns the closer the price is to the optimal point within the range. - Scenario 3: Price Finishes Above the Range
If the final price closes above the upper bound of the price range, you receive the guaranteed base APY.
Bullish SharkFin Example
Consider this hypothetical example for a Bullish SharkFin product:
- Investment Amount: 1,000 USDT
- APY Range: 1% - 18%
- Term: 7 days
- BTC Price Range: $18,000 - $21,000
Please note: This is a simplified example for illustrative purposes only and does not represent future actual APY.
- Outcome A: Maturity Price is $17,000 (Below Range)
APY = 1% (Base yield)
Return = 1,000 × 1% × (7/365) ≈ 0.192 USDT - Outcome B: Maturity Price is $19,500 (Within Range)
The APY is calculated proportionally. For instance:
APY = 4% + [($19,500 - $18,000) / ($21,000 - $18,000)] × (18% - 4%) = 11%
Return = 1,000 × 11% × (7/365) ≈ 2.110 USDT - Outcome C: Maturity Price is $24,000 (Above Range)
APY = 1% (Base yield)
Return = 1,000 × 1% × (7/365) ≈ 0.192 USDT
How Does a Bearish SharkFin Work?
A Bearish SharkFin operates on a similar principle but is designed for markets expected to move sideways or downward. The key difference lies in the calculation of the enhanced APY when the price falls within the range.
- Scenario 1: Price Finishes Below the Range
You receive the base APY. - Scenario 2: Price Finishes Within the Range
You earn an enhanced APY. However, the yield calculation is inverted compared to the bullish product, often providing higher returns when the price is lower within the range. - Scenario 3: Price Finishes Above the Range
You receive the base APY.
Bearish SharkFin Example
Consider this hypothetical example for a Bearish SharkFin product:
- Investment Amount: 1,000 USDT
- APY Range: 2% - 19%
- Term: 7 days
- BTC Price Range: $18,000 - $21,000
Please note: This is a simplified example for illustrative purposes only and does not represent future actual APY.
- Outcome A: Maturity Price is $17,000 (Below Range)
APY = 2% (Base yield)
Return = 1,000 × 2% × (7/365) ≈ 0.384 USDT - Outcome B: Maturity Price is $19,500 (Within Range)
The APY is calculated inversely. For instance:
APY = 19% - [($19,500 - $18,000) / ($21,000 - $18,000)] × (19% - 4%) = 11.5%
Return = 1,000 × 11.5% × (7/365) ≈ 2.205 USDT - Outcome C: Maturity Price is $24,000 (Above Range)
APY = 2% (Base yield)
Return = 1,000 × 2% × (7/365) ≈ 0.384 USDT
How to Participate in SharkFin Products
Participating in a SharkFin product is a straightforward process on most major trading platforms. These products are typically found within the "Finance" or "Earn" section of the platform, under a category like "Structured Products" or specifically "SharkFin."
Some platforms also offer products tied to staked assets like BETH (a token representing staked Ethereum). The general rules for these products remain consistent with standard USDT-based SharkFins.
Important Considerations for Asset-Backed Products:
- When you subscribe to a product using a staked asset like BETH, you typically stop earning the standard staking rewards for that asset for the duration of the product term. Your only yield will come from the SharkFin product itself.
- The principal protection feature usually ensures that you can redeem your initial asset amount 1:1 after the product matures.
- Interest accrual most often begins on the subscription day at a specific time, such as 4:00 PM UTC.
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Frequently Asked Questions
What is the main advantage of a SharkFin product?
The primary advantage is principal protection combined with the potential for a higher yield than a standard savings product. It allows you to express a market view on volatility or price range without risking your initial capital.
Is my principal really 100% safe?
In the structure of these specific products, yes, your principal is protected. This means that regardless of how the market moves, you will get back the amount of USDT or asset (like BETH) that you initially invested when the product matures.
What happens if the price is extremely volatile and moves far outside the range?
The beauty of the SharkFin structure is that extreme volatility does not harm your principal. Whether the price moves far below or far above the predetermined range, you will still receive the base level APY return on your investment.
How is the final price at maturity determined?
The settlement or maturity price is typically based on a fair and transparent average of the asset's price across several major spot markets at a specific time on the maturity date. This methodology is clearly outlined in the product description before you invest.
Can I redeem my investment before the maturity date?
Generally, SharkFin products are designed to be held until maturity. Early redemption is usually not permitted, which is why it's important to choose a investment term that aligns with your liquidity needs.
Who are these products best suited for?
These products are ideal for conservative to moderate investors who seek capital protection but want to earn a potentially better return than traditional savings accounts. They are also suitable for those with a neutral to slightly bullish or bearish short-term market outlook.