The arrival of ETHYLD on BitMEX offers new opportunities for ETH stakers and speculators to trade and hedge their positions. ETHYLD is a new type of cryptocurrency derivative that allows users to trade and speculate on daily ETH staking rates with up to 2x leverage. This introduces a new level of flexibility and potential returns for those interested in the staking and yield generation aspects of the Ethereum ecosystem.
What are ETH Staking Yield Swaps?
The ETHYLD swap allows traders to exchange the variable yield that comes from staking ETH on Lido, which is known as the floating rate, for a fixed interest rate. This gives traders the ability to trade and speculate on the yield that is generated from staking ETH, providing them with a new level of flexibility and potential returns.
Users should be aware that one of the main difference is that traders Pay or Receive the fixed rate on an ETHYLD contract, rather than Buy or Sell:
- When a trader enters a long position on an ETHYLD contract, they are considered the Payer. This means that they will pay the fixed interest rate on the contract and receive the floating rate, which is the variable yield generated from staking ETH on Lido. In other words, the trader is betting that the floating rate will be higher than the fixed rate, and they will profit if this turns out to be true.
- When a trader enters a short position on an ETHYLD contract, they are considered the Receiver. This means that they will receive the fixed interest rate on the contract and pay the floating rate, which is the variable yield generated from staking ETH on Lido. In other words, the trader is betting that the floating rate will be lower than the fixed rate, and they will profit if this turns out to be true.
Why Short an ETHYLD Contract?
There are several reasons why someone might short ETHYLD, and be in the receiver position (receiving fixed, paying floating)
For example, some people may run their own validators and want to lock in future yields. Others may believe that staking yields will be lower than what’s currently being implied by the swap price. Some people may think that the fixed rate for staking is too high and want to earn carry when the daily fixings are lower than the ETH yield swap price.
Why Long an ETHYLD Contract?
There are several reasons why someone might long ETHYLD, and be in a payer position (paying fixed, receiving floating). This is ideal for traders who:
For example, some people may believe that staking yields will be higher than what’s currently being implied by the swap price. Additionally, some people may think that the fixed rate for staking is too low and want to earn carry when the daily fixings are higher than the ETHYLD contract price.
Overall, the decision to long or short will depend on each individual’s specific situation and goals.
The post Trade and Hedge Your ETH Staking Positions with ETHYLD on BitMEX appeared first on YourCryptoLibrary.
Wil je op de hoogte blijven van het laatste nieuws? Abonneer je dan op onze push-berichten op Telegram of Twitter.
Heb je vragen of wil je in contact komen met andere crypto fanaten join dan onze Telegram chat!