To provide a better user experience in trading Leveraged Tokens, Bybit will consolidate shares of some Leveraged Tokens proportionally under certain market conditions. Traders will be notified through an announcement when a Leveraged Token share merger occurs.

What Is Leveraged Token Consolidation?

Leveraged Token Consolidation refers to reducing the number of issued Leveraged Tokens by a certain percentage to increase a trader's per share value. When extreme market conditions cause Leveraged Token prices to fall, token share consolidation may be triggered, thereby increasing the price of a Leveraged Token while enhancing the liquidity of Leveraged Tokens in the market. 

After a Leveraged Token merger, the number of tokens held by traders and the value of each unit per share will change. However, the total value held by traders will not change (excluding changes in value due to market price fluctuations). Share consolidation is also used in traditional financial markets, such as stocks.

Example

Taking the BTC3S as an example, Bybit will merge the shares of BTC3S at a ratio of 10,000:1.

If a trader holds BTC3S before the share consolidation execution time, Bybit will initiate Leveraged Token share consolidation for the BTC3S held by the trader at the ratio of 10,000 BTC3S (before) = 1 BTC3S (after), and will update the circulating supply of BTC3S after the merger.

Please note that the circulating supply of BTC3S after the Leveraged Token share consolidation will be updated to a maximum of 8 decimal places.

Let’s assume that the circulating supply of BTC3S before the combination of Leveraged Token shares is 100 billion. Therefore, the circulating supply of BTC3S after the combination of token shares is 10 million, based on the ratio of 10,000:1. According to this ratio, if a trader holds 1,000,000 BTC3S tokens before the Leveraged Token share merger, it means that the trader will hold 100 BTC3S after the token share merger.

Notes:

— During the process of Leveraged Token share consolidation, any changes in token net value may be reflected in the NAV graph. The net value of Leveraged Tokens displayed on the NAV graph during the period may not be accurate or for reference.

— All Traders who hold Leveraged Tokens are requested to evaluate their holding risks in advance to avoid risks caused by market fluctuations during the consolidation of Leveraged Token shares. Traders are advised to trade or redeem their holdings in advance.

For more information, please refer to Introduction to Bybit Leveraged Tokens.