Gate Research: Why Leveraged Tokens Are Vanishing

As regulatory pressure and risk controls reshape crypto trading, leveraged tokens have steadily disappeared from many exchanges. The questions remain: why the product category is contracting, how remaining platforms approach transparency and cost structure, and what sustained demand for leverage reveals about the evolving market.

In crypto markets, exchange-issued leveraged tokens are designed to give traders amplified exposure to price movements without requiring them to manage futures positions directly. These tokens bundle perpetual futures into spot-traded instruments, allowing users to take leveraged long or short positions simply by buying or selling a token.

Over the past two years, however, this product category has steadily shrunk. Several major exchanges have scaled back or exited leveraged token offerings entirely, citing operational risk, user complaints, and tighter compliance standards. Delistings and phased wind-downs have become common, particularly for high-profile assets like BTC and ETH.

This contraction does not suggest that demand for leverage has disappeared. Instead, it highlights the challenges of offering structured products that require careful handling. When leveraged tokens are misunderstood or held long-term in volatile markets, users can experience unexpected losses due to rebalancing effects and value decay, often leading to disputes and reputational risk for platforms. 

As a result, many exchanges have chosen to simplify their product suites rather than invest in deeper transparency and education.

Against this backdrop, the number of platforms still supporting leveraged tokens at scale has narrowed considerably, according to Gate. 

Leveraged products: Why platforms fail

Over the past two market cycles, leveraged products have moved from the periphery of crypto trading into the center of regulatory and platform-level debate. What began as an effort to simplify access to leverage for retail users has increasingly been viewed through a different lens: product complexity, user comprehension, and systemic risk.

As global oversight of digital asset markets tightens, these concerns are no longer theoretical. They are shaping which products survive, how they are structured, and who is willing to offer them.

In traditional finance, exchange-traded products with embedded leverage are typically subject to strict disclosure standards, suitability requirements, and ongoing supervision.

Crypto markets, by contrast, evolved faster than their guardrails. Leveraged tokens emerged as a way to abstract perpetual futures into spot-like instruments, lowering the operational barrier for users who wanted amplified exposure without managing margin or liquidation mechanics. 

While the design reduced some forms of friction, it introduced others, particularly around path dependency, volatility decay, and the mismatch between how products were intended to be used and how they were actually traded.

As enforcement actions and compliance expectations increased across major jurisdictions, many exchanges reassessed their exposure to structured products. Delistings, phased wind-downs, and product retirements became common, not necessarily because leverage demand declined, but because maintaining these products at scale requires clear rules, robust risk management, and a high tolerance for operational responsibility. 

In practice, fewer platforms have been willing or able to meet those conditions.

How Gate’s leveraged tokens are designed to work

Gate’s ETF leveraged tokens are structured to mirror leveraged perpetual futures positions, but with a trading experience that feels closer to spot markets. Users do not post margin, manage collateral, or monitor liquidation thresholds. Instead, exposure is embedded in the token’s net asset value, which fluctuates based on price movement, funding costs, and rebalancing activity.

All operational costs are bundled into a clearly stated management fee of 0.1% per day. This fee covers hedging expenses, funding rates, trading fees, and slippage, giving users a single, visible cost metric rather than fragmented charges spread across derivatives mechanics.

Importantly, these tokens are positioned as tactical tools rather than long-term holdings. They tend to perform best in strong, directional markets, where price momentum aligns with leverage. In sideways or choppy conditions, rebalancing effects can erode value, making short-term use more appropriate.

Rebalancing rules

According to the latest Gate research, factors largely determine leveraged token performance: when rebalancing occurs and how far leverage is allowed to drift before adjustments are made. Gate publishes explicit parameters for both.

Rebalancing for 3x and 5x products takes place on a daily schedule at 00:00 (UTC+8). Outside of this routine reset, leverage is allowed to fluctuate within defined ranges. As long as leverage stays within those bounds, no adjustment is triggered, reducing unnecessary trading costs during normal market movement.

If leverage drifts beyond those limits, the position is reset back to its target multiple. In cases where token prices become too small for efficient trading, consolidation or splits may occur, changing unit counts without affecting total value.

This level of disclosure gives traders a clearer framework for understanding how and when their positions change.

Cost transparency as a competitive edge

Rather than passing through individual fees from the derivatives layer, Gate absorbs complexity at the platform level. The flat 0.1% daily management fee is among the lowest offered by large exchanges and provides predictable cost exposure for users.

By consolidating funding, execution, and rebalancing costs into a single figure, performance attribution becomes easier to understand. Gains and losses are reflected directly in net asset value, without hidden variables that distort results.

While many exchanges have reduced exposure to leveraged tokens, Gate has expanded it. According to its 2025 disclosures, the platform supports trading across more than 240 leveraged ETF products, serving roughly 200,000 users with daily volumes reaching into the hundreds of millions of dollars.

Ongoing improvements, including detailed dashboards, rebalancing histories, and educational tools, suggest a focus on sustainability rather than short-term experimentation. Planned additions such as portfolio-based ETFs and lower-leverage alternatives point to continued refinement rather than retrenchment.

Conclusion: New crypto trends

The broader industry trend has been to eliminate complex products. Gate has taken the opposite approach: keeping complexity behind the scenes while giving users clearer rules, visible costs, and predictable behavior.

In a market where leveraged tokens have become scarce, that combination of transparency, scale, and operational commitment has turned availability itself into an advantage. Rather than treating leveraged ETFs as a marginal feature, Gate has positioned them as a structured system designed to function through market cycles, not just during speculative peaks.