Hello everyone, I am Zhe Ge. I have previously written three articles, all about strategies for solving BNB and price fluctuations during TGE tasks. Today, Zhe Ge will provide a brief summary, comparing and analyzing to see what advantages and disadvantages there are, as well as the applicable conditions for each strategy.
In the current market environment, the returns from TGE are clearly attractive. Once you master Binance's TGE tasks, the new listing tasks from other exchanges are quite similar. By mastering the BNB fluctuation management rules, you no longer have to worry about missing out or cutting losses during TGE, allowing you to participate in TGE with peace of mind and secure stable returns.
As a creator on Binance Square, I understand the core pain points Alpha users face before TGE: BNB price volatility is extreme, with opportunities and risks coexisting. Many newcomers are daunted by on-chain operations, while veterans often miss opportunities due to improper strategies.
Today, we will delve into comparing three mainstream BNB position management plans to help you navigate smoothly during TGE.
Plan one: Spot buying + contract hedging ('hedging paradise' for professional players)
This is the application of the classic 'hedging' strategy from traditional finance in the crypto world. The operation is quite simple: buy 3 BNB in the spot account while opening an equivalent short position in the contract account.
Advantages:
Perfectly hedging price risks: Regardless of whether BNB skyrockets or plummets, your spot gains and contract losses essentially offset each other, locking in costs.
No borrowing interest: Unlike borrowing plans, you only need to pay a one-time transaction fee, avoiding accumulating interest costs over time.
Risks and costs:
High operational threshold: Requires precise synchronization of spot and contract operations; any delay may invalidate the hedge.
Funding rate loss: When market sentiment is bullish, short contracts may need to regularly pay funding fees, resulting in ongoing costs for long-term holding.
Liquidation risk: If the BNB price rises significantly, your short contract faces liquidation risk; you need to closely monitor margin levels and control leverage to prevent contract liquidation.
High trading costs: BNB is calculated at a price of 1100, buying and selling 3 BNB, opening and closing 2 perpetual contracts, with expected trading costs around 13.2 U. Zhege reminds: If you want to save on fees, please check my previous article for detailed information; simply put, convert USDT to FDUSD, then place an order to buy spot, and use an order to open and close USDCBNB perpetual contracts to waive fees.
Target audience: Suitable for those with sufficient funds, familiar with contract trading, and able to monitor the market in real-time. This is the closest risk control method to traditional financial hedge funds.
Plan two: Full margin leveraged lending ('quick tools' within the exchange)
In the leveraged trading section of exchanges like Binance, deposit collateral (e.g., USDT) and directly borrow the required BNB. This is one of the fastest ways to obtain BNB.
Advantages:
Convenient operation: The entire process is completed within the exchange, allowing you to obtain BNB in minutes without cross-chain operations.
Quick fund arrival: Suitable for sudden TGE opportunities, enabling rapid position building.
Fatal risks:
High liquidation risk: This is the riskiest of the three plans. If collateral depreciates or BNB rises, leading to an increase in loan-to-value ratio, it may trigger forced liquidation by the platform.
Full margin mode risk: In full margin mode, all positions share margin; if one position has issues, it may affect the entire leveraged account.
Interest rate fluctuations: Leverage lending rates may fluctuate sharply with market supply and demand, potentially soaring before TGE. Zhege reminds that during TGE, there may also be situations where everything is borrowed out; due to low lending rates, it is advisable to act early.
Practical advice: If you choose this plan, be sure to set strict stop-loss lines and avoid high leverage during peak volatility periods. Once liquidation is triggered, full margin mode can lead to significant losses.
Plan three: Decentralized lending (e.g., Venus, Lista) ('self-custody' on-chain solution)
This is true on-chain operation. Deposit collateral into DeFi protocols and then borrow BNB. This is the most crypto-native characteristic solution.
Advantages:
Self-custody of funds: Your assets are always in your own wallet, without needing to trust centralized exchanges.
Transparent and fair: Lending rates are determined by on-chain market supply and demand, with transparent and immutable rules.
No credit checks required: Completely based on over-collateralization, no traditional identity verification needed.
Risks and challenges:
Smart contract risks: Protocols may have vulnerabilities; choose well-audited, reputable protocols.
Liquidation risk: A decline in collateral value triggers decentralized liquidation, and the on-chain liquidation speed is extremely fast.
Gas fee costs: Each operation requires paying network fees, which are especially significant during congestion.
Complex operations: Familiarity with wallets and DApp interactions is required, posing a high barrier for newcomers.
Target audience: Suitable for users who prioritize self-custody of funds, distrust centralized platforms, and are familiar with DeFi operations.
How to choose a plan suitable for you?
If you are a risk-averse player with sufficient funds, consider plan one (spot + contract hedging). It provides the most professional risk control measures closest to traditional finance. Note, Zhege reminds that the fees for this plan are high; to save on fees, please read the detailed operational instructions in Zhege's earlier articles.
If you are a convenience-seeking native exchange user who can strictly enforce stop-loss discipline, plan two (full margin leveraged lending) offers speed advantages, but be sure to control your leverage ratio. Note, Zhege reminds that this plan is full margin leveraged lending; if you do not understand what full margin is, do not act rashly, or it will lead to tears.
If you are a believer in on-chain, value self-custody, plan three (decentralized lending) is the most native Web3 experience, but it requires time to learn on-chain operations. Note, Zhege reminds that if you enjoy on-chain operations, then knowledge of DeFi is necessary; you should be familiar with common reception protocols, not to mention BSC's Lista, Venus, etc.; you must understand their principles and operational processes, or else you will feel insecure in your operations.
For most beginners who are new to TGE, I recommend starting with a simpler approach: directly using idle funds to purchase the required BNB in the spot market and calmly accepting its price fluctuations. This avoids all the complex risks associated with leverage, borrowing, and hedging. This might sound cliché; why does Zhege say this? Because the more you operate without understanding, the more mistakes you make, potentially leading to more losses. Learning step by step and continuously upgrading your operational skills is essential. At the same time, BNB, as Binance's platform token, has enormous intrinsic investment value; holding it for the long term is a good investment strategy, or the returns may far exceed the alpha itself.
Conclusion
On-chain operations are not boogeymen but skills that every crypto native user must master. As Zhege said: 'On-chain is where value is created, and the secondary market is where value is speculated.' Mastering BNB position management is a key step in transitioning from pure speculation to value creation.
I hope this guide helps you navigate the upcoming TGE successfully. Remember, risks always coexist with returns, and true alpha comes from meticulous risk management. Zhege reminds again: to manage risks and lock in returns, the act of managing risks itself also incurs costs and risks; this point must be clear. For instance, hedging the risk of spot BNB by opening a short perpetual contract incurs transaction fees while also carrying the risk of contract liquidation. This is the risk and cost of the risk management behavior taken to manage spot BNB. All of these must be considered in our thinking to continuously capture more alpha returns in the crypto space.
Welcome to share your TGE experience in the comments section; let's grow together! In subsequent articles, Zhege will explore DeFi protocols on the BSC chain and ETH and other chains based on this lending clue, continuously expanding our knowledge boundaries.
