A Quick Guide to Binance Dual Investment

TL;DR

If you’ve been involved in the world of crypto for a while, you’ll know that cryptoassets can be extremely volatile. The total value of your portfolio can experience large swings, leaving you holding on to dear life in the front seat of a wild roller coaster. Binance Dual Investment provides a way to earn passive income no matter which direction the market goes.

Introduction

What can you do to protect yourself from volatility but still generate yield? Binance Savings offers many convenient ways to earn passive income, but they may expose you to price risk. The option to use more volatile cryptocurrencies to generate income is enticing, but they are directly related to market conditions.

You can also use stablecoins, such as BUSD or USDT, but Binance Dual Investment takes this concept to the next level. You have the opportunity to enjoy yield no matter which direction the market goes. Let’s see how it works.

What is Binance Dual Investment?

Binance Dual Investment lets you deposit a cryptocurrency and earn yield based on two assets. You commit your crypto holdings, lock in a yield, but earn more if the value of your committed holdings increases. It’s basically a way for you to have more control over your risk.

The return you get is dependent on the outcome of your bet at the expiry date. If the value of your holdings increases so that your earnings exceed the savings rate, you’ll get a higher return. If the value of your holdings doesn’t exceed the savings rate, you’ll still get the yield from your savings.

Before we get into how these products work, let’s clear up some of the terms you’ll need to know.

Subscription cut-off date – the date until you can subscribe funds to this Dual Investment product.
Expiry date – This is when you can redeem your crypto with the interest that you earned.
Strike price – The price threshold that determines which settlement currency you’ll get paid in.
Settlement price – The price of your crypto at the expiry date. It’s calculated using an index of some of the most liquid spot BTC-USD market pairs.
Rate of return – The fixed interest you’ll earn when the product settles.
Annualized rate of return – The interest you’d earn if you’d lock your crypto in a Dual Investment product for a year. For example, if your annualized rate of return is 365%, then an estimation of your daily return is 1%.

How does BTC Dual Investment work?

The BTC Dual Investment product lets BTC holders hedge their bitcoin holdings.

The idea is that if the settlement price is higher than the strike price, the product is settled in BUSD. On the other hand, if the settlement price is lower than the strike price, the product is settled in BTC.

This means that if the product is settled in BUSD, you can effectively sell your BTC higher than the current spot price at the time of expiry.

So how are the interest rates calculated for this product? The higher the strike price and the shorter the period, the lower the yield. The lower the strike price and the longer the period, the higher the yield.

How does this work in practice? Let’s say you have 1 BTC at a price of $10,000, and you subscribe to a 30-day Dual Investment product with a 2% rate of return. The strike price is set to $12,000.

30 days later, one of two things will happen:

If BTC is above $12,000, your 1 BTC is paid out in 12,000 BUSD plus the 2% interest worth 240 BUSD. You now have 12,240 BUSD.
If BTC is below $12,000, you get your 1 BTC back plus the 2% interest worth 0.02 BTC. You now have 1.02 BTC.

How does BUSD/USDT Dual Investment work?

The stablecoin-based Dual Investment products let you effectively buy BTC at a lower price than the current spot price at the time of expiry. In the other outcome, you get your stablecoins back with interest.

Let’s say you have 10,000 BUSD when the price of 1 BTC is $10,000. You subscribe to a 30-day Dual Investment product with a 2% rate of return. The strike price is set to $8,000.

30 days later, one of two things will happen:

If BTC is above $8,000, you get your 10,000 BUSD back plus the 2% interest worth 200 BUSD. You now have 10,200 BUSD.
If BTC is below $8,000, your 10,000 BUSD is paid out in 1 BTC plus the 2% interest worth 0.02 BTC. You now have 1.02 BTC.

How to use Binance Dual Investment

Using Binance Dual Investment is quite easy if you’re familiar with how the product works. You’ll find the available Dual Investment products on the Binance Pool page, or by clicking on the link in the first step below.

Go to the Dual Investment page.
Select the product you’d like to subscribe your funds to.
Make sure there are enough funds in your exchange (spot) wallet.
Click on Subscribe.
You’re done! Your funds will be settled after the expiry date. You can check your previous orders on the Dual Currency Order page.

Closing thoughts

Binance Dual Investment allows you to earn passive income no matter which direction the market goes. Do you still have questions about Binance Dual Investment? Check out our Q&A platform, Ask Academy, where the Binance community will answer your questions.