Links

Dual Investment

;Summary

Dual investment (DI) is a financial product that allows traders to set the price at which to buy or sell an asset at a certain date, while earning returns along the way. Currently, there exist different versions of this product, being offered by both CeFi (ByBit, Binance, etc.) and DeFi exchanges (Thetanuts, etc).
One of the main advantages of DI is that it is really easy to use, even by less-experienced investors.
A good approach to get the essence of dual investment is to think of it as a limit order to buy an asset at a lower price or to sell it at a higher price, while getting an extra yield in return.

Description

DI is a bi-directional instrument that offers basically two alternatives:
  1. 1.
    Buy low
  2. 2.
    Sell high
Users have to set the following variables:
  • Initial amount: the amount of tokens the user wants to buy or sell.
  • Target price: the price at which the trader wants to sell or buy the product. The target price is fixed and will not change.
  • Settlement date: the date at which the product will end.
If at maturity the target price is reached, the tokens previously deposited in the vault will be sold or bought at the specified price.

Why to choose the Buy Low Side

  1. 1.
    To use existing stablecoin holdings to buy crypto at a desired price, on a desired date, and also make additional earnings.
  2. 2.
    To accumulate more stablecoins through interest income.

Why to choose the Sell High Side

  1. 1.
    To sell existing crypto holdings at a desired price on a desired date and also make additional earnings.
  2. 2.
    To Accumulate more crypto through interest income.

Formulas

If at settlement date the Target Price is reached your subscription amount and interest income will be converted into the alternate currency at the target price as conversion rate. The below formula shows the total amount you will be receiving:
Sell High: (Subscription Amount * Target Price) * [1 + (APY% * Deposit Days / 365)]
Buy Low: (Subscription Amount / Target Price) * [1 + (APY% * Deposit Days / 365)]
When the Target Price is not reached, your subscription amount and interest income will not be converted and you will receive the interest payment in the deposit currency. The below formula shows the total amount you will be receiving:
Subscription Amount * [1 + (APY% * Deposit Days / 365)]