Enhanced Snowball Product FAQ

What is an enhanced snowball?

The enhanced snowball product is actually a type of structured product that caters to aggressive investors wishing to capture the upside potential of the underlying asset while maintaining the downside protection of a regular snowball. The VETA platform mainly uses BTC or ETH as the underlying asset. In simple terms, if you believe that BTC will not drop (e.g., 25%) within the product term, you can receive coupon income and, in addition, share in the upside gains (e.g., 50%) of the underlying asset.

Who is the enhanced snowball suitable for?

The enhanced snowball product is suitable for investors who wish to obtain both a fixed coupon income and participate in the upside gains of the underlying asset. Compared to direct spot investment, the enhanced snowball offers a safety cushion for downside protection, greatly increasing the margin of investment error tolerance while benefiting from the appreciation of the underlying asset. It is very suitable for investors who are bullish on the market and desire downside protection.

How is the return calculated?

In most scenarios (Scenarios 1 and 2), you will receive the contracted interest income from the product. The holding period return is calculated as the holding period multiplied by the annualized yield plus the upside participation rate times the absolute return above the knock-out price. It is important to note that an early knock-out of the product will result in a holding period that is shorter than the total duration of the product. In Scenario 3, the product will return the full principal amount.

What is the product term? Will the product end early due to a knock-out?

You will find the product term on the specific product page, such as 28 days, 91 days, and 180 days. It should be noted that if a knock-out event occurs, it means that the product will end early and repay the principal and interest. (A knock-out event refers to the situation where the price of the underlying asset on the knock-out observation day is higher than the knock-out price, resulting in an early redemption of the product.) Early redemption is triggered only when a knock-out event occurs (Scenarios 1 and 2). Investors will receive APR interest based on the ratio of the annualized term. A knock-in event does not trigger early redemption.

What are the risks of the enhanced snowball product?

The enhanced snowball product is a type of aggressive financial management. Only in Scenario 4, when a knock-in event occurs without triggering a knock-out event, will you incur losses. In this case, you will bear the loss from the initial benchmark price to the settlement price, and your loss will never exceed the loss caused by holding the underlying asset directly. If purchased with a USD stablecoin, this means the quantity of BTC will not decrease.

What is the upside participation rate?

The upside participation rate is a unique parameter setting for the enhanced snowball. A higher upside participation rate means a higher proportion of the upside gains that the investor can share, but the fixed coupon income will decrease. A 50% upside participation rate means that investors can capture 50% of the profits above the knock-out price while also receiving a fixed coupon income.

What is the observation period?

During the lifetime of the product, the observation price for each observation period from 16:00 to 16:00 the next day (UTC+8) is determined at the beginning of the observation period, which includes the knock-in and knock-out prices, and it is monitored for any knock-in (knock-out) events.

8. What are knock-in/knock-out events?

Each observation period after subscribing to the enhanced snowball will have a price range consisting of a knock-in price and a knock-out price. It is then monitored to see if the coin price touches or exceeds the knock-in price or knock-out price during the observation period. If the coin price touches or exceeds the knock-in price, a knock-in event occurs; if the coin price touches or exceeds the knock-out price, a knock-out event occurs.

9. Can I withdraw or redeem during the term?

No, partial or full redemption is not allowed during the term. You can only redeem when the note ends. Remember to click to choose redemption on the product settlement date.