Snowball is OKX's newest structured financial product that users can purchase to increase their risk-adjusted rewards. If this sounds complicated, don't fret, our guide to what is OKX snowball will help you navigate through the volatile space of cryptocurrencies.
From explaining what OKX Snowball is and demystifying the related terms associated with the Snowball product to mapping out the Snowball payoff scenarios, here's everything you'll need to know when it comes to getting started with OKX Snowball.
What is OKX Snowball?
OKX Snowball is a reward-based structured product. Here, the payment of a one-off conditional reward of up to 60% APR is offered to crypto traders if a specific set of conditions are met. Just as a literal snowball gets bigger as it rolls downhill, the rewards for Snowball get larger the longer the Snowball product stays active.
Essentially, OKX Snowball rewards crypto traders who are keen to give trading a try but want partial forms of reward certainty and risk mitigation. Thanks to features like risk-adjusted rewards and partial downside protection, users can gain exposure to their favorite cryptocurrencies without experiencing the full volatility associated with trading crypto.
Why try OKX Snowball?
Curious about why you might want to try the Snowball product? Here are some appealing features that make OKX Snowball unique:
Satisfying rewards: Snowball can potentially offer better risk-adjusted rewards in certain market conditions than direct purchases of the underlying crypto asset.
Partial downside protection: Snowball is a non-principal protected product. However, there's a margin of safety the market can move through against your position before you encounter the possibility of losses. As a result, the probability of unfavorable growth is reduced.
More liquidity: The Snowball product will expire prematurely under certain market conditions, rewarding the user instantly by distributing their gains on the same day.
Demystifying complicated terms
There are certain terms it's helpful to know to understand the workings of OKX Snowball.
Risk-adjusted rewards: A risk-adjusted reward measures a structured product's gains after taking into account the degree of risk that was taken to achieve it. The buffered protection feature of Snowball is the main reason this product offers higher risk-adjusted gains.
Profit price: If the price of the underlying asset crosses this pre-agreed price, an Early Profit scenario may occur.
Caution price: If the price of the underlying asset falls below this pre-agreed price, a Recovery or Conversion scenario may occur.
Target price: If the price of the underlying asset hovers around this pre-agreed price, a Max Profit scenario may occur.
Buffered protection and margin of safety: The gap between the target price and caution price acts as a buffer against losses and gives the user a margin of safety to have markets move against them.
Payoff scenarios
Early Profit
When the price of the underlying asset crosses the profit price on any Friday during Snowball's active term, the Snowball product will expire and the user will receive their rewards prematurely on the same day. By expiring early, users can then redeploy the freed-up capital for additional usage across our various Earn products.
Max Profit
If the price of the underlying asset trades within the range of the profit price and caution prices for the entire duration of the Snowball's active term, users will enjoy maximum gains when the Snowball product expires on its final day. This is the ideal scenario for crypto traders as they enjoy their expected Snowball gains due to their accurate forecast of the underlying asset's price.
Recovery
If the caution price is crossed while Snowball is active and the price of the underlying asset ends up between the target price and profit price, users will receive the original amount committed to the Snowball product without any additional gains. This essentially acts like a refund and gives crypto traders a second chance at deploying their capital to generate extra gains.
Conversion
When the price of the underlying asset crosses the caution price on any given day while Snowball is active and the average price of the underlying asset is below the target price at expiry, there's a possibility that you'll incur losses in volatile market conditions. Users will then purchase the underlying asset with the capital committed to Snowball at the pre-agreed target price.
Get started today
OKX Snowball is an innovative structured product that offers you a unique opportunity to grow your earnings in both moderately bullish and bearish scenarios. Ultimately, by offering the potential for gains and robust risk protection, the Snowball product stands out as a handy tool in the arsenal of any user who's new to crypto trading and wants the certainty of gains through a structured product. Keen to get started? Try OKX Snowball today.
If you're more of a visual learner, why not check out our OKX Snowball guide that goes through examples of both bullish and bearish Snowballs. Conversely, you can also visit OKX Earn to discover all things related to growing your crypto portfolio over time.
