💲Trading strategies for XT and FT

The following table outlines recommended trading strategies for FT and XT in response to the interest rate movements of the borrowed tokens:

	FT Strategy	XT STrategy
Rate Increasing	Sell (short)	Buy (long)
Rate Decreasing	Buy (long)	Sell (short)

Explanation:

• When Interest Rates are Increasing:

  • FT (Fixed-rate Token): Sell (Short): As market interest rates rise, the fixed rate offered by FT becomes less attractive compared to new rates. Selling FT allows investors to lock in gains before the token's value potentially decreases due to higher prevailing rates.

  • XT (X Token): Buy (Long): Rising interest rates can increase the potential returns from leveraged positions represented by XT. Buying XT enables investors to capitalize on the higher interest rates, potentially enhancing leveraged yields.

• When Interest Rates are Decreasing:

  • FT (Fixed-rate Token): Buy (Long): Lower market interest rates make the fixed rate of FT more attractive. Purchasing FT allows investors to secure higher fixed returns relative to the declining market rates.

  • XT (X Token): Sell (Short): Decreasing interest rates may reduce the benefits of leveraged positions associated with XT. Selling XT can help investors avoid potential decreases in leveraged yields.