The Share Merging Mechanism of ETF Products

The share merging mechanism is triggered whenever the net value of a ETF product falls below 0.1 USDT to improve the sensitivity to the price change. MEXC will merge x shares of the product together to form a single unit while diluting the users’ holdings x times. This means that if 10 units are merged together to form a single unit with 10x its original value, the quantity of held assets will be reduced to 10% of its original. The total value of the users’ holding assets, therefore, remains unchanged.

Join ETF Trading on MEXC - Check The Share Merging Mechanism
Join ETF Trading on MEXC – Check The Share Merging Mechanism

Example of ETF Share Merging Mechanism

When BTC3L falls to 0.088USDT, less than 0.1USDT, the merge mechanism will be triggered. If you hold 1000 BTC3L, he will be merged into 100 BTC3L. However, the net value will also be reduced from0 .088USDT to about 0.88USDT.

That is, the corresponding total assets will not change, before sharing merging: Total Assets = 1000 * 0.088 = 88 USDT

After sharing merging: Total assets = 100 * 0.88 = 88 USDT

You can view the merger history of your ETF products at the bottom of the trading page. 

Merge Records on MEXC ETF
Merge Records on MEXC ETF

Closing thoughts

The volatility of the crypto market means the unit value of some ETF products may sometimes plunge. Additional fluctuations at that stage would result in disproportionate impacts on the price of the ETF. The share merging mechanism was therefore introduced to improve price sensitivity and provide traders with a better experience in the market.

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The content of this webpage is not investment advice and does not constitute an offer or solicitation to offer or recommendation of any investment product. It is for general purposes only and does not take into account your individual needs, investment objectives, and specific financial circumstances. Investment involves risk.

Please note that the information and data above are cited from third-party sources & whitepapers and do not represent MEXC. Please refer to direct sources for more details. This is not financial advice and does not constitute an offer or solicitation to offer or recommend any investment product. It is for general purposes only and does not take into account your individual needs, investment objectives, and specific financial circumstances. Investment involves risk.

This disclaimer informs readers that the MEXC Creator’s content, views, thoughts, and opinions expressed in the articles belong solely to the creators and authors, and not to MEXC Global itself. MEXC Global doesn’t give any investment recommendations or advice.

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