While pursuing enticing annualized returns of 50% or even higher, CoinEx’s dual-currency investment products resemble an intricately designed maze, where potential hidden risks are often obscured by the apparent high returns. Understanding these risks is an essential map for any rational investor before venturing into this maze.
The primary hidden risk lies in the non-linear correlation between its return structure and extreme market volatility. Dual-currency investment is essentially a structured product with embedded options; its final return depends on whether the underlying asset price exceeds a predetermined “knock-out price” at expiration. For example, a 7-day BTC dual-currency investment product promises a 25% annualized return, but only if the BTC price does not rise by more than 5% after 7 days. Historical volatility backtesting shows that in a rapid bull market, the probability of such put-side products being prematurely terminated (i.e., “knocked out”) may exceed 60%, resulting in investors receiving only extremely low interest rates, far below expectations. In the week following the 2024 Bitcoin halving, the market surged by over 15%, causing more than 70% of bearish dual-currency investment products to be liquidated. Many investors saw their actual annualized returns drop to less than 1%, missing out on significant capital gains from the market rally.
Secondly, the risks of liquidity lock-in and opportunity costs are often underestimated. Once invested, funds are typically not redeemable before maturity. This means investors need to accurately predict market volatility over the next 7, 14, or 28 days. If a sum of money is invested in a 28-day product with an expected annualized return of 18%, but a rare hot sector experiences a surge during this period (such as a new public chain token rising 300% in a week), the investor will completely miss out. Data shows that in the highly volatile market of the first quarter of 2025, the average opportunity cost (calculated based on the highest potential return from investing in spot markets during the same period) for users choosing 28-day dual-currency investments was estimated at approximately 12% of their principal. This hidden cost is often downplayed in product descriptions with the rhetoric of “high certainty of return.”
The third major risk is the erosion of returns due to the “win rate illusion.” Dual-currency investment products often advertise a historical win rate (i.e., the probability of obtaining a high, guaranteed return) of over 80%. However, behind this 80% win rate lie two drastically different outcomes: one is successfully maturing and receiving the full guaranteed return (e.g., an annualized return of 20%); the other is being knocked out, receiving only a very low compensation of 0.5%-2%. Mathematically, assuming a product has an 80% probability of obtaining a 20% annualized return (approximately 1.67% over a one-month term) and a 20% probability of obtaining a guaranteed 0.5% return, its overall expected monthly return is only 1.43%, which may not be significantly higher than the average return of a simple spot holding strategy in a bull market. Looking back at the consolidation market in the second half of 2023, although the probability of dual-currency investment products being knocked out was less than 30%, the median annualized return they offered was only 8%, failing to outperform the 40% increase in Bitcoin spot prices during the same period.
The platform’s own counterparty risk and limited transparency are another deep-seated hidden danger. Unlike CoinEx Onchain’s complete transparency regarding spot assets, dual-currency investment, as a derivative product, does not fully disclose its underlying risk hedging operations and fund custody on the blockchain. Users’ funds are not directly used to purchase the underlying asset, but rather enter a complex pool managed by the platform for options hedging. Although CoinEx claims a 100% hedging strategy, extreme market conditions (such as the 2022 LUNA crash) could lead to liquidity depletion and hedging failure, resulting in margin calls. While the platform has a risk reserve fund, its size (e.g., $500 million) is uncertain; whether it can cover potential losses across all products in the event of a black swan event remains a dynamic variable. Investors cannot verify the precise data of this risk exposure in real time, unlike with spot reserves.
Finally, there are inherent risks associated with understanding and executing complex products. Dual-currency investment involves choosing between “bullish” and “bearish” positions, as well as the settlement logic for “high-yield coins” and “low-yield coins.” Data shows that approximately 35% of new users do not fully understand the settlement mechanism when making their first purchase, resulting in receiving the unexpected cryptocurrency upon maturity and having to bear additional exchange costs and price volatility risks. For example, if a BTC bullish product is knocked out, investors will receive USDT instead of BTC. If BTC is in a strong upward trend at this time, investors will be forced to buy it back at a higher price, effectively suffering a double loss.
Therefore, CoinEx Dual Investment is by no means a risk-free “savings alternative,” but a professional tool that highly relies on market volatility prediction and has strict liquidity requirements. Its “hidden” risks do not exist in code vulnerabilities, but are embedded in the non-linear characteristics of its return structure, reflected in the absolute lock-up of liquidity, and obscured by the lack of on-chain transparency comparable to spot trading. Wise investors will only use it as a limited supplement to their asset allocation and, before investing, will ask themselves a crucial question with the same rigor they would use for options trading: Is the high annualized return I am pursuing sufficient to compensate for any missed bull market surges and the risk of potential principal fluctuations?