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Investing in Bit20 doesn't come without risks. Before using Bit20, it is important to research and understand the risks involved. This website is created for informational purposes and seeks to outline basic foreseeable risks. Nothing on this site should be taken as investment advice. Do your own research.
Collateral Risk. The BTWTY and TWENTIX tokens derive their value via instantaneous settlement execution. At any time a holder of BTWTY or TWENTIX can swap for a floating amount of underlying tokens in the collateral pool.
Constant Function Market Maker (Liquidity Pool) Risk. Depositing tokens into a CFMM transforms them into shares in the pool itself. *Impermanent Loss* is a temporary loss of funds occurring when providing liquidity. It’s very often explained as a difference between holding an asset versus providing liquidity in that asset. Impermanent loss is usually observed in standard liquidity pools where the liquidity provider (LP) has to provide both assets in a correct ratio, and one of the assets is volatile in relation to the other, for example, in a BitShares BTWTY/USD 50/50 liquidity pool.