Structured products in the digital asset space offer unique ways to earn yield, and one of the most intriguing is the SharkFin. This product derives its name from its distinctive payoff structure, which resembles a shark's fin. It is designed to provide investors with principal protection and a base level of return, while offering the potential for significantly higher yields based on the price movement of an underlying asset.
This guide will break down everything you need to know about how SharkFin products work, their advantages, and who they are best suited for.
What is a SharkFin Product?
A SharkFin is a type of structured investment product that evolved from traditional options. It is typically categorized into two main types: Bull SharkFin (for those with a bullish market outlook) and Bear SharkFin (for those with a bearish outlook).
These products have a fixed settlement date and offer a floating rate of return. Most importantly, they guarantee the safety of your principal investment, meaning you cannot lose your initial capital. Your final yield is determined by how accurately you predict the future price movement of the underlying asset within a predefined price range.
Key Features and Benefits
SharkFin products come with several compelling features that make them attractive to a broad range of investors:
- Principal Protection: Your initial investment is safeguarded. There is no risk of losing the capital you put in.
- Guaranteed Base Yield: Regardless of market performance, you will always receive a minimum, predetermined return.
- Potential for Higher Returns: On top of the base yield, you have the opportunity to earn a much higher return if the asset's price behaves within a specific range.
- Short Investment Cycles: These products typically have short durations (e.g., 7 days), ensuring your capital is not locked up for long periods and remains liquid.
- Flexible Strategy: They combine advantages from various option types (like American, European, and touch options), creating a versatile and strategic investment tool.
The core appeal of a SharkFin is the ability to pursue profits from market volatility while resting on a foundation of guaranteed, stable returns.
How SharkFin Returns Are Calculated: Examples
The best way to understand a SharkFin is through practical examples. Let's examine both a Bull and a Bear SharkFin product, assuming an investment of 1,000 USDT for 7 days on Bitcoin (BTC), with a yield range of 6% to 36% and a price corridor between $30,000 and $33,000.
Bull SharkFin (For a Bullish Outlook)
This product benefits if the price of BTC stays at or below the upper barrier ($33,000) and ends within the range at settlement.
- Scenario 1: Price exceeds the upper barrier.
If the highest price during the term or at settlement is $34,000 (above $33,000), the annualized yield drops to the base rate of 6%.Total Return = 1,000 × 6% × 7/365 = 1.150 USDT - Scenario 2: Price stays within the range.
If the price never breaches $33,000 during the term and the settlement price is $31,000 (within the range), the yield is calculated proportionally.Annualized Yield = 6% + (31,000 - 30,000)/(33,000-30,000) × (36% - 6%) = 16%Total Return = 1,000 × 16% × 7/365 = 3.068 USDT - Scenario 3: Price falls below the lower barrier at settlement.
If the price never breaches $33,000 but the settlement price is $29,000 (below $30,000), you receive the base yield of 6%.Total Return = 1,000 × 6% × 7/365 = 1.150 USDT
Bear SharkFin (For a Bearish Outlook)
This product benefits if the price of BTC stays at or above the lower barrier ($30,000) and ends within the range at settlement.
- Scenario 1: Price falls below the lower barrier.
If the lowest price during the term is $29,000 (below $30,000), the annualized yield is the base rate of 6%.Total Return = 1,000 × 6% × 7/365 = 1.150 USDT - Scenario 2: Price stays within the range.
If the price never breaches $30,000 during the term and the settlement price is $31,000 (within the range), the yield is calculated.Annualized Yield = 36% - (31,000 - 30,000)/(33,000-30,000) × (36% - 6%) = 26%Total Return = 1,000 × 26% × 7/365 = 4.986 USDT - Scenario 3: Price rises above the upper barrier at settlement.
If the price never breaches $30,000 but the settlement price is $34,000 (above $33,000), you receive the base yield of 6%.Total Return = 1,000 × 6% × 7/365 = 1.150 USDT
The key takeaway is that to maximize returns, the price of the underlying asset must remain within the predetermined range until settlement. A price moving too far in your predicted direction—outside the range—will still only result in the base yield.
Who Should Consider Investing in SharkFin Products?
SharkFin products are designed for a diverse set of investors looking for a balanced approach to digital asset yield generation.
- Risk-Averse Investors: The principal protection feature makes it an ideal, low-risk entry point into the world of crypto investing.
- Yield Optimizers: Investors who desire stability but also want to capitalize on potential market upside without additional risk will find SharkFin products highly attractive.
- Beginners: Newcomers can benefit from a guaranteed return while learning how market movements affect potential profits in a controlled environment.
- Options Curious Traders: For those interested in options trading but hesitant about their complexity and risk, SharkFins offer a way to experience option-like payoffs with built-in capital protection. 👉 Explore more advanced yield strategies
Frequently Asked Questions
What happens if the market crashes?
Your principal is protected. In a worst-case scenario, you will still receive the guaranteed base yield on your investment, unlike with a direct asset purchase where you could lose capital.
How is the final price for the asset determined?
The settlement price is typically based on a reputable index or the average price of the asset across several major exchanges at a specific time on the settlement date. This prevents price manipulation on a single platform.
Can I sell my SharkFin product before the settlement date?
Generally, these are fixed-term products without a secondary market. Your funds are locked until the maturity date, at which point they are automatically settled and returned to your account with the accrued yield.
What are the main risks?
The primary risk is opportunity cost. If the asset's price moves dramatically in your favor but outside the set range, you will only earn the base yield, potentially missing out on higher returns from a direct investment.
Are there any fees involved?
The product's yield is typically net of any management fees, which are built into the pricing of the product. Always check the specific product details for any associated costs before subscribing.
How do I get started?
These products are often available on major digital asset exchanges. The subscription window is usually limited, so it's important to check the platform's official announcements for sale periods. You can typically participate directly from your exchange account.