Coin-margined perpetual contracts are derivative instruments where users trade using base cryptocurrencies (like Bitcoin or Ethereum) as collateral and settlement currency. Unlike USDT-margined contracts, these contracts use digital assets directly for trading and profit/loss calculation. Key features include cryptocurrency-based settlement and no expiration date, allowing flexible entry and exit based on market conditions.
Key Features of Coin-Margined Perpetual Contracts
- Cryptocurrency Settlement: Profits, losses, and collateral are calculated in the base crypto (e.g., BTC, ETH).
- Funding Rate Mechanism: Maintains price alignment with spot markets via periodic (usually 8-hour) funding fee exchanges between long/short positions.
- No Expiry: Contracts remain open until manually closed.
- Leverage Trading: Enables amplified exposure (e.g., 10x) with smaller capital.
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Advantages of Coin-Margined Contracts
- Ideal for Crypto Holders
Eliminates stablecoin conversion costs for investors already holding BTC/ETH. - Optimized for Miners/Long-Term Investors
Allows mining rewards or held assets to serve as collateral, with settlements in crypto. - Close Spot Market Correlation
Prices track现货 markets closely, enabling intuitive trend analysis and arbitrage. - Reduced Conversion Fees
Direct crypto usage avoids USDT exchange overheads. - Leverage Opportunities
Magnifies gains (and risks) through borrowed capital.
Risks to Consider
- High Volatility: Crypto-denominated settlements amplify price swing impacts.
- Funding Rate Fluctuations: Frequent fee settlements may affect profitability.
- Liquidation Risks: Over-leveraged positions face forced closures during extreme moves.
Step-by-Step Trading Example
- Select Contract: Choose a BTC/USDT coin-margined perpetual contract on platforms like JuCoin.
- Open Position: Use 1 BTC as collateral to long/short with 10x leverage (=10 BTC exposure).
- Monitor Funding: Pay/receive fees every 8 hours (e.g., -0.01 BTC).
- Close Position: Settle profits/losses in BTC upon exit.
FAQs
Q: How does funding rate work?
A: It balances contract/spot prices by transferring fees between opposing positions periodically.
Q: Is leverage mandatory?
A: No, but it amplifies outcomes (1x = no leverage).
Q: Who benefits most from these contracts?
A: Crypto holders avoiding stablecoin conversions and miners hedging assets.
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