Introduction

Welcome to the Coinlocally Perpetual Contracts Guide — your go-to resource for mastering perpetual futures trading on our platform, where you can capitalize on market movements without the limitations of expiration dates.

A perpetual contract is a type of futures contract that has no expiration or delivery date, allowing it to be held indefinitely. This flexibility enables traders to profit from the price fluctuations of digital assets by taking long (buy) or short (sell) positions based on their market outlook.

Key Features of Perpetual Contracts

1. No Expiration Date

Unlike traditional futures contracts, which settle on a specific date using the average price of the underlying asset in the final hour, perpetual contracts do not expire. They can be held continuously without delivery.

2. Funding Fee Mechanism

To keep the perpetual contract's price aligned with the spot market, a funding fee mechanism is employed. This mechanism anchors the contract price to the market price, ensuring price alignment over time.

3. Mark Price

Perpetual contracts use a mark price to calculate unrealized profit and loss (PnL). This helps minimize unnecessary liquidations caused by temporary price volatility.

4. Real-Time Settlement

PnL is settled every minute, turning unrealized PnL into realized PnL continuously. This real-time settlement enhances capital efficiency and fund utilization.

5. Laddered Maintenance Margin Rate

The maintenance margin rate is the minimum collateral required to sustain an open position. A laddered margin system is applied:

• As a trader's position size increases, the maintenance margin rate increases.

• Consequently, the maximum available leverage decreases with larger positions, managing risk across different exposure levels.

6. Forced Partial Liquidation

Suppose a trader's margin rate falls below the current tier's maintenance margin + closing fee rate but remains above the minimum tier's maintenance margin + closing fee rate. In that case, the system does not fully liquidate the position. Instead:

• A partial reduction is triggered to reduce the position by two tiers.

• If the resulting margin ratio satisfies the lower tier's requirements, the reduction stops.

• If not, the reduction continues until the required margin level is met.

In position mode, the position is frozen during the forced reduction process. In cross margin mode, the entire perpetual contract account is frozen until the reduction is complete.