# Introduction

### **1. Margin Requirements**

In **USDT-margined perpetual contracts**, all contracts across different trading pairs use **USDT** as the **collateral asset**. Users only need to hold USDT to participate in any USDT-standard perpetual contract (e.g., BTC/USDT, ETH/USDT, etc.).

By contrast, **coin-margined perpetual contracts** require users to hold the **underlying cryptocurrency** as collateral. For example, to trade the **BTC/USD coin-margined perpetual contract**, the user must deposit BTC as collateral.

#### **Collateral Risk Comparison**

Due to the difference in margin currencies, the **risk of asset depreciation** during market downturns varies:

* In **coin-margined contracts** (e.g., BTC/USD), if BTC falls in price, users need to provide **more BTC** to maintain their position, exposing them to collateral depreciation.
* In **USDT-margined contracts**, users post **USDT as margin**, which remains stable in value. Therefore, the collateral is **not affected** by the underlying asset's price movements.

***

### **2. Valuation Unit**

* **USDT Perpetual Contracts** are **denominated in USDT**.
* **Coin-Margined Perpetual Contracts** are **denominated in USD**.

#### Example:

* The **BTC/USDT index price** reflects the average BTC price quoted in **USDT** across various exchanges.
* The **BTC/USD index price** reflects the average BTC price quoted in **USD** across exchanges.

### **3. Contract Face Value**

* In **USDT-margined contracts**, the **face value** is based on the **underlying asset**.

  Example:

$$
\text{BTC/USDT Contract Face Value} = 0.001 \text{ BTC}
$$

* In **coin-margined contracts**, the face value is typically quoted in **USD**.

  Example:

$$
\text{BTC/USD Contract Face Value} = $100
$$

### **4. Profit and Loss Settlement Currency**

* For **USDT-margined contracts**, **PnL (profit and loss)** is calculated and settled in **USDT**.
* For **coin-margined contracts**, PnL is calculated and settled in the **underlying asset**.

#### Example:

* In **BTC/USDT**, all profits and losses are realized in **USDT**.
* In **BTC/USD**, profits and losses are realized in **BTC**.


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