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.

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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.