Coin-margined contracts, also known as reverse contracts, are a type of perpetual contract in cryptocurrency trading. Unlike USDT-margined contracts that use stablecoins (USDT) as collateral, coin-margined contracts require traders to hold the underlying trading currency (e.g., BTC, ETH) as margin.
Key Differences: Coin-Margined vs. USDT-Margined Contracts
| Feature | Coin-Margined Contracts | USDT-Margined Contracts |
|---|---|---|
| Collateral | Trading currency (BTC, ETH, etc.) | Stablecoin (USDT) |
| Payout | Earn in the traded coin | Earn in USDT |
| Risk Exposure | Affected by coin price volatility | Stablecoin value remains consistent |
How Coin-Margined Contracts Work
To trade BTCUSD coin-margined contracts, users must deposit BTC as margin. Profits/losses are calculated in BTC, meaning:
- If BTC price rises, your earned BTC gains additional value.
- If BTC price falls, losses amplify proportionally.
Funding Rate Mechanism
Both contract types use funding rates to tether prices to the现货 (spot) market:
- Positive Funding Rate: Long positions pay short positions.
- Negative Funding Rate: Short positions pay long positions.
Funding fees are exchanged every 8 hours to balance contract and现货 prices, preventing prolonged divergence.
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Who Should Use Coin-Margined Contracts?
- Experienced Traders: Those holding BTC/ETH who understand market volatility.
- Bullish Investors: Benefit from double gains (coin appreciation + contract profit).
USDT-margined contracts are better for:
- Beginners with only stablecoins.
- Traders preferring stable value calculations.
FAQs
1. Can I switch between coin-margined and USDT-margined contracts?
Yes, but you must hold the required collateral (BTC for coin-margined, USDT for USDT-margined).
2. What happens if the funding rate is extremely high?
High rates incentivize arbitrageurs to balance prices, reducing long/short imbalances.
3. How does leverage affect coin-margined contracts?
Higher leverage (e.g., 100x) magnifies both profits and losses. Always manage risk.
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Risk Warning
Cryptocurrency contracts involve high risk. Never invest blindly or follow unverified trends. Start with small positions and prioritize education.
By understanding coin-margined contracts, you can strategically diversify your trading portfolio while mitigating risks. Always stay updated with market trends and platform-specific terms.