Perpetual
At LN Exchange, you can trade two types of perpetual contracts: USDT-margined and ALTCOIN-margined.
These contracts allow you to trade on the price movements of crypto assets like Bitcoin, with or without leverage, and without an expiration date.
USDT-M Perpetual Contracts
Also known as Linear Pepertual
In USDT-margined perpetual contracts, you use USDT as collateral. This means your profit and loss (PnL) is also settled in USDT. It’s a simple type of contract, where everything — from the collateral to the payout — is in USDT. This makes it easy to track how much you’ve gained or lost based on the price of the asset in USDT.
Example: You trade a BTC-USDT perpetual contract using USDT as collateral.
If Bitcoin goes up and you’re in a long position, your profit is settled in USDT. If the price goes down and you’re in a short position, your loss is also calculated in USDT.
ALTCOIN-M Perpetual Contracts
Also known as Quanto Perpetual
In ALTCOIN-margined perpetual contracts, you use an ALTCOIN (like BURGER) as collateral, but you’re still trading contracts based on the price of another asset like Bitcoin (in USDT). The unique thing is that even though the trade is based on Bitcoin’s price in USDT, your profit or loss is settled in the ALTCOIN you used as collateral.
This setup allows you to use other cryptocurrencies to trade, without worrying about how the collateral’s price changes during the trade.
Example: You open a BURGER-BTC-USDT contract. BURGER is used as the collateral. Your profit or loss will be settled in BURGER based on how Bitcoin’s price moves in USDT, but you don't have to worry about BURGER's price fluctuations during the trade.
Let’s break this down with a simple example:
Scenario:
You open a BURGER-BTC-USDT perpetual contract where the notional size is based on BTC.
Underlying Asset: BTC
Settlement or Collateral Currency: BURGER
Bitcoin Multiplier or Contract Size = 0.01 (varies by the underlying asset & settlement or collateral currency)
1 contract size = 0.01 BTC or ( 0.01 × BTC price ) BURGER
You enter a long position on BTC when BTC = 50,000 USDT.
At the time of opening the trade, 1 BURGER = 1 USDT, so the contract size in BURGER is 0.01 × 50,000 = 500 BURGER per contract.
After the Trade:
BTC’s price increases from 50,000 USDT to 60,000 USDT (a 20% increase).
Calculating Profit:
Contract Size in BURGER: At the new BTC price of 60,000 USDT, the contract size in BURGER changes to: 0.01 × 60,000 = 600 BURGER per contract.
Profit in BURGER: Your profit is based on the increase in the contract size in BURGER due to the BTC price change: PnL in BURGER = ( New contract size − Old contract size ) × Number of Contracts. PnL in BURGER = ( New contract size−Old contract size ) × Number of Contracts. If you have 1 contract, the PnL would be:
PnL in BURGER = ( 600 − 500 ) = 100 BURGER.
Thus, with the 0.01 BTC multiplier, and given the 10,000 USDT increase in BTC price, your profit would be 100 BURGER per contract. If you hold multiple contracts, this profit scales accordingly.
Why BURGER Price Doesn’t Matter During the Trade:
Even if BURGER’s price fluctuates during the trade, the calculation of profit or loss is always based on BTC’s price in USDT.
Key Benefits
Collateral
USDT
ALTCOIN
Max Leverage
20X - 100X
20X
Transparent PnL
PnL tied to COIN price, settled in USDT
PnL tied to COIN price, settled in ALTCOIN
Risk from Collateral Volatility
No risk of liquidation from USDT depeg.
No liquidation risk from ALTCOIN price fluctuations.
Expiration
No expiry
No expiry
When engaging in perpetual contract trading, traders must grasp several mechanics of the futures market.
Key components traders should understand
⚡Multiplier
This indicates the value of one contract. You can find this information in the Contract Specifications for each instrument.
⚡Position Marking
Perpetual contracts follow the Fair Price Marking method. The mark price determines Unrealised Profit and Loss (PNL) as well as liquidations.
⚡Initial and Maintenance Margin
These margins are pivotal as they determine the level of leverage available for trading and the threshold for liquidation.
⚡Funding
Funding occurs every 8 hours. Any position held in a perpetual swap during this period will either pay or receive funding. Traders can monitor the current funding rate for a contract in the "Contract Details" section at the bottom left of the Trade tab. Additionally, historical rates can be found in the Funding History or in the individual "Contract Specifications".
⚡Symbol
A symbol in trading identifies a specific financial instrument, combining both a base currency and a quote currency. BTC/USD indicates the price of one Bitcoin quoted in US dollars.
Understanding these components is essential for effective and informed trading in perpetual contracts. Below outlines the comparison of the three support payout types:
Description
The price of a linear contract is expressed as the price of the underlying against the base currency.
A quanto contract is a derivative instrument where the underlying asset is denominated in one currency (COIN), but the contract itself is settled in another currency (COIN2) at a predetermined rate.
These contracts are structured to simplify trading and comprehension. However, it's important to note that when trading Quanto Perpetuals, your underlying margin and Profit and Loss (PNL) are denominated in COIN2. Despite the underlying and quote currencies not being COIN2, traders are still exposed to COIN/USD price risk.
Who is it for?
Traders who seek to take either long or short positions on COIN relative to USDT.
Traders who seek exposure to other COIN in dollars relative to COIN2.
Price / Symbol
COINUSDT
COINUSD
Underlying
COINUSDT
COINUSD
Quote Currency
USDT
USD
Examples
BTCUSDT
BTCUSD
Multiplier / Contract Size (could be in smaller or bigger sizes than 1 COIN or 1 USD)
USDT per COIN
COIN2 per 1 USD
COIN Value per contract
Price * Multiplier
USD Value / COINUSDT Price
COIN2 Value per contract
-
COINUSD Price * COIN2 Multiplier
USDT or USD Value per contract
Price * Multiplier
COIN2 Value * COIN2 Spot Price
Margin / PnL Currency PnL Calculation
Quote Currency or USDT # Contracts * Multiplier * (Exit Price - Entry Price)
COIN2 # Contracts * Multiplier (in COIN2) * (COINUSD Exit Price - COINUSD Entry Price)
Last updated
