What Are Linear Contract and Inverse Contract

CoinEx offers both Linear Contract and Inverse Contract in Futures trading.


What is Linear Contract?

Linear Contract, also known as "USDT-Margined Contract", is priced, settled and margined in USDT or other stable coins. For example, the market price, profit and margin of CoinEx Linear Contract BTCUSDT are calculated in USDT.


What is Inverse Contract?

Inverse Contract, also known as "Coin-Margined Contract", is priced in USD and settled and margined in the underlying cryptocurrency. For example, the market price of CoinEx Inverse Contract BTCUSD is calculated in USD, but the profit and margin are calculated in BTC.

In addition, the price unit of Inverse Contract is "Cont" (Short for contract), and the value of 1 Cont is 1 USD. That is, 100 USD of BTCUSD Contract = 1 USD x 100 Cont.


Differences Between Linear and Inverse Contract

Take Linear Contract BTCUSDT and Inverse Contract BTCUSD for example:

Contract Type Linear (BTCUSDT) Inverse (BTCUSD)
Trading Coin BTC BTC
Pricing Coin USDT USD
Settlement Coin USDT BTC
Contract Value 1 BTC 1 USD
Margin Pricing Coin (USDT) Trading Coin (BTC)
Margin Mode Cross Margin/Isolated Margin Cross Margin/Isolated Margin
Expiration Perpetual Perpetual


Advantages of Linear Contract

1. Linear Contract provides more flexibility. You can use the same settlement coin(USDT) across various futures markets, which eliminated the need to buy the underlying coins to fund futures positions.

2. During market fluctuation, Linear Contract can help reduce the risk of large price swings.

3. With USDT settlement, your returns can be easily calculated in Fiat.


Advantages of Inverse Contract

1. By priced and settled in cryptocurrency, the profits of Inverse Contract can contribute to your long-term stack, especially for miners and long-term holders.

2. When the price rises, you can invest and earn the same cryptos via Inverse Contract. By holding and investing your crypto assets at the same time, you can hedge your positions in the Futures market without converting any of your holdings into USDT.