CoinEx offers both linear contracts and inverse contracts as derivatives in futures trading.
Understanding the Basics
1. Linear Contracts
Linear contracts, also known as "USDT-margined contracts", are denominated, settled, and margined in USDT or other stablecoins.
For CoinEx's BTCUSDT linear contracts, the market price, position profit and loss (PNL), and margin are all denominated in USDT.
For example, if you hold a 1-BTCUSDT contract and the price of BTC increases by $1,000, your profit is $1,000. Conversely, if the price drops by $1,000, your loss is $1,000.
Since linear contracts use stablecoins like USDT for settlement, both margin and PNL are denominated in USDT.
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2. Inverse Contracts
Inverse contracts, also known as "Coin-margined contracts", are denominated in USD but settled and margined in the underlying cryptocurrency.
For CoinEx's BTCUSD inverse contracts, the market price is denominated in USD, but the margin and PNL are denominated in BTC.
For example, the pricing unit of an inverse contract is “cont” (short for contract), and the value of 1 cont is 1 USD. That is, 100 USD of a BTCUSD contract position = 1 USD x 100 cont.
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Key Differences Between Linear and Inverse Contracts
| Contract type |
Linear Contract (e.g., BTCUSDT) |
Inverse Contract (e.g., BTCUSD) |
| Trading coin | BTC | |
| Expiration | Perpetual | |
| Margin mode | Cross/Isolated | |
| Margin coin | Stablecoin (USDT) | Underlying asset (BTC) |
| Pricing coin | Stablecoin (USDT) | USD |
| Settlement currency | USDT | BTC |
| Contract value | 1 BTC | 1 USD |
Scenarios and Advantages
| Contract type |
Linear Contract (e.g., BTCUSDT) |
Inverse Contract (e.g., BTCUSD) |
| Market scenario | Hedging against bearish marketsMulti-asset rotation | Leverage strategy in bullish marketsHedge for long-term holders |
| Target investors |
1. Ordinary investors who prefer pricing in fiat currencies. 2. Risk-off traders. |
1. Seasoned investors who are willing to hold the underlying assets in the long run. 2. Investors who can withstand market volatility for income |
| Core advantages |
1. Plain PNL calculation: Profits and losses are denominated in USDT, making calculations straightforward in fiat currencies. 2. Stable value: Margined with USDT, reducing exposure to price volatility and isolated from underlying asset volatility. 3. Flexibility: Using USDT for trading across various contract markets, no need for asset conversion. |
1. Indigenous cryptocurrency market: No sensitivity to the credit risk of stablecoin issuers. 2. Hedge against inflation: In bullish markets, investors can increase their positions while hedging their spot positions with inverse contracts. They don’t need to convert their coins into USDT. 3. Capital accumulation: Settled and denominated in cryptocurrency, inverse contracts are ideal for long-term holders and miners who tend to hold their income for capital accumulation. |
Risk Reminders
1. Linear contracts are highly exposed to the redemption of stablecoin issuers (e.g., the risk of USDT de-anchoring).
2. When the underlying asset of the inverse contract experiences a sharp decline, the margin could depreciate significantly faster than anticipated.
3. The above content is for reference only. Please assess your risk tolerance and the market situation before engaging in futures trading.