USDⓈ-Margined | Coin-Margined Futures Contracts

Note: USDⓈ-margined futures are also called forward contracts, and coin-margined futures are also called reverse contracts. It is difficult to understand reverse contracts, which can be understood by comparing parameters.

Introduction

USDⓈ-margined futures contract

USDⓈ-margined futures, also known as forward contracts, is a contracts with stablecoins (such as USDT, BUSD, and USDC) as the quote and settlement currency.

Coin-margined futures contract

Coin-margined futures, also known as inverse contracts, are contracts that use USD as the quote currency and the underlying currency (such as BTC, ETH, and LTC) as the settlement currency.

Parameter comparison

	USDⓈ-M (forward)	Coin-M (inverse)
Contract Name	BTCUSDT	BTCUSD
Underlying Currency	BTC/USDT	BTC/USD
Index Price	BTC/USDT	BTC/USD
Pricing Currency	USDT	USD
Margin Currency	USDT	BTC
Revenue Currency	USDT	BTC
Contract Size	1 Cont. = 0.0001 BTC	1 Cont. = 1 USD
Order Quantity	n Cont. = 0.000n BTC	n Cont. = n USD
Position Value	= Cont. * size * opening price Unit：USDT	= Cont. * size / opening price Unit：BTC
Initial Margin	= Cont. * size * opening price / leverage Unit：USDT	= Cont. * size / opening price / leverage Unit：BTC
Profit Calculation (long positions)	= (Closing price - opening price) * Cont. * size Unit：USDT	(1/opening price - 1/closing price) * Cont. * size Unit：BTC
Profit Calculation (short position)	= (Opening price - closing price) * Cont. * size Unit：USDT	= (1/closing price - 1/opening price) * Cont. * size Unit：BTC

A way of understanding reverse contracts

We can observe that the price in the reverse contract uses 1 / price, which can be understood as the price of USD/BTC, that is, 1 USD = 0.000x BTC.

If we put aside our daily concepts and swap the two currencies, for example, BTC is a fiat currency or stablecoins that people used every day, and USD is a digital currency. In this way, compared with forward contracts, we are trading USD/BTC. The quote currency BTC is used, and the size is also 1 USD. The number of positions opened is n USD, and the profit calculation also uses the forward contract (closing price - opening price) * Cont. * size, because the price = USD / BTC = 1 / (BTC/USD).

In this way, we are actually trading the USD/BTC forward contract, but this is not easy for users to understand, so we trade the price of BTC/USD in reverse, that is, the reverse contract.