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Introduction to Perpetual Swap

BitMart Futures is a futures trading market, specifically a market for perpetual swaps, offered per the Terms and Conditions for BitMart Futures Market. 
Below is the [Introduction] for BitMart Futures:

 

The Perpetual Swap refers to a kind of derivative that is similar to a traditional future and can provide high leverage. It differs from traditional futures in the following aspects:

  • No delivery date: perpetual swap doesn’t have an expiration time, so it doesn’t any limit on position-holding duration.
  • Anchored spot market: in order to guarantee to track the underlying price index, the perpetual swap ensures that its price follows the price of an underlying asset through the mechanism of funding cost.
  • Reasonable price marking: perpetual swap adopts a reasonable price marking method to avoid forced liquidation due to a lack of liquidity or manipulation of the market.
  • Auto deleveraging (ADL) mechanism: perpetual swap uses the ADL mechanism instead of the account sharing mechanism to deal with the losses caused by force liquidation of big positions.

 

Difference Between a Perpetual Swap and a Traditional Futures

Item Perpetual Swap Traditional Futures
Margin USDT, monetary base Monetary base
Settlement Date No Specific date per week, month, quarter, etc. 
Leverage 1-125x 20x at most
Loss Mechanism ADL mechanism Shared by all accounts
Forced Liquidation Price Reasonable price index Last trading price
Price Equilibrium Mechanism Funding cost rate Regular delivery

 

Market Mechanism of Perpetual Swap

Traders need to understand several mechanisms of the perpetual market when trading a perpetual swap. They should pay attention to the following key parts:

  • Position marking: perpetual swap adopts reasonable price marking Marked price determines unrealized profit/loss and force liquidation price.
  • Initial margin: The initial margin decides the leverage that you can use to open a position.
  • Maintenance margin: The maintenance margin is the margin level required to maintain the minimum level of your position.
  • Funding cost: buyers and sellers pay funding costs regularly, i.e. every 8 hours. If the rate is positive, long positions pay funding costs to short positions. If the rate is negative, short positions pay funding cost to long positions.

 

*You only need to pay or collect funding costs if you hold a position at funding timestamp.

The timestamp of funding cost:

UTC 00:00, UTC 08:00, and UTC 16:00

 

 

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