BloFin Coin-Margined Contracts vs USDT-Margined Contracts

Key Differences

Pricing Units

• Coin-Margined Contracts: Priced in USD (US Dollars). For example, the BTCUSD contract index price is based on the spot price of BTC against USD.
• USDT-Margined Contracts: Priced in USDT. For example, the BTCUSDT contract index price is based on the spot price of BTC against USDT.

Contract Value

• Coin-Margined Contracts: Each contract has a fixed value in USD. For instance, the BTCUSD contract has a face value of 50 USD.
• USDT-Margined Contracts: Each contract has a fixed value in the base currency (e.g., BTC). For instance, the BTCUSDT contract has a face value of 0.001 BTC.

Margin Assets

• Coin-Margined Contracts: Use the underlying cryptocurrency as the margin asset. For example, trading BTCUSD contracts requires BTC as margin.
• USDT-Margined Contracts: Use USDT as the margin asset. Holding USDT allows participation in all types of contracts.

Profit and Loss Calculation

• Coin-Margined Contracts: Profits and losses are calculated in the underlying cryptocurrency. For example, BTCUSD contract profits and losses are expressed in BTC.
• USDT-Margined Contracts: Profits and losses are calculated in USDT. For example, BTCUSDT contract profits and losses are expressed in USDT.

Initial Conditions

• BTC current price: 100,000 USD
• Leverage: 10x
• Face value of USDT contract: 0.001 BTC
• Face value of coin-margined contract: 1 USD

Long Scenario

• Coin-Margined Contract: Use 0.05 BTC as margin to go long 0.5 BTC (50,000 contracts, each with a face value of 1 USD).
• USDT-Margined Contract: Use 5,000 USDT as margin to go long 0.5 BTC (500 contracts, each with a face value of 0.001 BTC).

• Coin-Margined Contract:
  • Profit = (1 / Entry Price - 1 / Exit Price) × Contract Face Value × Number of Contracts
  • Profit = (1 / 100,000 - 1 / 110,000) × 1 × 50,000 = +0.04545454545 BTC
  • Converted to USD: 0.04545454545 × 110,000 = 5,000 USD.
  • Collateral Appreciation: 0.05 × (110,000 - 100,000) = 500 USD.
  • Total Profit: 5,500 USD
• USDT-Margined Contract:
  • Profit = (Exit Price - Entry Price) × Contract Face Value × Number of Contracts
  • Profit = (110,000 - 100,000) × 0.001 × 500 = 5,000 USDT
• Results Comparison:
  • Coin-Margined Contract: Profits are expressed in BTC, and the USD equivalent increases with the price rise.
  • USDT-Margined Contract: Profits are expressed in USDT and increase linearly.

Short Scenario

• Coin-Margined Contract: Use 0.05 BTC as margin to short 0.5 BTC (50,000 contracts, each with a face value of 1 USD).
• USDT-Margined Contract: Use 5,000 USDT as margin to short 0.5 BTC (500 contracts, each with a face value of 0.001 BTC).

• Coin-Margined Contract:
  • Profit = (1 / Exit Price - 1 / Entry Price) × Contract Face Value × Number of Contracts
  • Profit = (1 / 90,000 - 1 / 100,000) × 1 × 50,000 = +0.05555555555 BTC
  • Converted to USD: 0.05555555555 × 90,000 = 5,000 USD.
  • Collateral Loss: 0.05 × (90,000 - 100,000) = -500 USD.
  • Total Profit: 4,500 USD
• USDT-Margined Contract:
  • Profit = (Entry Price - Exit Price) × Contract Face Value × Number of Contracts
  • Profit = (100,000 - 90,000) × 0.001 × 500 = 5,000 USDT
• Results Comparison:
  • Coin-Margined Contract: Profits are expressed in BTC, and the USD equivalent decreases with the price drop.
  • USDT-Margined Contract: Profits are expressed in USDT and increase linearly.

Usage Scenarios

• Coin-Margined Contracts: Profits are convex. As the price increases, profits rise at an accelerating rate. This makes them suitable for bull markets.
• USDT-Margined Contracts: Profits are linear, directly proportional to price changes. This makes them suitable for bear markets.

Usage Recommendations:

• Bull Market Trend: Go long on coin-margined contracts to maximize returns.
• Bear Market Trend: Go short on USDT-margined contracts for stable and predictable profits.
• Short-Term Market Fluctuations: Choose contracts based on the market direction (e.g., coin-margined for upward trends, USDT-margined for downward trends).
• User Types:
  • Miners or Long-Term Crypto Holders: Coin-margined contracts are ideal, as they use the held cryptocurrency as collateral and generate more crypto-based profits.
  • Fiat-Based Users: USDT-margined contracts are simpler, with lower trading costs and clearer profit calculations.

Summary

• Both coin-margined and USDT-margined contracts have their advantages and disadvantages. BloFin offers a variety of contract types to meet the trading needs of different users, regardless of market conditions.