In BloFin contract trading, based on the type of margin used, contract products can be divided into coin-margined contracts and USDT-margined contracts. These two types of contracts differ significantly in terms of pricing unit, contract value, margin assets, and profit/loss calculation.
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
Practical Examples: Comparison of Long and Short Scenarios
- 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).
BTC Price Increases by 10% (from 100,000 USD to 110,000 USD)
- 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).
BTC Price Decreases by 10% (from 100,000 USD to 90,000 USD)
- 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.