A Quick Start Guide to USDT Contract
If you wonder about the most popular contract in the cryptocurrency realm, search “58COIN USDT contract” on Baidu, then you’ll find nearly 500,000 results.
Let’s take a look at the details of the USDT Contract.
What is a USDT Contract?
The USDT contract, full named USDT perpetual contract, is actually a kind of perpetual contract. Since the whole contract is running under the framework of the perpetual contract, therefore, it boasts the same features with the standard contract, including the index mechanism, no delivery date, covering loss with the insurance fund, 2x to 100x leverages, low fees and maintenance margin, no funding fee. However, it is important to emphasize that all of the above features are unique to 58COIN except the index mechanism and no delivery date, other platforms will not design in this way.
So, what are the difference between Standard Contract and USDT Contract?
The main difference is that it uses USDT as the general currency for quotes, transactions, and settlement, which means that it is no longer necessary to hold BTC to trade the BTC perpetual contract. As long as you hold USDT, you can trade BTC, ETH, and other currencies type perpetual contracts with it. This design not only simplifies the calculation of profit and loss but also realize value preservation in the bear market due to the stable coin characteristic of USDT. If you are not accustomed to the pricing method of Standard Contract and do not have spare time to read the tape, then the USDT Contract will be the right choice for you.
Differences between Standard Contract and USDT Contract
Compared with the standard contract, the USDT contract inherits most of its design, and several unique designs are worth noting except value preservation and simplified calculation.
1. Two-Direction Positions
Investors can open long and open short of the same currency at the same time, especially in the volatile market. If you do not sure whether to long or short positions, you can open two-direction positions to lock the risk. When the market becomes clear, you can retain the favorable side. This is a feature that the novice player will often use.
2. One Side Margin for Two-Direction Positions
If you hold both long positions and short positions of the same currency, for which, according to the common rules of the perpetual contract, you will have to pay two margins. However, with the USDT contract, you only need to pay the for the side with higher margin. For example, if based on the common rules, a user will need to pay 100 USDT as the margin for one side and 200 USDT for the other side. However, only 200 USDT is required when trading the USDT contract. The most immediate benefit for users is that they can open two positions with one margin.
3. Open Positions with the Unrealized Profit
The unrealized profit is an estimated profit gained by assuming that positions are closed. Although you have not closed those positions in real and got profits from it, this estimated income can be used to open positions, which is equivalent to use future money as the principal to make more money.
For example, if you open long 10 BTC positions at the price of $9,000, when the price rises to $10,000, you earn $10,000, which will be automatically included in the available assets, and all the assets contained can be used to open long/short positions. With $10,000, how many positions can you open under the price of $10,000? If you use a 100x leverage, then it will be 100 BTCs. On other exchanges, the unrealized profit is unavailable, however, at 58COIN, you can use the unrealized profit to open another 100 BTC positions!
Have you found the opening technique in the unilateral market?
4. Use Risk Level to Measure the Risk of Liquidation
Generally, “liquidation price” is the indicator for measuring the risk of liquidation, however, in the USDT contract, risk level is adopted as such indicator for all positions regardless of the coin type, and the liquidation line is 100%. The essence of the one risk level calculation for all positions depends on whether the margin can meet the lower limit of the maintenance margin. The advantage of such design lies in that even if losses occurred in some positions, as long as the profit of other positions is stable and safe enough, then there is a high probability that all positions will be safe.
For novices, not open many positions at the same time is a more secure method. When becoming more experienced, investors can use this mechanism flexibly and it will bring you surprises.
Notably, the maintenance margin of the USDT contract remains the same as the standard contract, the lowest of 0.5% in the industry.
Since USDT contract is a typical contract product that is easy to use, with the knowledge above, you have already stepped into the door of the USDT contract, and it’ll be easy to trade other contract products. If you want to know more about contract products, please continue to follow our contract guide series tutorials. You can join our official community to communicate with more investors.