Beginner’s Guide To Standard Contract| Product Series II
What is the Standard Contract?
Standard contract (former name: digital contract, perpetual contract) is one of the three major contract products of 58COIN, with the most typical feature of using holding currency as both the quote and trading unit.
The standard contract does not have an expiry and thus do not have a settlement and delivery. The index price is taken from multiple exchanges and is the key indicator for calculating the floating profit and loss and determining the position risk.
It supports two-direction transactions and supplies 2x, 3x, 5x, 10x, 20x, 33x, 50x, and 100x leverages, fitting the needs of investors of various risk preferences.
How to make a profit by using Standard Contract?
Since the standard contract features for using the holding currency as both the quote and trading unit. Investors should hold a currency if seek to make a profit on such currency. The profit-making logic is “Appreciate in the bull market, hoard in a bear market”, if the bull market arrives, with the rise of the currency price, the value of digital assets will continue to rise; if the bear market comes, you can hoard the currency and wait for the bull market to appreciate.
For example, Tom has a BTC, and recently, the price of bitcoin has been falling. He wants to hoard more bitcoins, so he chooses to trade the standard contract. When the price reaches $10,000, he shorts 100 BTC positions and closes the position when the price falls to $9,000. Excluding the fees, how many bitcoins does Tom have?
Let’s make a brief analyze. Tom sold 100 BTCs at $10,000, and bought 100 BTCs at $9,000, earning $1,000 per coin, $1,000*100 = $100,000 in total. The current price of bitcoin is $9,000, so he earned 100,000/9,000=11.11 BTC, from 1 BTC to 11.11 BTCs, a 11 times turn of his original assets.
It can also be calculated by the system’s return calculator. Shown below:
Advantages of the Standard Contract
Low Fee, No Funding Fees. The transaction fee of 58COIN’s standard contract is the lowest in the industry, taker 0.02% (ETC, DASH 0.03%) and maker 0.03%. Moreover, there are no funding fees, while the perpetual contract of most other exchanges is set up with funding fees. Buyers and sellers pay and receive funding fees two or three times throughout the trading day: if the rate is positive, then the longs will pay to the shorts; if the rate is negative, then the shorts will pay to the longs. If a user holds a position for a long time, he may suffer the risk of paying funding fees. At 58COIN, users do not need the worry about the funding fees and thus can hold the position at a long time as they want.
Multiple Leverage Choices. The standard contract offers 2x, 3x, 5x, 10x, 20x, 33x, 50x, and 100x leverages to users, fitting the needs of various investors of different risk preferences. For example, if you prefer high risk and high earnings, then you can catch the chance and use a 100x leverage, maximizing the assets.
Index Mechanism, No Market Manipulation. The index mechanism was first launched by 58COIN in Asian regions. Index price, the key indicator of the index mechanism, is the weighted average of spot prices taken from Huobi Pro and Binance, representing the reasonable price of BTC and ETH in the global spot market and serving as the key indicator for calculating the unrealized profit and loss and judging the position risk. Other exchanges use the last price in the market as the liquidation price indicator, which is prone to market manipulation, causing users to suffer unnecessary losses.