Introduction of Huobi Coin-Margined Swaps

Introduction

Huobi Coin-margined Swaps are a kind of digital currency derivatives. Users can make a profit from the rising/falling of digital currencies prices by going long or selling short based on their own judgment. Similar to a margin spot market, its price is close to the price of the underlying reference index. The main mechanism for anchoring spot prices is the cost of funds. Coin-margined Swaps have no delivery date. Users can always hold it. Coin-margined Swaps are settled every 8 hours. After each settlement, the realized profit/loss and unrealized profits/losses are transferred to the user account balance.

 

Mechanism

  • Margin ratio and liquidation:

Margin Ratio = (Equity Balance / Used Margin) * 100% - Adjustment Factor

When margin ratio less than or equal to 0%, forced liquidation will be triggered.

  • Funding:The buyer and seller pay the fee periodically every 8 hours. If the funding rate is positive, long positions will pay the funding and short positions will get it; if the funding rate is negative, short positions will pay the funding and long positions will get it. (Only when the user's net position at the settlement funds is not 0, the funding or payment is required).
  • Settlement funds time(GMT+8):00:00, 8:00, 16:00.

 

Difference of Futures contract and Perpetual Swap

  • Perpetual Swap has no expiration date and will not be delivered;
  • Perpetual swap only has one contract per variety, there is no Weekly, Bi-weekly, Quarter and Bi-quarter;
  • Perpetual normally settles 3 times a day with a period of 8 hours,Futures will settle every day at 16:00 (GMT+8), the cycle is 24 hours, and on every friday,the weekly-futures will be delivered at 16:00 (GMT+8) .
  • Because there is no delivery date limit, perpetual swap can avoid repeated opening steps due to delivery, avoid misleading market conditions, and avoid funding caused by repeated opening of positions;
  • Perpetual swap will collect the funding from the long / short position user and return it to the short / long position user according to the positive / negative of the funding rate.;
  • Perpetual swap has no trading time limit and can open and close positions at any time,Futures Contract can close the position save can`t open the position before delivery 10 minutes.

 

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