📈Coin-Margined Perpetual Contract
Last updated
Last updated
Zeepr's coin-margined perpetual contract is a digital currency contract product settled in various project currencies. Each contract represents a specific quantity of digital currency (e.g., BTCDOGE contract, where each contract represents 0.1 BTC). Investors can profit from the price movements of digital currencies by taking long positions through buying or short positions through selling contracts. The contract leverage ranges from 1 to 100 times.
Using the BTC/DOGE contract as an example, the elements are as follows:
1.1 Coin-margined perpetual contract for More Intuitive Returns Zeepr's coin-margined perpetual contract settles in project currencies, with a 1:1 correlation to USD. The typical user base consists of hodlers who seek low trading costs and simplicity in calculations.
1.2 Expiry Date Coin-margined perpetual contracts have no expiration or delivery date; they are perpetual.
1.3 Index Price System Zeepr's coin-margined perpetual contracts use the corresponding USD index of the underlying asset.
1.4 Limit Order System Zeepr adjusts the order price range flexibly based on the index price and the previous-minute contract price to prevent malicious trading activities that could lead to forced liquidation without affecting normal order placement.
1.5 Maintenance Margin System
The maintenance margin refers to the minimum margin rate required for users to maintain their current positions. When the margin rate falls below the maintenance margin rate plus the liquidation fee rate, forced liquidation is triggered.
1.6 Funding Cost Mechanism As Zeepr relies on index price execution, there is no divergence in prices, and therefore, Zeepr does not charge funding fees.
2.1. What is Margin? In the digital currency contract market, traders need to deposit a small amount of funds as collateral based on the contract price, which serves as financial assurance for contract execution. This is called digital currency contract margin.
2.2 How is Margin Calculated? Zeepr supports full-margin trading. In full-margin mode, all available funds in the user's account are considered available margin. The initial margin calculation formula is: Initial Margin = Price * Quantity * Conversion Coefficient / Leverage Ratio. The initial margin varies with changes in the trading currency's price.
2.3 Margin and Leverage Relationship Leverage is a common financial trading system, known as the margin system. "Leverage" amplifies the amount a trader can trade but also increases both potential profits and risks.
For full-margin trading, when users open long or short positions of a certain quantity, the initial margin is calculated as: Initial Margin = Position Value / Leverage Ratio.
2.4 Margin Ratio Initial Margin Ratio: 1 / Leverage Ratio Maintenance Margin Ratio: The minimum margin ratio required for users to maintain their current positions. Margin Ratio Calculation Formula: Maintenance Margin / (Account Available + Total Margin + Frozen Margin + Unrealized P&L)
Limit orders are a crucial risk control method to protect investors and prevent market manipulation. Without limit order rules, a small number of traders could use minimal funds and high leverage to create substantial price fluctuations, artificially causing massive liquidations. On the other hand, overly simplistic limit order rules may lead to a lack of market activity, no premium over spot markets, and a loss of meaning in contract trading itself.
The calculation method for the platform's highest bid price and lowest ask price is as follows:
Highest Bid Price = 1.05 * Mark Price
Lowest Ask Price = 0.95 * Mark Price
4.1 Terminology Explanation
Liquidation Trigger Price: When the mark price reaches a certain value, and the user's margin rate is too low, liquidation is triggered.
Bankruptcy Price: The price at which the user's margin rate reaches 0.
Liquidation Takeover Price: When the forced liquidation engine takes over the user's
liquidation position, it does so at the takeover price.
4.2 Liquidation Order Takeover Price When a user's position triggers liquidation and is taken over by the forced liquidation engine, it is immediately liquidated at the index price.
In simple terms, the Dual Liquidity Pool consists of a public pool and a private pool. The public pool serves as a unified reserve liquidity pool, where anyone can provide liquidity as supplementary support. The private pool is reserved for professional market makers and has higher requirements regarding capital strength, quoting ability, and position management.
When users open positions, the system first assigns orders to the private pool (mainly provided by professional institutional market makers), which can carry out external risk hedging. When the private pool lacks liquidity or insufficient order margin triggers liquidation, orders are transferred to the public pool.
In essence, throughout the entire trading process, professional market makers bear the main counterparty risk in the private pool, while ordinary users participating in the public pool provide a final "insurance", resulting in lower risk for them.
