Perpetual Contracts

What is a Perpetual Contract?

A perpetual contract is a product similar to a traditional futures contract in how it trades, but does not have an expiry date, so you can hold a position for as long as you like. Perpetual contracts trade like spot, tracking the underlying asset index price closely.

The features of a perpetual contract are:

  • Expiry Date: A perpetual contract does not have an expiry date
  • Market Price: the last buy / sell price
  • Underlying Asset of each contract is:  1/1000th of the corresponding digital currency
  • PnL Base: All PnL can be settled in USD / USDT / USDC / BTC / ETH 
  • Leverage: Allows you to enter a futures position that is worth much more than you are required to pay upfront. Leverage is the ratio of the initial margin to the order value of a contract
  • Margin: Funds required in order to open and maintain a position. You can use both fiat and digital assets as your margin.
    • The price of your digital asset margin is calculated based on an executable market price that is representative of your asset quality and market liquidity. This price may differ slightly from the prices you see on the spot market
  • Liquidation: When the mark price reaches your liquidation price, the liquidation engine will take over your position
  • Mark Price: Perpetual contracts use the mark price to determine your unrealized PnL and when to trigger the liquidation, partial liquidation, or forced market buy/sell process
  • Funding Fees: Periodic payments exchanged between the buyer and seller every 1 hour

What is Mark Price?

 Mark price is weighted from the index price; its main purposes are:

  • To calculate the unrealized PnL
  • To determine if liquidation, partial liquidation, or forced market buy/sell occurs
  • To avoid market manipulation and unnecessary liquidation, partial liquidation, or forced market buy/sell

What are the differences between Market Price, Index Price and Mark Price?

  • Market Price: The last price at which the asset was traded
  • Index Price: The weighted average of the asset price based on Bitfinex/Bitstamp/Bittrex/Coinbase Pro/Krac
  • Mark Price: The price is used to calculate the unrealized PnL and the liquidation price of the perpetual contract

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