The Pros and Cons of COIN- & USDT-settlement: How do they impact your returns?

Monday 21 September 2020, 1:42 PM AEST - 1 month ago

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Binance Futures offers one of the most comprehensive range of derivatives in the industry with over 85 products across four categories. Currently, the futures product line consists of two types, COIN-margined, and USDT-margined futures contracts. The USDT-margined product line is our first flagship product that was first introduced in September 2019. Our second flagship product line, the COIN-margined futures, was just introduced recently in Q2 FY20.

In this article, we shall compare the two futures products and analyze how different settlement methods can benefit you and possibly maximize your returns in the long-run.

Throughout the article, we will refer to COIN-& USDT-settled contracts as COIN- & USDT-margined contracts interchangeably.

Contract Specifications

To begin, we shall first compare the contract specifications of both USDT-margined and COIN-margined products.

COIN-margined contractsUSDT-margined contractsMarginCryptocurrency (i.e. BTC, ETH)USDTMargin TypeIsolate/CrossIsolate/CrossSettlementYesNoCross CollateralNoYes

COIN-margined contracts on Binance offer the following characteristics:

  • Settlement in cryptocurrency: contracts are denominated and settled in underlying cryptocurrency, this eliminates the need to hold Stablecoins as collateral.
  • Contract Multiplier: Contract multiplier represents the value of a contract. Each BTC contract represents 100 USD, while others, each contract represents 10 USD. For example, 1,000 USD of BTCUSD Quarterly 1225 (100 USD x 10 contracts) and 1,000 USD of ETHUSD Quarterly 1225 (10 USD x 100 contracts).
  • Expiration: Perpetual, Quarterly, and Bi-Quarterly

Meanwhile, USDT-margined contracts offer the following characteristics:

  • Settlement in USDT: contracts are denominated and settled in USDT. A versatile settlement currency across the USDT-margined futures product line.
  • No expiration date: you can hold positions without an expiry date and do not need to keep track of various delivery months, unlike traditional futures contracts.

Clear pricing rules

: each futures contract specifi ...

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