• A step-by-step guide of How To Trade Vainilla Contract

What is Inverse Contract and Vanilla Contract?

Inverse Contract is calculated by using USD as the base currency and for example, BTC, as the pricing and settlement currency no matter the gain or loss.

Vanilla contract uses a stable coin (USDT) as margin and thus. The vanilla contract is set to use USDT to settle the profit and loss. Each contract has a face value of 0.001 BTC. Traders can long a position to profit from the increase of a digital asset's price, or short a position to profit from the decline of a digital asset's price.

The calculation of margin and P&L of USDT perpetual contract is straightforward. When trading 1 BTC and the price moves by 100 USDT, the profit/loss of the trader will be 100 USDT. The PnL chart of the USDT contracts will be a linear curve.

Benefit of trading in Vanilla Contracts

Due to BTC’s high volatility and its fluctuation in the crypto market, USDT is relatively more stable. By trading in vanilla contracts to settle the profit or loss in USDT, users can avoid potential loss while exchanging to other tokens.

Simple Example (Fees are not included in the following examples):

Inverse Contract (BTC/USD):

Users are required to exchange their holding tokens into BTC for opening order and position. For example:

Purchasing Price (Long): 10,000

Selling Price (Short): 11,000

Profit or Loss: (11,000 - 10,000) = 1,000 USD worth of BTC (approximate to 0.0909 BTC)

A higher volatility may be resulted from the price fluctuation before or after the trade and the cost of trading. If a user would like to hold USDT after closing the position, he or she would need to convert in the spot market from the BTC obtained from the futures position. As a result, the realized profit or loss cannot be determined immediately.

Brand New Vanilla Contract (BTC / USDT):

As long as users are holding USDT as an asset, they can start trading the vanilla contract. Users can use USDT to start trading contracts without needing to convert to BTC first. Take BTC/USDT perpetual contract as an example:

Purchasing Price (Long): 10,000

Selling Price (Short): 11,000

Profit or Loss: [(11,000 - 10,000) / 10,000] = 10%

Through trading in vanilla contracts, the user's profit would simply be 1,000 USDT.

Trading Fees

Minimum Trading Unit:

Trading Unit: 1 Contract = 0.001 BTC

Minimum Trading Unit: 1 Contract

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