A Perpetual Swap Contract is an innovative derivative product. It trades like spot, tracking the underlying Index Price closely. It is also very similar to traditional Futures, but it doesn’t have an expiry date, so there is no settlement. 7x24 trading allows traders to open a position or close a position whenever they like to.
Perpetual Swap Contracts trade close to the underlying reference Index Price. The primary mechanism to track spot price is Funding.
In Coinstore, the following concepts need to be noted:
1.Mark price: in order to avoid market manipulation and ensure that the price of the perpetual contract matches the spot price, we use mark price to calculate the unrealized profit and loss of all traders.
2.Initial margin and maintenance margin: traders should be familiar with initial margin and maintenance margin, especially maintenance margin. Once the position margin of the user is lower than the maintenance margin, the system will start liquidation.
3.Funding rate: the perpetual contract has the Funding rate, and the buyer and the Seller shall calculate funding fee every 8 hours. If the funding rate is positive, long positions will be paid, and the short positions will receive the funding fee; If the rate is negative, the short position will be paid, and the long positions will receive the funding fee（ Only if the net position of the user when settling funding fee is not 0, the funding fee will be paid or received).
4.Funding fee settlement time: UTC-0 00:00(GMT+8 08:00) ,UTC-0 0800(GMT+8 16:00) ,UTC-0 16:00 (GMT+8 24:00) .
Tip: traders can check the estimated funding rate of the next period and the current funding rate on the trading page.
5.Risk: different from the spot market, the contract market allows traders to trade and hold more than their margin, that is, there is a leverage mechanism.
The parameters of Coinstore perpetual swap contract are as follows: