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The difference between crypto and U-margined futures

OKX Learn
OKX Learn
Published on Jul 14, 2023
Updated on Apr 25, 2024
3 min read

OKX offers both crypto-margined and U-margined (USDT-margined and USDC-margined) futures products. They're different in terms of:

Quote currency

One important difference is the quote currency, which affects the price index of crypto-margined vs. U-margined pairs. For example, a U-margined BTC/USDT perpetual futures uses the price of OKX spot BTC converted to USDT. Meanwhile, a crypto-margined BTC/USD perpetual futures uses the price of OKX spot BTC converted to USD.

Face value

The face value of a contract is the amount of asset that's being traded per contract. The face value of U-margined futures depends on the underlying quote currency. For example, BTC/USDT contract have a face value of 0.01 BTC each, meaning the face value of crypto-margined futures will be in USD. For example, BTC/USD contract have a face value of 100USD each.

Margin

All U-margined perpetual futures use the quote currency USDT/USDC as margin, which allows you to make perpetual futures trades with USDT or USDC assets. For a crypto-margined perpetual futures, you'll need to hold the corresponding cryptocurrency assets as margin. Using the BTC/USD contract as an example, you'll have to deposit or transfer BTC as margin before being able to trade.

Settlement

U-margined futures use the quote currency USDT or USDC to calculate profit and loss (PnL), while crypto-margined contracts use the corresponding cryptocurrency to calculate the PnL. For example, a BTC/USD contract PnL will be settled in BTC.

Impact on gains: linear nature vs convexity

U-margined futures growth is linear as the quote currency is in USD, meaning portfolio growth increases by the same proportion of the value of your contract position. Meanwhile, crypto-margined futures growth would show convexity because the underlying crypto asset held also moves relative to your contract position.

Understanding these differences can be used to your advantage, considering different market conditions:

  • You may choose long crypto-margined futures during the bull market to amplify growth, and short U-margined futures during the bear market.

  • There are convex payoff risks in holding crypto-margined futures as users lose more when the market drops. This is because the value of cryptocurrency relative to USD doesn't change in a proportionate amount like stablecoin.

  • Remember, for a crypto-margined futures, you must hold an asset. For U-margined futures, you don't need to hold any crypto assets.

Disclaimer
This content is provided for informational purposes only and may cover products that are not available in your region. It is not intended to provide (i) investment advice or an investment recommendation; (ii) an offer or solicitation to buy, sell, or hold digital assets, or (iii) financial, accounting, legal, or tax advice. Digital asset holdings, including stablecoins and NFTs, involve a high degree of risk and can fluctuate greatly. You should carefully consider whether trading or holding digital assets is suitable for you in light of your financial condition. Please consult your legal/tax/investment professional for questions about your specific circumstances. Information (including market data and statistical information, if any) appearing in this post is for general information purposes only. While all reasonable care has been taken in preparing this data and graphs, no responsibility or liability is accepted for any errors of fact or omission expressed herein. Both OKX Web3 Wallet and OKX NFT Marketplace are subject to separate terms of service at www.okx.com.
© 2024 OKX. This article may be reproduced or distributed in its entirety, or excerpts of 100 words or less of this article may be used, provided such use is non-commercial. Any reproduction or distribution of the entire article must also prominently state: “This article is © 2024 OKX and is used with permission.” Permitted excerpts must cite to the name of the article and include attribution, for example “Article Name, [author name if applicable], © 2024 OKX.” No derivative works or other uses of this article are permitted.
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Quote currency
Face value
Margin
Settlement
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