USDT-margined contracts, also known as "U本位合约" in Chinese, refer to derivative contracts that use USDT (Tether) as collateral. These contracts utilize USDT as the margin and settlement currency throughout the entire trading process—from opening positions to final delivery.
Key Features of USDT-Margined Contracts
- USDT as Universal Unit: All calculations (profits, losses, margins) are denominated in USDT.
- Multi-Currency Trading: Enables trading of BTC, ETH, and other cryptocurrencies without holding the underlying assets.
- Simplified Settlement: Eliminates volatility concerns associated with holding volatile base currencies (e.g., BTC in BTC-margined contracts).
Understanding USDT-Margined Contract Fees (Binance Example)
Exchange fees vary, but here's how Binance structures costs for USDT-margined contracts:
Funding Fee Calculation
Funding Fee = Position Notional Value × Funding RateWhere:
- Position Notional Value = Mark Price × Contract Quantity
- Funding Rate = Premium Index (P) + Clamp(0.01% - P, -0.05% to 0.05%)
Components of Funding Rate:
- Interest Rate (I): Fixed at 0.01% per funding interval (0.03% daily)*.
Premium Index (P): Balances perpetual contract prices with spot prices:
P = [Max(0, Impact Bid Price - Mark Price) - Max(0, Mark Price - Impact Ask Price)] / Spot Price*Excludes LINK/USDT, LTC/USDT, and BNB/USDT pairs.
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USDT-Margined vs. Coin-Margined Contracts
| Aspect | USDT-Margined | Coin-Margined |
|---|---|---|
| Collateral | USDT only | Underlying crypto (e.g., BTC for BTC contracts) |
| Settlement | Profits/losses in USDT | Profits/losses in the contracted coin |
| Stability | More predictable due to USDT peg | Exposed to base currency volatility |
| Use Case | Preferred for short-selling or neutral strategies | Ideal for long-term bullish holdings |
FAQs
Q: Why choose USDT-margined contracts over coin-margined?
A: They reduce volatility risk and simplify profit tracking, especially in bear markets.
Q: How often are funding fees charged?
A: Typically every 8 hours, but check your exchange’s schedule.
Q: Can funding rates be negative?
A: Yes, negative rates mean shorts pay longs—common during extreme bearish sentiment.
Q: Are USDT-margined contracts safer?
A: They mitigate currency fluctuation risks but still carry leverage-related dangers.
Risk Management Tips
- Monitor Funding Rates: High rates may indicate overcrowded positions.
- Diversify Strategies: Combine USDT and coin-margined contracts to hedge risks.
- Leverage Cautiously: Even stable USDT won’t prevent liquidation during high volatility.
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Conclusion
USDT-margined contracts offer stability by tethering all transactions to a fiat-pegged asset. While fees vary across exchanges, understanding mechanisms like funding rates empowers traders to optimize costs. Whether choosing USDT or coin-margined contracts, prioritize risk management and align strategies with market conditions.
Note: Always verify fee structures with your exchange, as policies may update periodically.