OKX offers both crypto-margin futures and U-margin futures (USDT-margin and USDC-margin). Here’s a detailed breakdown of their differences:
1. Pricing Currency
The pricing currency significantly impacts the price index of each contract type:
- U-Margin Futures: Use stablecoins (USDT/USDC) for pricing. For example, BTC/USDT perpetual futures reference the OKX BTC spot price converted to USDT.
- Crypto-Margin Futures: Use USD for pricing. BTC/USD perpetual futures reference the OKX BTC spot price converted to USD.
2. Contract Size
- U-Margin: Denominated in the base currency (e.g., 0.01 BTC per BTC/USDT contract).
- Crypto-Margin: Denominated in USD (e.g., $100 per BTC/USD contract).
3. Margin Requirements
- U-Margin: Requires USDT or USDC as collateral.
- Crypto-Margin: Requires the underlying crypto (e.g., BTC for BTC/USD contracts).
4. Settlement
- U-Margin: Profits/losses calculated in USDT/USDC.
- Crypto-Margin: Profits/losses settled in the underlying crypto (e.g., BTC).
Profit Dynamics: Linearity vs. Convexity
- U-Margin: Linear growth tied to USD stability.
- Crypto-Margin: Convex growth due to crypto’s price volatility.
Strategic Implications:
- Bull Markets: Crypto-margin longs amplify gains.
- Bear Markets: U-margin shorts hedge risks.
- Crypto-margin carries higher downside risk if the crypto asset depreciates.
FAQs
Q1: Can I trade both margin types in one account?
Yes, OKX supports simultaneous trading of both types.
Q2: Which margin type is better for beginners?
U-margin (USDT/USDC) is simpler due to stablecoin pricing.
Q3: How does leverage differ between the two?
Leverage ratios are similar, but risk exposure varies with the margin asset’s volatility.
Trading Account Modes
- Cross-Margin: Balances risk across positions (differences apply only here).
- Isolated Margin: Segregates funds; no mode-based differences.
Derivatives Trading Basics
What Are Crypto Derivatives?
Agreements to buy/sell assets at future dates/prices. Types include:
- Expiry Futures: Fixed settlement dates.
- Perpetual Futures: No expiry (positions can remain open indefinitely with sufficient margin).
For advanced strategies, see our guide on Perpetual vs. Expiry Futures.