Perpetual Futures is a financial derivative product launched by BKEX.
In order to help you deepen your understanding, we will introduce the characteristics of perpetual futures, the main difference between perpetual futures and spot trading and traditional futures trading through this article.
What is a perpetual futures?
A perpetual futures is a financial derivative. It has the following two characteristics:
- There is no expiry delivery date for perpetual futures.
- Through the capital rate mechanism, the perpetual futures makes the transaction price of the perpetual futures close to the corresponding spot price.
Types of perpetual futures
The BKEX digital currency trading platform provides forward perpetual futures trading with a leverage of up to 100 times. More perpetual futures trading targets and derivative hedging tools will be launched one after another. Currently, the platform only accepts USDT as margin for all futures transactions, and all products are priced in USDT.
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Difference between spot transaction and futures transaction
Unlike the spot market, the two counterparties of the transaction will not settle immediately, but settle on a clearly agreed future date.
There is a further difference between the perpetual futures market and the spot market, that is, the perpetual futures has no expiry delivery date.
Differences between perpetual futures and delivery contracts
Perpetual futures are similar to futures contracts. The main difference is that perpetual futures have no expiration date or settlement date.
In addition, perpetual futures inherit the characteristics of delivery contracts, especially without the need to deliver the actual commodity, and imitate the behavior of the spot market to reduce the gap between the futures price and the marked price. This is a big improvement over traditional futures (which have a long-term/fixed price difference to the spot price).
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Features of BKEX Perpetual Futures
1. Double price mechanism: increase the difficulty of price manipulation.
Market manipulation is an act of maliciously manipulating transaction prices for personal gain. Such abnormal price fluctuations can lead to malicious liquidation of positions, thus creating a very unfair trading environment. In order to reduce the possibility of malicious manipulation of the market, BKEX uses a double price mechanism to ensure a fair trading environment. Currently, most exchanges use the latest market price as a trigger point for liquidation. However, BKEX uses a reasonable mark price as the trigger point for forced liquidation, rather than the latest market price on the platform. The mark price is calculated in real time with reference to the spot prices of the three major spot exchanges. So, even BKEX has no ability to influence the mark price.
2. Always anchor the spot market price
Another feature of BKEX perpetual futures is that the transaction price is always anchored to the spot market price without huge deviation. Funding costs are an important tool used to ensure this goal. BKEX calculates the funding fee by weighing the long and short trends of perpetual futures transactions on the exchange every 8 hours and other comprehensive factors, and one of the long and short parties pays the other, so as to ensure that the transaction price of the perpetual futures is always anchored to the spot price . Funding fees are generated every 8 hours and are charged at 8:00 am, 16:00 pm, and 24:00 pm every day.
3. Flexible leverage of up to 100x
The spot leverage trading market generally provides 3-5 times leverage, and the borrowing cost is also high. In the futures market, several major trading platforms only provide leverage of 5-20 times. However, BKEX perpetual futures provide up to 100 times leverage, and traders can flexibly adjust after opening positions according to their trading needs. The platform provides a flexible gradient margin system while ensuring the best trading experience for traders.
4. The automatic reduction mechanism ensures the interests of traders
BKEX adopts a complete position crossing mechanism to ensure the interests of traders. This mechanism is used to determine who is responsible for the loss caused by the inability of the position to be traded at a price better than the bankruptcy price when the position is forced to close. Different from the socialized loss sharing mechanism, the losses are shared by all profitable traders. BKEX adopts an automatic reduction mechanism to ensure that the interests of traders are not affected by huge losses caused by a few high-risk speculators. The automatic liquidation system sorts according to the profit percentage and effective leverage of the client’s position. That is, traders with high returns and high leverage will be selected first.
Market Mechanism of Perpetual Futures
Leverage: BKEX provides different leverage levels for different products, and the maximum leverage can reach 100 times. Leverage is determined by the initial margin and maintenance margin levels. They determine the minimum capital a trader needs to open and maintain a position. Leverage is not a fixed multiple, but a minimum margin requirement. You can check the minimum amount of initial margin and maintenance margin on the risk limit document page.
Opening value: average opening price * opening quantity
Holding value: opening quantity * mark price
Unrealized profit and loss: the trader’s current futures position generates profit and loss, also known as floating profit and loss.
Realized profit and loss: It is the accumulated profit and loss generated by the trader’s closed position before the settlement of the contract.
Profit: The realized profit that has been settled since the opening of the position + the unrealized profit since the last settlement.
Profit rate: = income / margin required when opening a position = income / (number of open positions * average opening price / leverage).
How to make money with virtual currency, which one is best for beginners?
Newbies who are new to the virtual currency market, are you eager to try the various ways to make money on social media, but don’t know how to operate? This article will list the common ways to make money in virtual currency, and will select the most suitable entry strategy for beginners.
1. Spot transaction
The most common way to make money with virtual currency is to buy low and sell high to earn the difference in the middle. Like stock investment, if you buy virtual currencies, such as bitcoin, ether, etc., when the price is relatively low, and then sell it when the price rises, you can earn the difference in the middle.
Advantages: You only need to buy and hold virtual currency, wait for the price to rise and then sell it, you can make a good profit.
Disadvantage: If you only focus on short-term volatility and rush for success, you may miss the long-term uptrend.
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2. Futures transactions
A cryptocurrency Futures is a futures contract. As the name suggests, this is a “future” contract, that is, the price of buying the future will rise or fall. With Futures trading, you can profit from a variety of market price fluctuations, including rising, falling and shaking markets. And you can get more profits with less money, and the leverage effect of the Futures can make you “big with small”.
For beginners, pay attention to Futures trading: 1. The contract multiple should not be too high: reduce the risk of liquidation, for example, not higher than 10 times; 2. Beginners can start with isolated positions: because the maximum loss of “full position” is selected, it may be It means that the entire principal of the Futures account is reset to zero, and the maximum loss of choosing “isolated position” is only the principal of the Futures.
Advantages: small and big, high risk and high reward
Disadvantages: The risk is extremely high, and it is easy to “explode”, that is, the principal returns to zero.
3. Stable financial management
Putting virtual currency in the wealth management account of the exchange, you can collect interest on demand or on a regular basis/locked position just like banks collect interest, and earn stable passive income.
Advantages: higher interest, usually 10-20 times of bank interest, or even higher; demand interest can be redeemed at any time, with large liquidity; regular interest is higher; both interest collection methods can be used for investors bring in cash flow.
Disadvantages: It may encounter the failure of the wealth management platform, resulting in a loss of principal, or even zero; regular interest payments can only be redeemed on a specified date.
Example: For example, you can choose stablecoin wealth management income, which belongs to capital-guaranteed wealth management. Taking USDT as an example, the current USDT current interest rate of the exchange is about 2.5% to 20%. For details, please refer to the rules of different exchanges.
4. Mining
The use of mining machine mining (Mining) refers to the creation of virtual currency through computer operations, thereby obtaining profits. Using a physical mining machine to mine, mainly through the following steps: 1. Download the mining software on the computer; 2. Use the mining software to perform operations; 3. Automatically obtain cryptocurrency
Advantages: You can get cryptocurrencies 24 hours a day, forming passive income
Disadvantages: The return of mining is not fixed, and the actual profit depends on several factors: 1. The price of the currency rises and falls, and the price rises will increase the return, on the contrary, the price drop will reduce the return; 2. Electricity; Time, usually 5-10 years; 4. The number of mining competitors, the less competition, the greater the return
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5. Receive the airdrop
Airdrop means that the project party sends you coins for free, usually distributed to current or potential users for free for market promotion. Airdrops are divided into: holder airdrops / network-wide airdrops / hard forks: as long as you hold the currency of the project, you can get airdrop rewards or exchange, and the recipients can receive free tokens according to their holdings. The team usually takes a snapshot of the user’s cryptocurrency assets on a specific date and time, and some airdrops may require additional requirements. Exclusive airdrop: The airdropped cryptocurrency will be sent to the designated wallet. Reward Airdrop: When you complete the designated task, the project party will issue an airdrop to you. The reward task depends on the arrangement of the project party, such as users who have interacted with its platform; pledge (Stake) your currency to the official website or exchange platform to improve the liquidity of the currency.
Advantages: Free access to new cryptocurrencies, high-quality new coins may become coins with high gains.
Cons: Not everyone can get it, usually requires certain conditions to be met.
6. Invest in NFTs
Investing in NFT mainly refers to investing in valuable digital assets online, such as music, artwork, pictures, metaverse land, etc. When these online properties appreciate in value, you can earn profits from them. NFT refers to “Non-Fungible Token”, a kind of digital asset certificate, similar to the online real estate certificate, artwork ownership certificate, and various asset holder certificates.
Advantages: NFTs are unique asset ownership. For some high-quality or popular NFTs, their prices can explode in a short period of time, and as the only asset owner, you can also sell these NFTs at any time, bringing huge benefits to yourself.
Disadvantages: The prospect depends on the production team. There are many worthless NFT projects on the market. Investors need to spend a lot of time and energy to distinguish them before they can select NFTs with potential for appreciation.
7. Liquidity mining
Liquidity mining means that as long as you provide liquidity to the platform or exchange, you can get virtual currency rewards.
“Liquidity” mainly refers to depositing virtual currency, thereby increasing the “stock” of the virtual currency, so that the platform can be used for various transactions, including selling to users, supporting the exchange function of two currencies, lending to users, etc., and from Get transaction fees, loan interest, and more. In order to repay you for increasing the liquidity of the platform, the platform will distribute part of the income to you as a reward, which is the return you can earn.
Liquidity mining is mainly divided into two types:
Liquidity Mining
Usually, liquidity mining refers to dual-coin liquidity mining (Liquidity Mining). As the name implies, dual-currency liquidity mining refers to depositing two virtual currencies, such as ETH and USDT, to provide “liquidity” for exchanges, that is, to increase the “stock” of these two currencies. When investors swap or trade USDT and ETH, they need to pay a fee to the exchange, and the exchange will also distribute part of the fee income to you as a reward for increasing its liquidity.
Yield Farming
Stake a single currency to get the interest issued by the platform. Therefore, it is also called “mortgage token interest”. Fundamentally, it just lends cryptocurrencies in exchange for interest and fee income, that is, the platform lends your coins to other users, earns loan interest from them, and distributes some of the interest to you as a reward.
Advantages: Idle funds can earn good returns and form passive income.
Disadvantages: The interest rate is relatively floating; the price of the invested currency varies, and there will be impermanent losses; the principal may return to zero due to the failure of the platform.
Example: Different exchanges will provide liquidity mining for different trading pairs with different yields. For details, please refer to the rules of the exchange.
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8. GameFi
GameFi is a blockchain game and a virtual currency investment method that can make money while playing games.
GameFi = Game + Finance, that is, adding finance to the game, is a blockchain game that can make money. The main way to make money is to get NFT by playing games, such as game props and characters.
Advantages: work for entertainment, play to earn money while playing games.
Disadvantages: It takes a long time to participate in the game; GameFi tokens are prone to drop in price after the boom.
9. SocialFi
SocialFi (Socialized Finance) = Social + Finance / DeFi
SocialFi uses the technology of blockchain and cryptocurrency to combine social platform (Soical platform) and finance (Finance) to become a new social platform.
Advantages: Anyone who interacts with others on the SocialFi platform has the opportunity to earn cryptocurrency, such as creating content, like sharing, voting, etc. This is something traditional platforms cannot do.
Disadvantages: Currently, SocialFi’s token price performance is generally poor. The main reasons include: after years of market promotion of traditional social platforms, many people have become accustomed to using these platforms, it is difficult to suddenly switch to a new platform, and the transfer cost is relatively high. The SocialFi project does not have a very stable market development and a reasonable reward mechanism.
10. Exchange arbitrage
Cryptocurrencies will have different prices on different exchanges. You can use this difference to make a profit and buy low and sell high.
Advantages: Low risk and high returns, especially during periods of price volatility.
Disadvantages: 1. A handling fee is required to withdraw virtual currency; 2. The number of daily withdrawals may be limited; 3. It takes time to transfer funds, which may lead to loss of arbitrage opportunities
The above are the common ways to make money with virtual currency, and there are various more advanced arbitrage methods. Based on the above, the most suitable strategy for beginners is actually “investing and hoarding coins for stable financial management in bear markets, and buying low and selling high to earn the difference in bull markets”, or even simpler, you can directly transfer the legal currency you hold, such as new currency , Taiwan dollar, Hong Kong dollar, Euro, U.S. dollar and other cash are directly exchanged for U.S. dollar stablecoins such as USDC or USDT, etc. and put into the exchange platform to collect interest, because the rate provided by the virtual currency wealth management platform or exchange can reach up to 20%, which is faster than the direct exchange rate. Banking has better returns.
Please check BKEX official website or contact the customer support with regard to the latest information and more accurate details.
BKEX official website is here.
Please click "Introduction of BKEX", if you want to know the details and the company information of BKEX.
Comment by Hans
April 24, 2024
as I am trading here various assets, for me it's the most important feature. i mean, flexibility in tradable markets. i alternate trading styles, meaning that sometimes I trad...