Key Takeaways
- Simplified Trading: USDT perpetual contracts offer straightforward calculations and lower risk compared to coin-margined contracts.
- Risk Control Evolution: Exchanges employ a four-tier risk management system (margin-leverage-liquidation-risk sharing). Strategies diverge between precision (e.g., Huobi) and simplicity (e.g., BitZ).
- Market Dominance: USDT contracts capture 56.65% of perpetual contract trading volume, with Binance leading at 41.22% market share.
- BTC Dominance: BTC/USDT pairs account for 78.82% of trading activity, highlighting their central role.
- Liquidity Insights: USDT contracts show 30% lower liquidity scores than coin-margined equivalents, attributed to differing risk-reward profiles in bull markets.
- Depth Leaders: Binance, Bybit, and Bitget excel in BTC/USDT liquidity; FTX and Huobi perform well in ETH/USDT markets.
- Future Trends: Hybrid contracts combining coin-margined and USDT contract advantages may emerge as the next innovation.
1. Introduction
Derivatives are pivotal in capital markets, with crypto derivatives representing 40.3% of digital asset trading volume in Q3 2020. Among these, perpetual contracts dominate due to their no-expiry design. USDT perpetual contracts—introduced in 2018—have rapidly gained traction for their stability and user-friendly pricing.
2. USDT Perpetual Contracts: Core Concepts
2.1 Definition
- USDT Perpetual Contracts: Linear derivatives priced and settled in USDT, eliminating coin-price volatility risks.
2.2 Advantages Over Coin-Margined Contracts
- Reduced Risk: No "double exposure" to market volatility and coin depreciation.
- Linear PnL: Symmetrical profit/loss curves for long/short positions (unlike convex coin-margined models).
- Accessibility: Simplified calculations lower entry barriers for retail traders.
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3. Market Landscape (2020 Data)
3.1 Volume Distribution
| Exchange | BTC/USDT Volume (30D) | ETH/USDT Volume (30D) |
|---|---|---|
| Binance | $2905B | $620B |
| Huobi | $716B | $197B |
| Bybit | $480B | $105B |
3.2 Open Interest Trends
- BTC/USDT OI surged 200% (Sept–Dec 2020), reaching $2.7B.
- Huobi’s ETH/USDT OI grew 90% in December alone.
4. Liquidity Analysis
4.1 Scoring
- Binance leads with liquidity scores of 85 (BTC) and 75 (ETH).
- Average scores: 40–55 for BTC/USDT across other exchanges.
4.2 Depth Metrics
| Exchange | BTC/USDT 1‰ Depth | ETH/USDT 1‰ Depth |
|---|---|---|
| Binance | $470M | $220M |
| Huobi | $210M | $180M |
5. Future Outlook
5.1 Risk Management
- Precision models: Dynamic tools like Huobi’s EMA pricing and adjustable coefficients.
- Streamlined approaches: BitZ’s position limits for simplified user experiences.
5.2 Product Diversification
- Expanding beyond BTC/ETH pairs (e.g., Huobi supports 44+ tokens including DeFi assets).
5.3 Hybrid Contracts
Potential fusion of coin-margined leverage benefits with USDT’s stability.
FAQ
Q: Why choose USDT contracts over coin-margined?
A: Lower volatility risk and intuitive PnL calculations make them ideal for risk-averse traders.
Q: How does Huobi optimize locked positions?
A: It charges margin only on the larger side of hedged positions, freeing capital for reuse.
Q: Which exchange leads in ETH/USDT liquidity?
A: FTX and Huobi currently show the deepest order books for ETH pairs.