OKEx to launch USDT margin futures, top exchanges are expanding this market

Erich Gamma
Nov 1 · 3 min read

Recently, it is reported that OKEx will launch the USDT Futures trading, a linear futures contract this month. As mentioned on the OKEx official twitter, the simulation will commence on 5 November, and the official launch will be available at Mid-November. If we take a look at the market, OKEx is another cryptocurrency exchange giant who is trying to expand the stablecoin-based derivatives contracts market after some other exchanges like Bitfinex, FTX, and so on, have launched similar products.

source: https://twitter.com/OKEx

Top exchanges are expanding the USDT futures market

USDT-margined futures, also known as linear futures contracts, is served as a derivative product which is settled and quoted in USDT. In contrast to the token-margined futures, also known as inverse contracts, USDT futures can allow traders to open long or short positions and get profits in USDT via the price fluctuation of cryptocurrencies. In this case, USDT futures is actually more user friendly because of the elimination of hassle of switching between different cryptocurrencies, and the cost will in turn get reduced. Moreover, the collateral’s price of USDT futures is comparatively stable, which could somehow reduce the risk of price volatility. Last but not the least, USDT futures make it quite similar to spot trading with addition of leverage, so it is much easier for users to understand and master the trading system.

It could be easier for us to understand the difference if we check the graph below in comparison between the P&L of linear and inverse contracts (BTC-USDT as the example). Obviously, P&L in USDT-margined contracts is linear with the BTC price changes, while that in BTC-margined contracts is not. Thus, whenever you open short or long position in the USDT futures, you profit is directly from your trades. However, in the BTC futures, if you open long position, your profit equals to the profit from your trades plus the BTC price increase. And if you open short position, the profit will be that from your trades minus BTC price decline.

Thus, based on all the advantages, USDT futures can offer a simpler and more efficient way for traders to calculate the profit and loss. The cryptocurrency exchanges are now competing on this segment of crypto derivatives market to attract as many users as they can.

OKEx stablecoin-based futures to be launched soon

In addition to the USDT futures, Lennix Lai, Financial Market Director at OKEx also mentioned that “We would continue to research and add stablecoin-based derivatives so to offer a simpler hedging instrument for traders who normally book their profit and loss in USD value.

Importantly, OKEx said they can support both futures and perpetual swap products, and the minimum contract value could be 0.0001BTC which reduces the thread for retail investors. Also, in their product description, fixed and cross margin modes are both available to meet the demands of different users. Regarding to the risk control system, OKEx applied mark price to calculate users’ unrealized profits and losses, ensuring the reduction in unnecessary forced liquidation. The daily settlement process also could make it more flexible for users to move their profits or losses. Besides, the hedging tools like insurance provided by the platform can also assist traders to optimize their trading experience. Algo orders function gives users more choices to set up personalized trading strategies.

However, with more cryptocurrency exchanges launching the USDT-margined futures, we also need to caution that the value stability of USDT is of great importance in the crypto ecosystem.

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