USDT-Margined Perpetual Contracts

Last updated: 12/31/2025

1. Overview of USD-Margined Perpetual Contracts

A USD-margined perpetual contract is a derivative product that uses stablecoins (mainly USDT or USDC) as both margin and settlement currency.

This contract allows users to go long or short on the underlying asset (e.g., BTC, ETH) to profit from price fluctuations without actually holding the asset.

Key Features:

No Expiration: Positions can be held long-term.
Stablecoin Settlement: P&L is calculated in USDT or USDC.
Leverage Support: Amplifies both potential profit and risk.
Two-Way Trading: Go long when prices rise, go short when prices fall.

2.Basic Mechanisms

2.1 Margin & Settlement

USDT is the primary margin and settlement currency; some contracts also support USDC.
Profit and loss are settled in the used stablecoin. For example, when going long on BTCUSDT, both margin and settlement are in USDT.

2.2 Leverage & Risk

Flexible leverage is supported (maximum leverage varies by contract; KuCoin offers up to 125×).
Leverage amplifies both gains and losses. Example: With 10× leverage and 100 USDT margin, you can control a 1,000 USDT position. If the price rises 10%, profit = 100 USDT; if it falls 10%, loss = 100 USDT.

2.3 Funding Fee

Perpetual contracts use a funding fee mechanism to keep contract prices close to the spot price. Longs and shorts pay each other periodically (interval varies by contract, commonly 8h, 4h, or 1h).
Funding Rate:
- Positive → longs pay shorts
- Negative → shorts pay longs

2.4 Mark Price & Liquidation Mechanism

The system uses the mark price to calculate P&L and risk to prevent forced liquidation due to abnormal trades.
If the margin ratio falls below the maintenance margin requirement, forced liquidation will be triggered.

3. Example Scenarios

Example 1: Long (Bullish) BTCUSDT Perpetual (ignoring fees)

Margin: 1,000 USDT; Leverage: 10×; Entry Price: 20,000 USDT; Position: 0.5 BTC
If price rises to 22,000 → Profit = 1,000 USDT
If price falls to 18,000 → Loss = 1,000 USDT (may trigger liquidation)

Example 2: Short (Bearish) ETHUSDT Perpetual (ignoring fees)

Margin: 1,000 USDT; Leverage: 10×; Entry Price: 2,000 USDT; Position: 5 ETH
If ETH price drops to 1,600 USDT → Profit = 2,000 USDT
If ETH price rises to 2,400 USDT → Loss = 2,000 USDT (may trigger liquidation)

4. Position Overview

Terms	Explanation
Quantity	A USDT-margined futures position is measured by the number of contracts. Each trading pair has a specific contract multiplier. Position Size = No. of Contracts × Contract Multiplier For example, 1 BTC contract is equal to 0.001 BTC. Long positions are represented by a positive amounts, while short positions are negative.
Value	The value of a USDT-margined position is calculated in stablecoins, where Position Value = Price × Amount.
Entry Price	The average opening price of a position adjusts whenever you add to or reduce a position. Example: You have a BTCUSDT futures position, going long for 1,000 contracts. Your entry price is 50,000 USDT. An hour later, you decide to add 2,000 more contracts with an entry price of 60,000 USDT. Then: Average Entry Price = Total Entry Price of BTC Contracts ÷ Total No. of Contracts Total No. of Contracts: 1,000 + 2,000 = 3,000 Total Value of BTC Contracts = 50,000 + 120,000 = 170,000 USDT Average Entry Price = 170,000 ÷ (3,000 × 0.001) = 56,666.7
Mark Price	The current mark price of a USDT-margined contract.
Liquidation Price	See section on liquidation prices.
Margin	Margin for a Position = Initial Margin + Unrealized PNL + Any Added/Withdrawn Margin + Funding Fees
Position Leverage	Actual Leverage of Position = Position Mark Value ÷ Margin
Unrealized PNL	Users can choose whether unrealized PNL is calculated using the mark price or the last traded price. Unrealized PNL = Position Size × (Mark Price or Last Price - Average Entry Price) Long Position Example You have a BTCUSDT stablecoin-margined position. You hold 1,000 long contracts. Your entry price is 50,000 USDT. When the latest mark price is 55,000 USDT, your unrealized PNL will show 5,000 USDT. Unrealized PNL = Position Size × [(Mark Price) - (Average Entry Price)] = 1 × [(55,000) - (50,000)] = 5,000 USDT Short Position Example You have a BTC/USD stablecoin-margined position. You hold 1,000 short contracts. Your entry price is 50,000 USDT. When the latest mark price is 45,000 USDT, your unrealized PNL will show 5,000 USDT. Unrealized PNL = Position Size × [(Mark Price) - (Average Entry Price)] = -1 × [(45,000) - (50,000)] = 5,000 USDT Note: The calculation of unrealized PNL does not include any trading fees or funding fees incurred during the opening, closing, or holding of positions.
ROI	ROI = Unrealized PNL ÷ Initial Margin
Realized PNL	Realized PNL = ∑(PNL From Reducing Positions) - Trading Fees - Total Funding Fees Since Opening Realized PNL is the profit or loss from closing or reducing positions. It includes the PNL from the actual trade, trading fees, and total funding fees. It is calculated as the difference between the average entry and exit prices. Example: You have a BTCUSDT stablecoin-margined position. You hold 1,000 long contracts. Your entry price is 50,000 USDT. You close 500 contracts of the position at a price of 55,000 USDT, with a partial position of 500 contracts remaining. Partial Position PNL: 500 × 0.001 × [55,000 - 50,000] = 2,500 USDT Position Opening Fee: (50,000) × 0.06% = 30 USDT Position Closing Fee: (55,000) × 0.06% = 33 USDT Assume Total Funding Fees Received: 3 USDT Realized PNL: 2,500 - 30 - 33 + 3 = 2,400 USDT

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