What are the trading rules for on-chain perpetual futures trading
This article explains the rules for on-chain perpetual futures trading, so you can plan your trades beforehand.
What rules apply to on-chain perpetual trading?
Tick size, min trade amount and min & max order value
Every trading pair has its own tick size and minimum trade amount, along with a minimum and maximum order value.
Tick size is the smallest price increment you can use. Your order price has to be multiple of it.
Minimum trade amount is the smallest quantity you can trade. Your order size has to be multiple of it too.
Order value, an order below the minimum or above the maximum is rejected
Note: fully closing a position is always allowed, even when it's worth less than the minimum order value. A small leftover position never gets stuck.
Price Limit
Each contract has price limit derived from its oracle price. Only the side that matters gets checked, a buy against the top of the limit, a sell against the bottom. What happens when your price falls outside the limit depends on the order type.
Market order: the price is automatically brought to the edge of the limit, and the order goes through
Limit order: the order is rejected, unless you've allowed price adjustment, in which case the price is brought to the edge of the limit instead
Example: BTC-USDⓈ has a price of 65,000 USDⓈ and the upper price limit is to 66,000 USDⓈ. A buy limit order at 70,000 USDⓈ is rejected. A market buy order is accepted and prices at 66,000 USDⓈ or better.
Open interest Limit
Each contract has a cap on total open interest across the platform, and a cap on how much any one account can hold. Your order is rejected if the platform is already at its cap, or if your own position and orders together would take you past yours.
Note: placing orders to close is always allowed. You can always cut a position back even when a cap has been reached.
What's the difference between one-way mode and hedge mode?
It decides whether you can hold single-sided or two-sided positions of every trading pair in your account.
One-way mode
Only a single position can be held per trading pair in one-way mode. Its direction follows the net of your trades, buy past a short and the same position flips to long.
Hedge mode
A long and a short position per trading pair can be held at the same time in hedge mode, and every order says which of the two is for.
What's the difference between cross margin and isolated margin?
Unlike position mode, this one is set per contract rather than whole account.
Cross margin
Cross-margin positions that use the same collateral token share equity (= balance + unrealized profit and loss). Unrealized profits increase the equity available to support these positions or open new ones, while unrealized losses reduce it. You don’t fund each position separately, so losses on one position can put all cross-margin positions using that collateral token at risk of liquidation.
Isolated margin
An isolated margin position is funded by collateral you set aside for it. A loss is confined to that position's own collateral and leaves the rest of your account equity and your other positions untouched. Liquidation is assessed on that position by itself, so it can't reach your account balance or your other positions.
Switching between them
A contract uses one margin mode at a time, so switching moves your existing position across rather than opening a second one next to it.To switch a position from one mode to the other:
Cancel your open orders on that contract first, including any take profit or stop loss that's waiting on an order
The switch has to leave you with enough margin to hold what you've got. Switching to isolated margin also doesn't count unrealized profit, so you can't fund isolated collateral with a position that's in profit
If you hold both a long and a short and you're switching to cross margin, both have to be on the same leverage
In hedge mode, your long and your short switch together
Note: some contracts only allow isolated margin. Switching one of those to cross margin is rejected.
How is margin calculated for an on-chain perpetual?
The initial margin is what you need to open a position. Maintenance margin is the minimum you have to keep once it's open.
Initial margin
The margin required for a position is calculated as position size × mark price ÷ leverage. The margin required for an order is calculated as order size x order price ÷ leverage.
Position mode | One-way mode | Hedge mode |
|---|---|---|
Initial Margin Requirement | It is the greater of the buy-side and sell-side initial margin totals, each including both positions and orders. | Sum of the initial margin of both long and short positions, and orders that would add to positions. |
Note: Unrealized profit in an open position counts toward your equity but not when you're taking money out. Unrealized profit and equity occupied by initial margin cannot be withdrawn or transferred.
Maintenance margin
The maintenance margin requirement is the minimum amount of equity you must maintain to keep your positions open. It is calculated by multiplying each position’s notional value by its applicable maintenance margin rate. For cross-margin positions using the same collateral token, these requirements are added together and compared with your equity of that collateral token. For an isolated-margin position, the requirement is assessed against that position’s own margin.Liquidation is triggered when your equity falls to or below your maintenance margin plus the estimated trading fees for liquidation.
> Crypto products involve significant risk. Prices can go up and down, and you may get back less than you put in. This article is for informational purposes only and is not financial, investment, or tax advice. Please do your own research and seek independent advice before making any investment decisions.