What is a delivery contract
Hotcoin1. Coin-based delivery contract
Hotcoin currency-based delivery contracts are digital currency contract products settled in BTC, ETH and other currencies. Each contract represents BTC worth US$100, or US$10 in other currencies (ETH, etc.). Delivery contracts are divided into weekly/quarterly delivery. Investors can gain profits from rising or falling digital currency prices by buying long or selling short contracts.
2. USDT-based delivery contract
Hotcoin USDT-based delivery contract is a digital currency contract product settled in USDT. Each contract represents a certain contract of digital currency (for example, BTCUSDT contract, each contract represents 0.001 BTC). Delivery contracts are divided into weekly/quarterly delivery. Investors can gain profits from rising or falling digital currency prices by buying long or selling short contracts. The contract leverage ratio ranges from 0.01 to 100 times.
3. Introduction to the rules for generating delivery expiration dates
The delivery contract provides four cycle types, namely: current week, next week, current quarter, and second quarter.
The current week contract refers to the contract that is delivered on the Friday closest to the trading day; the second-week contract refers to the contract that is delivered on the second Friday closest to the trading day; the current quarter contract refers to the delivery day on March 6, 9 , a contract that falls on the last Friday of the month closest to the current one in December and does not coincide with the delivery day of the current week/second week’s contract.
Special circumstances: Under normal circumstances, after settlement and delivery every Friday, a new next-week contract will be generated. However, after settlement on the penultimate Friday of the quarter month, there are only 2 weeks left for the current quarter contract to expire, and it actually becomes a sub-week contract. If a new sub-week contract is generated at this time, the two contracts will have the same expiration date. Therefore, after settlement and delivery on the penultimate Friday of the quarter months March, June, September, and December, the system will not generate the second-week contract, but will generate a new quarterly contract, and the original quarterly contract will become the second-week contract. For weekly contracts, the original weekly contract will become the current week contract. And renewed the second-season contract.
For example:
(1) After delivery and settlement at 16:00 (GMT+8) on September 11, 2020, because there are only two weeks left for the 0925 quarter contract to expire and deliver, the system will generate a new 1225 quarter contract at this time. The original 0925 quarterly contract is converted to the 0925 weekly contract; the original 0918 weekly contract is converted to the 0918 weekly contract, and a new 1225 quarterly contract is generated. Users need to check the price of the corresponding contract type K-line chart to trade. .
(2) After delivery and settlement at 16:00 (GMT+8) every Friday, the K-line of the new week's contract will continue the K-line of the original week's contract, and the K-line of the new next-week contract will continue the original one. Weekly K-line; if a new quarterly contract is generated, the K-line of the new quarterly contract will continue the Kline of the original quarterly contract. Users need to check the price of the corresponding contract type K-line chart to trade.
4. How to settle and deliver delivery contracts
(1) At the delivery time, the system uses the arithmetic mean of the BTC (LTC and other currencies) spot index in the last hour as the delivery price to deliver and close all open positions for the current week's contracts. The profit and loss generated after the delivery and closing of the position are added to the realized profit and loss. (one value per second)
(2) If there are still user liquidation orders that cannot be completed until delivery, the position will be delivered at the delivery price at the time of delivery. The resulting losses and liquidation losses, as well as the liquidation losses caused by liquidation orders that have been traded at a price lower than the bankruptcy price, will be calculated based on the overall price after the current week's contract is delivered and the next week, current quarter, and second quarter contract settlement is completed. The account allocation system is used to allocate losses to make up for the losses of users who overflow their positions.
(3) Add the realized profit and loss of the weekly contract to the account balance, and the delivery and settlement is completed.
(4) In the last 10 minutes before delivery of a contract, positions can only be closed but not opened.
5. Product features
(1) Coin-standard contracts facilitate hedging; U-standard contracts make returns more intuitive
Coin-based contracts use digital currency as the settlement currency. Typical user groups are hedging users, such as miners, who are characterized by the need to hold a certain currency for a long time.
USDT-margined contracts use USDT as the settlement currency. The typical user group is legal currency-based users, which meets the requirements of this type of users for low transaction costs and simple calculations.
(2) Expiration date
Each delivery contract has a fixed expiration and delivery date. The delivery price is the arithmetic mean of the USDT index of BTC and other currencies in the last hour before delivery.
(3) Index price system
USDT margin contracts use the USDT index of the corresponding underlying, and currency-margin contracts use the USD index of the corresponding underlying. In order to ensure that the spot index price reasonably reflects the fair spot market price of each currency, Hotcoin selects currency pairs from more than 3 mainstream exchanges for each contract currency as index weight components, and designs exception handling logic to ensure that a single exchange When prices deviate significantly, the index fluctuates within the normal range.
(4) Marked price system
Hotcoin has made adjustments based on the liquidation mechanism in the contract market. When the price fluctuates extremely, it will refer to the mark price to determine liquidation, preventing investors from liquidating due to a single transaction with abnormal transaction prices, and further reducing the risk of illegal investors maliciously destroying their positions. The possibility of liquidation caused by the market.
(5) Tiered maintenance margin rate system
The maintenance margin rate refers to the minimum margin rate required by users to maintain their current positions. When the account equity is lower than the maintenance margin + liquidation fee, forced liquidation or forced partial position reduction is triggered. Hotcoin implements a tiered maintenance margin rate system, that is, the larger the user's position, the higher the maintenance margin rate, and the lower the maximum leverage multiple that the user can choose.
(6) Hotcoin’s intervention:
If encountering extreme market conditions where users may be severely affected, Hotcoin may take one of the following measures:
• Deliver before triggering liquidation
•Delay settlement and delivery processes until further notice
Hotcoin intervention is designed to protect user funds from any potential market manipulation or adverse circumstances.