👍Perpetual Futures: The Basics

Perpetual Futures: The Basics

On-Chain Perpetual Futures Contracts on Vibe let you trade contracts without an expiry date, enabling a continuous exchange of risk on asset prices. Gains or losses are realized in cash, based on the price difference from the time the trade opens to when it closes, and heavily influenced by leverage.

Key Features:

• No Expiry Date: Hold positions indefinitely.

• Continuous Monitoring: Track prices and funding rates for profitability.

• Collateral & Cross-Margin Account Mechanics: Deposit collateral (usually USDC) into a cross-margin account before trading. This enhances liquidity and minimizes premature liquidations.

Highlights:

• Pooled Margin Benefits: Balances unrealized profits and losses against market volatility.

• Leverage Implications: Market shifts can impact gains or losses.

• Future Updates: Isolated trade positions for added flexibility.

Understanding Funding Rates

Vibe’s funding rate mechanism keeps perpetual contract prices in line with the underlying spot price, ensuring fairness between long and short positions.

Terms & Definitions

• Unrealized Profit and Loss (UPNL): Potential gains or losses if a position is closed.

• Open Interest (OI): Total value of active contracts, indicating market activity.

• Account Health: Safety margin before liquidation.

• Maintenance Margin (CVA): Security deposit to prevent liquidation.

• Equity Balance: Total account value, including allocated balance and UPNL.

• Allocated Balance: Funds set aside for margin in sub-accounts.

• Initial & Locked Margin: Margins tied to active positions.

• Available for Orders: Balance available for new trades.

• Withdrawal & Proof of Time: 12-hour security measure against double spending, with expedited processes possible through third parties.