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Crypto Trading

Contracts And More

Delivery Contract

A delivery contract is an agreement to buy or sell a particular commodity or asset at a predetermined price at a specified time (named delivery date) in the future.

The XBT delivery contract is a swap contract to be settled at a given price in a prespecified time. The delivery date is a prespecified date when the delivery contract is settled. The price to settle at is a 30-minutes TWAP price of the spot index at 12:00 UTC on the delivery date. The delivery date is the last Friday of the contract month. Traders can identify the contract month according to the contract ticker.

For example, the ticker for a Bitcoin contract to settle in December 2019 is XBTZ19. The XBT delivery contract is quoted in USD and denominated in Bitcoin. The underlying price is Bitcoin Spot Index.

Perpetual Contract

The Bitcoin mini perpetual contract is aimed to replicate the underlying bitcoin spot market but with flexible leverage. The contract has no expiration date and is designed to closely track the underlying reference Price Index via the Funding Rate mechanism.

The XBTUSDM contract is quoted in USD and denominated in Bitcoin. The underlying price is Bitcoin Spot Index. This Index is the volume-weighted average US dollar price of Bitcoin in 6 exchanges including Coinbase Pro, Bitstamp, Kraken, Gemini, Liquid and Bittrex. The weight will be rebalanced quarterly. The profits and loss (PNL) calculation and margin are denominated in Bitcoin as well.

Mark Price

In traditional markets, a position is usually marked to the last trading price (i.e., mark to market), on which unrealized Pnl and liquidation triggering depend. However, unnecessary liquidation may occur if the market is being manipulated, is illiquid or the Mark Price swings significantly relative to its Index Price.

KuMEX utilizes a system called Fair Price Marking to avoid the situations above. This system sets the Mark Price of the contract to the Fair Price instead of the last trading price. Fair Price Marking only affects the liquidation price and unrealized Pnl. Realized Pnl is not affected. When the index price behaves abnormally, the marking method will be changed temporarily to which is similar to the simple last trading price marking.