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Perpetuals
Here is our guide to Spin's perpetual futures. Enjoy your reading!
Spin's Perpetuals
Spin will utilize perpetual futures contracts. Perpetual Futures differ from traditional futures with no predetermined date of expiry, so they can be kept open as long as you wish.
If you're new to futures trading, we recommend that you should first get acquainted with our short educational guide on futures. Enjoy the reading!
First of all, Spin offers a decentralized way to trade futures meaning traders don't need to rely on centralized exchanges and trust their funds to a single entity. Funds are stored on users' wallets, e.g., NEAR wallet. Thus, Spin assumes security and privacy for derivatives traders similar to DEX while embedding a Central Limit Order Book trade execution model. The immediacy of trade settlement with the Order Book model allows seamless intermedial trading.
How to trade futures on-chain?
The experience of futures trading on Spin is quite similar to centralized exchanges. Still, for a few minor differentiators. Long story short, here's a quick lifespan of your futures trade on Spin:
- 1.Connect your wallet to Spin.
- 2.Deposit funds to a Margin Account (which is a smart contract). In the blockchain, all users' funds on margin accounts are placed in a vault, where each transfer is assigned a number to indicate the owner of funds.
- 3.Create a futures position by choosing an asset, position size, and leverage.
- 4.Collateral for this position is temporarily locked on your account (the collateral size depends on the position size and asset volatility).
- 5.Each time the settlement happens, unrealized PnL and funding amounts are either added to or deducted from your margin account.
- 6.Closing your position results in the funds being settled.
- 7.Withdraw returns from the Margin Account to your wallet.
Note that if you have an open position and want to withdraw funds to your wallet, you can easily do that, but the collateral will remain locked. If you suffer losses for this position, there will be no funds on your account to compensate, which will result in liquidation.
When a net position is opened or increased on the user's account, the guarantee collateral gets blocked – this is the amount the trader cannot withdraw from his margin account because it secures the position open to him.
Margin is the amount of funds in the user's wallet available for buying or selling assets. The client himself chooses how much to allocate as a margin. In the blockchain, this money is transferred to the storage, i.e. separated from the funds on the user's wallet.
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