Perpetuals are a powerful derivatives instrument that allows you to extract yields on any market and use capital more efficiently thanks to up to x10 leverage.
Spin’s Perpetual Futures are the first implementation of on-chain derivatives trading on NEAR Protocol. This asset type traditionally has larger trading volumes because of its capital efficiency:
- With Perpetuals, you can earn on any price movement, be that asset growth or decrease in price;
- To trade any Perpetuals contract, you only need to have the collateral — USDC in the Spin case;
- You can open positions that increase your balance by up to 10 times (leverage).
Perpetuals trading is also associated with higher risks because of the leverage considering that it multiplies not only potential profits but also losses.
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 NEAR 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 the order type and direction and position size (the leverage will be adjusted).
- 4.The margin ratio for this position is temporarily locked on your account (the margin ratio size depends on the position size and asset volatility).
- 5.Closing or changing your position results in the funds being settled and unrealized PnL and funding amounts are either added to or deducted from your margin account balance.
- 6.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 margin ratio will be reduced. If you suffer losses for this position, there will be not enough funds in your account for keeping the margin ratio above 0.7 and it will lead to liquidation.
To have a deeper understanding of Perpetual Futures and their implementation on Spin, please read the information provided in the Perpetuals section.