What are Bybit's coin-margined contracts?

Understanding Bybit's Coin-Margined Contracts

Bybit offers a range of derivative products, with coin-margined contracts being one of the most utilized tools among experienced traders. These contracts allow users to trade futures using a cryptocurrency as collateral instead of stablecoins or fiat. This structure aligns the margin and profit/loss directly with the underlying asset, creating unique opportunities and risks.

Type of Underlying Assets

2. Other major cryptocurrencies such as Ethereum (ETH), BNB, and Solana (SOL) also serve as margin assets on select pairs.

3. The contract value is denominated in USD, but all settlements occur in the selected cryptocurrency.

4. Traders must hold sufficient amounts of the base coin in their wallet to open and maintain positions.

5. Fluctuations in the base coin’s price can affect both margin balance and liquidation thresholds.

Mechanics of Trading

2. Conversely, shorting BTC/USD with BTC as margin yields more BTC if the market declines.

3. Funding rates are exchanged between long and short traders every 8 hours, paid in the base currency.

4. Leverage options typically range from 1x to 100x, depending on the contract and risk parameters.

5. Liquidation occurs when the equity in the position falls below the maintenance margin, calculated in real-time based on the base coin’s value.

Risks and Volatility Exposure

2. A sharp drop in BTC price not only reduces the value of a long position but also depletes the BTC-denominated margin.

3. This compounding effect increases the likelihood of liquidation during high volatility.

4. Traders must monitor both directional price movement and the health of their margin balance continuously.

5. Unlike USDT-margined contracts, there is no stable reference point—gains and losses fluctuate with crypto market swings.

Frequently Asked Questions

How is a coin-margined contract different from a USDT-margined contract?

Coin-margined contracts use a cryptocurrency like BTC or ETH as collateral and settle gains and losses in that same coin. USDT-margined contracts use a stablecoin for margin and payouts, providing price stability in dollar terms.

Can I use ETH to margin a BTC-margined contract?

No. Each coin-margined contract requires the specific base cryptocurrency as margin. For a BTC-margined contract, only BTC can be used to open and maintain the position.

What happens to my margin if the market crashes suddenly?

The value of your margin decreases along with the price of the base coin. If the drop is severe enough, it may trigger automatic liquidation to prevent further losses.

Are funding payments made in the same coin used for margin?

Yes. Funding fees on coin-margined contracts are always settled in the base cryptocurrency of the contract, whether you are paying or receiving funds.