Complete spec for PowerTrade perpetuals: cash flows, funding, settlement and ADL behavior.
PowerTrade Perpetuals are a margin product that allows users to take a view on a crypto asset price (BTC, ETH, etc.) and profit on the asset’s appreciation or depreciation without having to hold the actual crypto asset. If a user believes the price of the asset will increase, the user can take a “long” view by opening a long position. The user will make a profit if the price appreciates above the entry price (plus any costs such as trading fees). The entry price is the price of the asset (also known as the mark price) estimated by the system at the time the trade was entered into. Alternatively, if the user believes the asset’s price will go down, they can enter into a “short” position and profit if the price moves below the entry price (minus any fees paid to enter into the trade).
PowerTrade Perpetuals settle in cash (USD) and do not require the user to hold or deliver the actual asset. Perpetuals are similar to Financial Futures in several aspects: (1) they represent a contract between two parties based on the future price of an asset where one party (the buyer) pays the other party (the seller) at the end of the term depending on whether there is price appreciation or vice versa , (2) they settle every period of time (every 1 hour in the case of PowerTrade Perpetuals) at the end of which cash flows are exchanged and profit may be settled.
PowerTrade Perpetuals are different from financial Futures in that (1) there is no set term or expiration and they continue in perpetuity and (2) a cash flow swap takes place at the end of the 1 hour term. The amount swapped is determined by the swap rate, which is calculated and applied every second as described in the table below.
Cash flows in one direction: either accounts with long positions pay accounts with short positions or vice versa, depending on whether the swap rate is a positive or negative value. This mechanism ensures that prices do not diverge too far from the underlying spot index.
The table below shows specific characteristics and attributes of PowerTrade Perpetuals.
Priority = PnL Percentage * Effective Leverage
IF PnL percentage > 0 Priority = PnL Percentage / Effective Leverage
IF PnL percentage < 0 Effective Leverage = Mark Value / abs (Avg. Entry Value - Bankrupt Value)
PnL Percentage = abs (Mark Value - Avg. Entry Value) / Avg. Entry Value
Mark Value = Position Value at Mark Price
Bankrupt Value = Position Value at Bankruptcy Price
Avg. Entry Value = Position Value at Avg. Entry Price
Last updated
Was this helpful?
Was this helpful?
