Perpetual futures: USDⓈ-M vs COIN-M

A future is an agreement to settle the value of an asset at a later date. A perpetual future — a perp — strips out the date. It is a futures contract with no expiry: you can hold the position for an hour or for a year, and nothing forces it to close.

Removing the expiry creates a problem, though. A dated future converges to spot because at settlement it must. Take the date away and there is nothing anchoring the contract to the underlying. The fix is the funding rate: a small payment exchanged directly between longs and shorts, usually every eight hours, that leans against whichever side is crowded. Perp above spot, longs pay shorts; perp below spot, shorts pay longs. That recurring cost is what keeps the two prices together.

USDⓈ-M — linear contracts

In a USDⓈ-margined contract, everything is denominated in a stablecoin: you post USDT (or USDC) as margin, position size is quoted in the coin, and profit and loss lands back in USDT.

The payoff is linear, which is the useful property. Long 1 BTC at $60,000; price goes to $63,000; you made exactly $3,000. Every dollar the price moves is a dollar of P&L per coin — no conversion, no curvature. This is the default choice for most traders, and the easier one to reason about when sizing risk.

COIN-M — inverse contracts

In a coin-margined contract you post BTC as collateral and are paid in BTC. Contracts are quoted in dollar notional — typically $100 per contract — while the settlement currency is the coin itself. Hence inverse: the payoff depends on 1/price, not on price.

The consequence is a curve rather than a straight line. Going long, each additional dollar of upside earns you slightly less BTC (the coin you are being paid in is now worth more); going down, each dollar of loss costs slightly more BTC. Losses accelerate in coin terms exactly when your collateral is losing dollar value — a double squeeze that catches people out.

So why use it? Because if you think in coins rather than dollars, COIN-M keeps you there. A miner or a long-term holder with BTC on the balance sheet can hedge or add exposure without ever touching a stablecoin, and their margin appreciates when the market goes their way.

The numbers on the ticker

Three figures follow every perp around. Open interest is the total notional of contracts currently open — how much money is committed, rising when new positions are created and falling when they close. Funding is the running cost of holding the position, and its sign tells you which side is paying. Basis is the gap between the perp and spot; persistent positive basis with rising open interest is the classic signature of a crowded long.

Next: what all of this buys you compared with simply holding the coin.