What Is Perpetual Swap?
A perpetual swap is a derivatives contract similar to perpetual futures but typically settled in the underlying cryptocurrency rather than USD. The distinction matters for PnL calculation and margin: coin-margined perpetual swaps use BTC as collateral and settle PnL in BTC, while USDT-margined perpetual futures use stablecoins.
How Perpetual Swap Works
Coin-margined swaps create a convexity effect: when BTC rises, both the position value and the collateral value increase, amplifying gains. Conversely, when BTC falls, both decline, amplifying losses. This non-linear payoff profile makes coin-margined swaps more volatile than linear (stablecoin-margined) contracts for the same leverage.
Why It Matters for Traders
Choosing between coin-margined and stablecoin-margined perpetuals depends on your strategy. Coin-margined swaps are preferred by holders who want to maintain BTC exposure while trading, and by those who believe BTC will appreciate (the convexity works in their favor). Stablecoin-margined perpetuals offer simpler PnL calculation and stable collateral, preferred for hedging and short-term trading.
How It Works on CEX Perps
On centralized perpetual futures venues, perpetual swap shows up in the position panel, the funding timer, or the liquidation engine rather than as a separate product. Traders usually check it next to mark price, margin mode, and open interest so they do not size a trade from last price alone.
Example numbers only (not a live quote): if you hold a $10,000 notional long with 5x leverage, your initial margin is about $2,000. A move against you of roughly 20% of that notional can push the position near maintenance margin depending on the venue formula. Always read the venue's own liquidation rule before you size.
Formula and Worked Example
Use this only as a labeled example. It is not a live market print.
- Notional = coin size × mark price.
- Initial margin ≈ notional ÷ leverage.
- Distance to liquidation depends on maintenance margin, fees, and whether you use cross or isolated margin.
Example: 0.1 BTC long, mark $60,000, leverage 10x → notional $6,000, initial margin about $600. If maintenance margin is near 0.5% of notional, a modest adverse move can close the trade even when your thesis is still intact.
Common Mistakes
- Treating a single print of perpetual swap as a trade signal without checking funding, open interest, and your liquidation price.
- Mixing venue conventions (coin-margined vs USDT-margined, cross vs isolated) and reading the wrong mark.
- Copying example numbers from a glossary into live size without checking the current book depth and fee schedule.
- Ignoring related terms that change the meaning of the print on a given day.
