What is the difference between coin-based contracts and U-based contracts?
👉 Settlement and pricing method: U-based contracts usually use stablecoins (such as USDT or USDC) as the settlement currency, which means that no matter what digital currency is traded, the price, margin and profit and loss of the contract are all denominated and settled in stablecoins. In contrast, coin-based contracts use the traded cryptocurrency (such as BTC, ETH) as the settlement currency, that is, which cryptocurrency the user trades in the contract, then the margin and profit and loss are also denominated and settled in that cryptocurrency.
👉 Simply put, the core of coin-based contracts is to earn more coins, and U-based contracts is to earn U, which is equivalent to gold standard, with U as the anchor value.
🚀 The advantages of coin-based contracts are mainly reflected in the following aspects:
1. Avoid the impact of digital currency fluctuations: The unit of valuation of coin-based contracts is the digital currency itself, so the price is not directly linked to the price fluctuations of digital currencies. Investors can avoid the risks brought by digital currency price fluctuations, while getting returns from the appreciation or depreciation of digital currencies.
2. Hedge price risk: When the currency price is high, the coin standard can be shorted 1x to lock in profits and hedge. Wait until the currency price reaches the relative bottom before unwinding the hedge order. In this way, you can earn coins, and when the currency price rises again, you will have more coins in your hands, and the overall value will be higher.
3. Use leverage to amplify trading income: If you go long, the coin standard will double the increase in the value of the currency with the U standard. For example, if the coin standard 2 is long, you can actually get not only 2 times the currency income but also the increase in the value of the currency itself. Going long 2x on the U standard is 2x, but doubling the overall coin standard is equivalent to 3x.
4. No need to hold stablecoins: For miners or long-term holders of digital currencies, coin-based contracts allow them to open positions directly without converting their crypto assets into stablecoins, avoiding unnecessary losses caused by selling tokens at lower prices.
💻Summary: Coin hoarders, miners, spot swing traders, and BTC-centric players can use the coin standard for long positions, and use the coin standard 1x for short positions to lock in profits and hedge risks, because this way you can earn more coins.
👀U standard is used for short positions for pure contract traders.
