What is the difference between U-based contracts and coin-based contracts?
When users place orders, going long and going short use different trading modes, which can actually enhance returns.
U-based contracts
U-based contracts are contracts that use a fiat stablecoin (usually USDT) as the pricing unit. In U-based contracts, the value of the contract is calculated in US dollars.
For example, each contract represents a certain amount of dollar value. This form of contract allows investors to more intuitively assess the value and risk of the contract, and directly use USDT to participate in the virtual currency market without having to actually buy coins and face the risk of a price drop, making it particularly suitable for contract novices.
USDT is the most commonly used pricing currency in U-based contracts, and recently some exchanges have launched USDC priced contracts, but the trading depth is still far less than that of USDT contracts. Taking the Bitcoin contracts on Bybit exchange as an example, the trading volume of BTCUSDT perpetual contracts is 200 times that of BTCUSDC perpetual contracts.
Coin-based contracts
Coin-based contracts are contracts that use cryptocurrencies as the pricing unit. In coin-based contracts, the value of the contract is calculated in cryptocurrency, for example, each contract represents a certain amount of Bitcoin or other cryptocurrencies. This form of contract allows investors to directly use virtual currencies to participate in the market without having to convert coins into stablecoins and miss out on opportunities for price increases, earning the corresponding value of coins, and when the coins appreciate, your profits will also increase.
(Coin-based contracts are also referred to as inverse contracts on some exchanges)
Therefore, when going long, the returns from U-based contracts are less than those from coin-based contracts, but the risk of U-based contracts is lower. When going short, the returns from U-based contracts are greater than those from coin-based contracts, but the risk of U-based contracts is higher.