AllXBTUSD6469.5+0.53%XBTU186412.5+0.56%XBTZ186417.5+0.56%XBT7D_U1050.00010-92.06%XBT7D_D950.00009-91.26%ADAU180.00001565+4.06%BCHU180.0841+1.33%EOSU180.0007388+0.09%ETHUSD299.25+1.03%ETHU180.04623+0.76%LTCU180.00891+0.00%TRXU180.00000314+6.80%XRPU180.00004873+6.86%.BXBT6473.30+0.51%.ETHXBT0.04620+0.63%.BVOL24H3.75-12.79%Funding: 00:02:47 @ -0.0566%Time: 11:57:12 AM
Ethereum Series (ETH) Guide

Ethereum is a decentralized platform that runs smart contracts: applications that run exactly as programmed on a blockchain without any possibility of downtime, censorship, fraud or third party interference. The project is developed by the Ethereum Foundation. The Ethereum currency is denominated by the currency code ETH and is commonly referred to as Ether. Further information about ETH and the Ethereum Project can be found here.

BitMEX currently offers two types of ETH derivative products for traders. The first is in the form of an Ether / Bitcoin (ETH/XBT) Futures Contract and the second is in the form of an Ether / USD (ETH/USD) Perpetual Contract.

Futures Contracts

On BitMEX, the ETH Futures Contract allows traders to speculate on the future value of the Ether / Bitcoin (ETH/XBT) exchange rate. Traders need not have Ether to trade the futures contract as it only requires Bitcoin as margin.

How Are ETHXBT Futures Quoted?

The ETH futures’ underlying is the ETH/XBT exchange rate on Poloniex as recorded in the .ETHXBT Index. The futures are quoted in Bitcoin and all margin and PNL calculations are denominated in Bitcoin.

Contract Calculations
Multiplier 1
XBT Contract Value Multiplier * Futures Price * 1 ETH
USD Contract Value XBT Contract Value * XBTUSD
PnL Calculation # Contracts * Multiplier * (Exit Price - Entry Price)

Traders who think that the price of ETH will rise will buy the futures contract. Conversely, traders who believe the price will drop will sell the futures contract.

Margin and Leverage

All margin is posted in Bitcoin, that means traders can go long or short this contract using only Bitcoin. The ETH futures contracts feature a leverage of up to 50x.

For example, to buy 50 Bitcoin worth of contracts, you will only require 1 Bitcoin of Initial Margin.

Settlement

The ETH futures contracts settle on the .ETHXBT30M Index Price. Settlement will occur on the last Friday of the Settlement Month.

ETHXBT Futures Contract Example

A trader wants to goes long 10 XBT of ETH futures contracts. ETHU18 (the ETH futures contract expiring in September 2018) trades at 0.0500 XBT. As the leverage is 50x, the trader only needs 0.2 XBT of margin for this trade.

The trader must buy 200 contracts: 10 XBT / (0.0500 XBT * 1).

A few days later, the price rises to 0.0550 XBT and the trader sells all their contracts.

The trader’s profit will be: 200 * 1 * (0.0550 - 0.0500) = 1 XBT

Perpetual Contracts

Currently BitMEX only accepts Bitcoin as collateral. That that means margin, profit, and loss must be paid or received in Bitcoin. However, through the use of financial engineering, BitMEX can give users exposure to any underlying price using a derivative called a Quanto.

A Bitcoin Quanto ETH/USD contract has a fixed Bitcoin multiplier regardless of the USD price of ETH. This allows the trader to go long or short the ETH/USD exchange rate without ever touching ETH or USD. The trader will post margin in Bitcoin, and make or lose Bitcoin as the ETH/USD exchange rate changes.

How Is The ETHUSD Perpetual Contract Quoted

Contract Calculations
Bitcoin Multiplier per 1 USD 0.000001 XBT
XBT Value ETHUSD Price * Bitcoin Multiplier
USD Value XBT Value * .BXBT Spot Price
ETH Value XBT Value / .ETHXBT Spot Price
Bitcoin PNL Calculation (ETHUSD Exit Price - ETHUSD Entry Price) * Bitcoin Multiplier * # Contracts

Margin and Leverage

All margin is posted in Bitcoin, that means traders can go long or short this contract using only Bitcoin. The ETHUSD Perpetual Contract feature a leverage of up to 50x.

For example, to buy 50 Bitcoin worth of contracts, you will only require 1 Bitcoin of Initial Margin.

Settlement

As the ETHUSD contract is perpetual, there is no settlement. Marking for Unrealised PNL and Liquidation purposes are done according to the Fair Price Marking system.

Note also: since this product is a perpetual contract, funding occurs every 8 hours. Please see the Funding Section in the Perpetual Contracts Guide for information, and for the current rates please see Funding Calculation in the ETHUSD Contract Specifications.

ETHUSD Perpetual Contract Example

BitMEX Derivative: ETHUSD Perpetual Swap
Contracts: 10,000
Bitcoin Multiplier per 1 USD: 0.000001 XBT
.BXBT Spot Price: $10,000
ETHUSD Swap Price: $500
.ETHXBT Spot Price: 0.05 XBT
Trade Inception

Jaewon and Wang trade the ETHUSD Perpetual Swap against each other for 10,000 contracts. Jaewon goes long, and Wang goes short. For each 1 USD move, the contract pays out 0.000001 XBT; this is called the Bitcoin multiplier.

They agree that each side can use 50x leverage, which means they post 2% initial margin to BitMEX to initiate the trade. To calculate the Bitcoin margin, they first calculate the Bitcoin value of their ETHUSD Quanto Swap.

XBT Value = ETHUSD Price * Bitcoin Multiplier * # Contracts

5 XBT = $500 * 0.000001 XBT * 10,000

Initial Bitcoin Margin = 5 XBT * 2% = 0.1 XBT

They both like to think in ETH terms at any given ETHUSD price. On the BitMEX Position Table, they are able to view the current value of their position in ETH terms.

ETH Value = XBT Value / .ETHXBT Spot Price

100 ETH = 5 XBT / 0.05 XBT

They notice that the ETH value can change either when the ETHUSD price changes, or when the .ETHXBT spot price changes. The only fixed number in a Quanto derivative is the multiplier. The ETH and USD value will change as the ETHUSD, .BXBT, and .ETHXBT prices change.

Trade Expiry

The ETHUSD swap price rises to $505, let’s compute Jaewon and Wang’s Bitcoin PNL.

Bitcoin PNL = (ETHUSD Exit Price – ETHUSD Entry Price) * Bitcoin Multiplier * # Contracts

Jaewon Bitcoin PNL = ($505 - $500) * 0.000001 XBT * +10,000 = 0.05 XBT Profit

Wang Bitcoin PNL = ($505 - $500) * 0.000001 XBT * -10,000 = 0.05 XBT Loss

Notice that the only variable that affects the PNL is the movement of the ETHUSD price. Neither the .BXBT, nor the .ETHXBT exchange rate affect either trader’s PNL.