On BitMEX, the Chainlink derivative is in the form of a Quanto Futures Contract and allows traders to speculate on the future value of the Chainlink / Tether (LINK/USDT) exchange rate. Traders need not have Chainlink to trade the contract as it only requires Bitcoin as margin.
On BitMEX, the LINKUSDT Futures Contract allows traders to speculate on the future value of the Chainlink / Tether (LINK/USDT) exchange rate.
A Bitcoin Quanto LINK/USDT futures contract has a fixed Bitcoin multiplier regardless of the USDT price of LINK. This allows the trader to go long or short the LINK/USDT exchange rate without ever touching LINK or USDT. The trader will post margin in Bitcoin, and make or lose Bitcoin as the LINK/USDT exchange rate changes.
The LINKUSDT futures’ underlying is the LINK/USDT exchange rate as recorded in the .BLINKT Index. The futures are quoted in USDT and all margin and PNL calculations are denominated in Bitcoin.
|Bitcoin Multiplier per 1 USDT||0.0001 XBT|
|XBT Value||LINKUSDT Price * Bitcoin Multiplier|
|USD Value||XBT Value * .BXBT Spot Price|
|LINK Value*||USD Value / LINKUSDT Price|
|Bitcoin PNL Calculation||(LINKUSDT Exit Price - LINKUSDT Entry Price) * Bitcoin Multiplier * # Contracts|
*Assumes USD/USDT rate of 1
Traders who think that the price of LINK will rise will buy the futures contract. Conversely, traders who believe the price will drop will sell the futures contract.
All margin is posted in Bitcoin, that means traders can go long or short this contract using only Bitcoin. The LINKUSDT Quanto Futures feature a leverage of up to 33x.
For example, to buy 10 Bitcoin worth of contracts, you will only require 0.3 Bitcoin of Initial Margin.
The LINKUSDT futures contracts settle on the .BLINKT30M Index Price. Settlement will occur on the last Friday of the Settlement Month.
BitMEX Derivative: LINKUSDTZ20 Quanto Future Contracts: 100,000 Bitcoin Multiplier per 1 USDT: 0.0001 XBT .BXBT Spot Price: $10,000 LINKUSDT Futures Price: 15.00
Jaewon and Wang trade the LINKUSDTZ20 Quanto Futures against each other for 100,000 contracts. Jaewon goes long, and Wang goes short. For each 1 USDT move, the contract pays out 0.0001 XBT; this is called the Bitcoin multiplier.
They agree that each side can use 33x leverage, which means they post 3.00% initial margin to BitMEX to initiate the trade. To calculate the Bitcoin margin, they first calculate the Bitcoin value of their LINKUSDTZ20 Quanto Futures.
XBT Value = LINKUSDT Price * Bitcoin Multiplier * # Contracts
150 XBT = 15.00 * 0.0001 XBT * 100,000
Initial Bitcoin Margin = 150 XBT * 3.00% = 4.5 XBT
They both like to think in LINK terms at any given LINKUSDT price. On the BitMEX Position Table, they are able to view the current value of their position in LINK terms.
USD Value = XBT Value * .BXBT Spot Price = 150 XBT * $10,000 = $1,500,000
LINK Value = USD Value / LINKUSDTZ20 Price
100,000 LINK = $1,500,000 / 15.00
They notice that the LINK value can change when the LINKUSDT price changes. The only fixed number in a Quanto derivative is the multiplier. The LINK and USDT value will change as the LINKUSDT and .BXBT prices change.
The LINKUSDTZ20 quanto futures price rises to 20.00, let’s compute Jaewon and Wang’s Bitcoin PNL.
Bitcoin PNL = (LINKUSDT Exit Price – LINKUSDT Entry Price) * Bitcoin Multiplier * # Contracts
Jaewon Bitcoin PNL = (20.00 - 15.00) * 0.0001 XBT * +100,000 = 50 XBT Profit
Wang Bitcoin PNL = (20.00 - 15.00) * 0.0001 XBT * -100,000 = 50 XBT Loss
Notice that the only variable that affects the PNL is the movement of the LINKUSDT price.