The Lisk (LSK) derivative is in the form of a swap contract. There are mechanisms that keep the price aligned with the reference Index Price which is the LSKXBT exchange rate on Poloniex. As such this contract allows traders to speculate on the current value of the exchange rate. Traders need not have Lisk to trade the swap as it only requires Bitcoin as margin.
The LSK swaps’ underlying is the LSK/XBT exchange rate on Poloniex as recorded in the .LSKXBT Index. The swaps are quoted in Bitcoin and all margin and PNL calculations are denominated in Bitcoin.
|XBT Contract Value||Multiplier * Futures Price * 1 LSK|
|USD Contract Value||XBT Contract Value * XBTUSD|
|PnL Calculation||# Contracts * Multipler * (Exit Price - Entry Price)|
Traders who think that the price of LSK will rise will buy the swap contract. Conversely, traders who believe the price will drop will sell the swap contract.
All margin is posted in Bitcoin, that means traders can go long or short this contract using only Bitcoin. The LSK swap contract features a leverage of up to 3.3x.
For example, to buy 33 Bitcoin worth of contracts, you will require 10 Bitcoin of Initial Margin.
As this product is in the form a swap contract, there is no settlement. Note that since this product is a swap contract, funding occurs every 8 hours. Please see the Funding Section in the Swaps Guide for further information how this is calculated.
A trader wants to goes long 3.3 XBT of LSK swap contracts. LSKXBT (the Lisk swap contract) trades at 0.00045 XBT. As the leverage is 3.3x, the trader needs 1 XBT of margin for this trade.
The trader must buy 7,333 contracts: 3.3 XBT / (0.00045 XBT * 1).
A few days later, the price rises to 0.00050 XBT and the trader sells all their contracts.
The trader’s profit will be: 7,333 * 1 * (0.00050 - 0.00045) = 0.367 XBT